Q2 2021 Energy Transfer LP Earnings Call

August 3, 2021

Yeah.

[music].

Greetings and welcome to energy transfer a second quarter earnings call at this time.

All participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded it is now my pleasure to introduce your host Tom Long Chief Financial Officer. Thank you you may begin.

Thank you operator, good afternoon, everyone and welcome to the energy transfer second quarter 2021 earnings call and thank you for joining us today.

I'm also joined today by Mackie Mccrea and other members of our senior management team who are here to help answer your questions. After our prepared remarks, hopefully you saw our press release, we issued earlier this afternoon as well as the slides posted to our website. As a reminder, we will be making forward looking statements within the meaning of section 20 <unk>.

<unk> of the Securities Exchange Act of $19.30 for these.

These statements are based on our current beliefs as well as certain assumptions and information currently available to US and are discussed in more detail on our quarterly report on form 10-Q for the quarter ended June 32021.

Which we expect to be filed this Thursday August 5th.

I'll also refer to adjusted EBITDA, and distributable cash flow or DCF, all of which are non-GAAP financial measures you will find a reconciliation of our non-GAAP measures on our website.

I'd like to start today by looking at some of our second quarter highlights we generated adjusted EBITDA of $2.6 billion and DCF attributable to the partners of ETP as adjusted of $1.4 billion or excess cash flow after distributions was approximately $980 million.

On an incurred basis, we had excess DCF of approximately $625 million.

After distributions of $414 million and growth capital of approximately $355 million. The increased results over the second quarter of 2020 were primarily due to higher earnings and the midstream intrastate and NGL and refined products segments.

Switching gears to an update on the acquisition of enable midstream partners, which will provide increased scale and the mid continent, and Ark, la Tex regions and improve connectivity for our natural gas and NGL transportation customers in.

In May the acquisition was approved by enable unit holders and the only remaining condition to closing is obtaining HSR clearance.

The FTC has issued requests for additional information and documentary material.

<unk> net second request, which extended the HSR waiting period.

Okay.

Energy transfer and enable are working diligently to provide the relevant information to the FTC and have engaged in constructive dialogue with them throughout this process.

We continue to believe that the FTC will grant unconditional clearance of the transaction and then we will close the transaction in the second half of 2021.

I'll now walk you through recent developments on.

On our major growth projects, and we will start with our Cushing to needle on pipeline.

In early June we commenced joint tariff service to provide crude oil transportation from our Cushing terminal to our Nederland terminal.

This project also provides the capability to deliver powder River and DJ basin barrels to our Nederland terminal B in an upstream connection with our white cliffs pipeline.

We are now capable of transporting approximately 65000 barrels per day of oil from the DJ Basin, and Cushing area to Nederland, and we're seeing a steady growth in volumes. The first phase of this project is fully contracted with a large majority of those contracts coming from third party shippers.

In addition to customer demand, we are moving forward with phase 2 of this project, which will increase the capacity to 120000 barrels per day.

<unk> is expected to be in service in the first quarter of 2022 and is underpinned by third party commitments.

Minimal capital spend is required for this project.

Net construction of the Ted Collins link is progressing and we continue to expect it to be in service in the fourth quarter of 2021. Upon initial completion. This project will provide crude oil transportation up to 150000 barrels per day from West, Texas, a needle to our Houston terminal, which <unk>.

Can be expanded to 300000 barrels per day.

Now looking to Dakota access in May the D. C District Court denied the plaintiff's motion for an injunction to shutdown Dakota access.

And thereafter dismiss the plaintiffs lawsuit against the Army Corps, we continue to cooperate with the Army Corps and the preparation of the environmental impact statement.

We recently placed the next phase of incremental capacity.

For the Bakken pipeline optimization project into service.

Which is supported by minimum volume commitments from long term customers.

With completion of this phase of the optimization Dakota access now has the ability to flow approximately 750000 barrels per day.

Let's take a look at marrow Mariner East system second quarter 2021, NGL volumes through the Mariner East pipeline system increased approximately 15% over the second quarter of 2020.

Our Pennsylvania access project, which will allow refined products to flow from the Midwest supply reagents into Pennsylvania, New York and other markets in the northeast is ready for service when markets dictate.

We now expect the next significant pays of the Mariner East project to be in service in the third quarter of 2021, and the final phase of the Mariner East pipeline is expected to be completed in the fourth quarter of 2021 today, we are seeing demand exceed our current throughput capacity, which will allow.

Now us to begin utilizing additional capacity as our next phase of Mariner East is brought on line later this year.

Now a brief update on our Nederland terminal during the second quarter, we completed the remaining expansion of our LPG facilities that may lift with.

With the addition of our LPG and ethane expansions completed in late 2020 and early 2021, we are now capable of exporting approximately 700000 barrels per day of Ngls from our Nederland terminal.

And when combined with our export capabilities from our Marcus Hook terminal as well as our Mariner west pipeline, which exports more than 55000 barrels per day of ethane to Canada or.

Our total NGL export capacity is now over 1.1 million barrels per day, which is among the largest in the world.

