Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Energy Transfer LP (ET, Financial) reported a record adjusted EBITDA of $15.5 billion for 2024, marking a 13% increase over 2023.
- The company achieved record volumes across its Interstate, Midstream, NGL, and Crude segments, as well as record NGL exports from its terminals.
- Energy Transfer LP (ET) is investing in significant growth projects, including the Hugh Brinson pipeline and the Flexport expansion, which are expected to enhance capacity and service offerings.
- The company has entered into a 20-year LNG sale and purchase agreement with Chevron, indicating strong commercial progress for its Lake Charles LNG project.
- Energy Transfer LP (ET) is well-positioned to capitalize on the anticipated rise in natural gas demand, particularly with its extensive infrastructure and new partnerships with data centers like CloudBurst.
Negative Points
- Despite strong financial performance, the company faces potential challenges from increased competition in the NGL pipeline and export space, which could impact returns.
- The Waha basis spread is expected to compress in 2025, which could pose a headwind to financial performance.
- Energy Transfer LP (ET) is undertaking significant capital expenditures, with $5 billion planned for 2025, which may limit flexibility for other capital return strategies like buybacks.
- The company is renegotiating older SPAs for its Lake Charles LNG project due to rising costs, which could impact project economics.
- There is uncertainty around the timing and full realization of synergies from recent acquisitions, which may affect near-term financial outcomes.
Q & A Highlights
Q: Can you talk about the returns you're seeing with the new project backlog? Have they evolved or changed?
A: Marshall McCrea, Co-CEO, stated that the target returns remain in the mid-teen to upper-teen range, depending on the project and synergistic benefits.
Q: Regarding the Hugh Brinson pipeline, why is Abilene a significant marker?
A: McCrea explained that the pipeline is crucial for Permian Basin producers and market-pull in Texas and the Southeast. Abilene is strategically positioned near potential data center growth, aligning with Energy Transfer's assets.
Q: Does the $5 billion growth CapEx include unsanctioned projects? What drives the increase in midstream spending?
A: McCrea confirmed that the $5 billion is for sanctioned projects, driven by midstream needs, particularly in the Permian Basin, with projects like Mustang Draw and Badger processing plants.
Q: Can you elaborate on the CloudBurst project and its expected ramp-up?
A: McCrea noted that CloudBurst is expected to scale up to 450,000 MMBtus per day, with significant experience and contacts in the data center industry, potentially accelerating the project's timeline.
Q: How does the new administration impact Energy Transfer's opportunities, such as Lake Charles?
A: McCrea expressed optimism about the administration's support for fossil fuels and streamlined regulations, which could benefit projects like Lake Charles LNG.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
