Earnings Call Insights: Energy Transfer LP (ET) Q4 2025
Management View
- Co-CEO Thomas Long highlighted a partnership record with adjusted EBITDA of nearly $16 billion for 2025 and DCF attributable to partners at $8.2 billion. He noted, “Operationally, we moved record volumes across each of our interstate midstream NGL and crude segments for the year ended 2025. We also exported a record amount of total NGLs out of our Nederland and Marcus Hook terminals.”
- Long stated, “During the quarter, we recorded records in each of our NGL fractionation throughput, LPG exports, Nederland terminal volumes and crude transportation throughput.”
- Energy Transfer spent approximately $4.5 billion on organic growth capital for 2025, focusing mainly on NGL, refined products, midstream, and intrastate segments.
- The company projects 2026 organic growth capital guidance between $5 billion and $5.5 billion, with two-thirds invested to enhance natural gas assets and one-quarter for NGL and refined products expansions contracted under long-term commitments.
- Long announced the upsize of the Desert Southwest Pipeline Project to a 48-inch diameter, increasing capacity to up to 2.3 Bcf per day, with expected in-service by Q4 2029 at a projected cost of $5.6 billion.
- The Hugh Brinson pipeline is 75% complete, expected in service Q4 2026 for Phase 1, with Phase 2 following in Q1 2027. The system is fully contracted west to east, with growing backhaul commitments.
- Group CFO Dylan Bramhall reported, “We’re about 60% of our own volumes, 40% third-party, and that affiliate volume number continues to grow. So we’ll keep trending — that 60% will trend up higher as we move through the year.”
Outlook
- The company revised 2026 adjusted EBITDA guidance to a range of $17.45 billion to $17.85 billion, up from the previous $17.3 billion to $17.7 billion, stating the change is “solely attributable to the USA Compression’s acquisition of J-W Power Company, which closed on January 12, 2026.”
- Management reiterated a long-term annual distribution growth target of 3% to 5% and leverage target of 4x to 4.5x EBITDA during this period of investment.
- Long described a “significant backlog of opportunities” supporting continued growth, with large-scale projects including the upsized Desert Southwest Pipeline and ongoing expansions at Nederland and Marcus Hook terminals.
Financial Results
- Adjusted EBITDA for Q4 2025 was approximately $4.2 billion, up from $3.9 billion in Q4 2024. DCF attributable to partners was approximately $2 billion, consistent with the prior-year quarter.
- The NGL and refined products segment reported adjusted EBITDA of $1.1 billion, including a onetime $56 million increase from a regulatory order, offset by a $58 million timing-related decrease and a $14 million impact from loading delays at Nederland.
- Midstream adjusted EBITDA was $720 million, crude oil segment $722 million, interstate natural gas $523 million, and intrastate natural gas $355 million—all showing increases or stability except for crude oil, which reflected lower Bakken pipeline revenues.
- One-time items included regulatory order impacts and a $60 million transaction expense related to the Parkland acquisition.
Q&A
- Theresa Chen, Barclays: Asked about key drivers and creative solutions in natural gas commercialization. Co-CEO Marshall McCrea responded with enthusiasm for the Desert Southwest and Hugh Brinson projects, emphasizing the company’s growing NGL and power plant footprint.
- Gabriel Moreen, Mizuho: Inquired about potential asset conversions and winter weather impacts. McCrea confirmed ongoing evaluation for asset repurposing and reported effective operational performance during recent storms, though profits did not match historical events like Uri.
- Jean Ann Salisbury, BofA: Sought clarity on early volumes for Hugh Brinson and DAPL’s future use. McCrea indicated confidence in bringing on early volumes, with details to follow in future calls, and Arthur noted flexibility for DAPL to serve Canadian heavy crude as Bakken production shifts.
- Keith Stanley, Wolfe: Asked about multiyear EBITDA growth expectations. Bramhall referenced the 3%-5% long-term distribution growth rate as a floor for growth outlook.
- Julien Dumoulin-Smith, Jefferies: Discussed pro forma economics of the upsized Desert Southwest project and DAPL tariffs. McCrea described it as one of the better rate-of-return projects the company has ever built.
- Additional analyst questions focused on storage, data center demand, project capital, and regulatory order impacts, with management providing detailed breakdowns of segment performance and strategy.
Sentiment Analysis
- Analyst tone was positive to slightly positive, with multiple questions on commercialization, project timelines, and upside from data center and power plant demand.
- Management maintained a confident, occasionally exuberant tone, especially during prepared remarks on growth projects and in response to questions about strategic flexibility. McCrea repeatedly expressed excitement, stating, “We are incredibly excited about our footprint and couldn’t be more elated of where we’re going to be over the next 10 or 15 years.”
- Compared to the previous quarter, management’s confidence was more pronounced, reflecting the completion of project milestones and upward guidance revision. Analysts continued to probe for details on growth drivers and execution risk but were receptive to management’s responses.
Quarter-over-Quarter Comparison
- Adjusted EBITDA for Q4 2025 showed a sequential increase from $3.84 billion in Q3 to $4.2 billion in Q4, with full-year adjusted EBITDA reaching a record $16 billion versus $11.8 billion for the first nine months.
- Guidance language shifted from caution regarding 2025 results in Q3 to a raised outlook for 2026, citing USA Compression’s acquisition and strong project execution.
- The company advanced the Desert Southwest pipeline from 42 to 48 inches and moved the Hugh Brinson project toward earlier partial service, indicating accelerated project momentum.
- Analysts in both quarters focused on growth capital allocation, data center and power plant demand, and asset optimization; management’s tone evolved from disciplined optimism to heightened confidence in the current quarter.
Risks and Concerns
- Management acknowledged competitive pressure in NGL transportation and fractionation, with McCrea noting the “NGL transportation and fracking segment has become the most competitive.”
- Weather volatility and Permian Basin freeze-offs were highlighted, but management emphasized operational preparedness.
- Regulatory changes affecting rates were discussed, with CFO Bramhall detailing the onetime impacts and expectations for recouping lost revenue in future quarters.
- Analysts probed on project execution risks, especially for major expansions and asset conversion decisions, but management consistently stressed capital discipline and flexibility.
Final Takeaway
Management emphasized that Energy Transfer is positioned for significant growth in 2026 and beyond, driven by major pipeline expansions, robust demand from data centers and power plants, and a strong backlog of long-term contracted projects. The company raised its 2026 EBITDA guidance and reaffirmed its commitment to disciplined capital allocation and distribution growth, highlighting operational excellence and flexibility to capture new opportunities across its asset base.