In fact in May and June we exported more ngls than any other company or country in the world with our daily throughput averaging over 850000 barrels per day in June.

We see an increasing need for products in markets beyond North America, and we are striving to meet this need with our growing export business.

At our expanded Nederland terminal volumes have continued to increase throughout the first half of this year and we expect them to continue to increase throughout the remainder of 2021.

And export volumes under our orbit ethane export joint venture has seen strong growth.

Through June we loaded more than 9 million barrels of ethane out of this facility since placing it into service.

Our Permian Bridge project.

Which will connect our gathering and processing assets in the Delaware basin with our G&P assets in the Midland Basin.

Is expected to be completed in the fourth quarter of 2021. This project will allow us to move approximately 115000 Mcf per day of rich gas out of the Midland basin and operate existing capacity more efficiently, while also providing access to additional takeaway options.

This project is a good example of how we can preserve capital spin as we strategically look for ways to optimize repurpose and expand our assets to provide us with competitive advantages.

Lastly in July we announced the signing of a memorandum of understanding with the Republic of Panama to study the feasibility of jointly developing a proposed trans Panama Gateway pipeline.

The project would include terminals on the Pacific and Atlantic side of Panama to be connected by a pipeline for the receipt transportation and export of LPG to international markets.

This project would provide relief for the increasing traffic of <unk> through the Panama Canal and provide high volume specific loading optionality for customers in Asia.

Now for an update on our alternative energy activities since we announced the creation of an alternative energy group in February we have continued to focus on renewable energy projects. In this regard we have finalized a second long term power purchase agreement for 120 megawatts of solar power.

That we expect to sign after receipt of regulatory approval. We are also.

So continuing to explore several opportunities for solar and wind projects on our existing acreage in the northeast and recently signed an agreement with a large utility company to jointly pursue solar and wind development on an energy transfer attract in Kentucky.

On the carbon capture front, our Marcus Hook project continues to look promising based on preliminary cost estimates and designed feasibility studies.

This project would involve capturing cotwo from the flue gas and delivering it to customers with produce food grade <unk>.

We're also pursuing 2 carbon projects near our systems, 1 involving the capture of Cotwo from processing plants for use in enhanced oil recovery and the second for a carbon utilization project.

We're also reviewing potential equity investments in a variety of projects, including biogas biodiesel projects that would qualify for low carbon fuel standard credits as long as they satisfy our economic return criteria are.

Our engineering and operations teams are constantly working to explore ways to reduce emissions across our facilities.

And as we've discussed previously our dual drop compressors continued win environmental awards for reducing cotwo emissions by utilizing their ability to run off the electric power as well as natural gas.

An important distinction for our dual drive compressors versus all electric compressors as that dual draft helps grid reliability as the electric demand can be volatile.

Especially on some remote areas of operations.

In addition, we have significantly ramped up our exports of butane propane and ethane for power generation. They are in many cases displaces diesel wood and animal waste naphtha and other fields, which provide for a significant reduction of cotwo emissions.

Finally, we expect to publish ESG data on the energy infrastructure Council and GPA midstream ESG template in the near future and we're also continued to address various in accuracies and third party ESG reports due to a lack of effort by certain third parties to discover and report accurate information.

Sure.

Now, let's take a closer look at our second quarter results consolidated adjusted EBITDA was $2.6 billion compared to $2.4 billion for the second quarter of 2020.

DCF attributable to the partners as adjusted was $1.4 billion for the second quarter compared to $1.3 billion for the second quarter of 2020 the.

The increased results were primarily driven by improved earnings in our midstream intrastate and NGL and refined product segments on July 20, <unk>, We announced a quarterly cash distribution of 15 and on a quarter cents per common unit of <unk> 61, Samsung Manualize basis.

This distribution will be paid on August 19th to unitholders of record as of the close of business on August 6.

Turning to our results by segment, we'll start with the NGL and refined products segment.

Our adjusted EBITDA was $736 million compared to $674 million the same period last year.

This was primarily due to higher export volume speeding our Nederland terminal increased throughput on our Mariner east pipeline and at our Marcus Hook terminal as well as increased storage and fractionation and refinery services margin.

NGL transportation volumes on our wholly owned and joint venture pipelines increased to $1.7 million barrels per day compared to $1.4 million barrels per day for the same period last year.

This increase was primarily due to increased export volumes feeding into our Nederland terminal from the initiation of service on our propane and ethane export projects as well as increased volumes on our Mariner East pipeline system.

On our fractionator average fractionated volumes was 833000 barrels per day compared to 836000 barrels per day for the second quarter of 2020.

Since the end of the second quarter transportation and fractionation volumes have continued to increase.

For our crude oil segment, adjusted EBITDA was $484 million comp.

Compared to $519 million for the same period last year. This was primarily due to lower average tariff rates on our Texas crude oil pipeline system as well as decrease in our crude oil acquisition and marketing business.

We did see higher volumes on our Bakken and Bayou bridge pipelines, which have improved from the lows of last year.

We have now seen the majority of the major contract roll offs on our Permian Express system, and we will look to capture better margins going forward as the market improves.

From midstream adjusted EBITDA was $477 million compared to $367 million for the second quarter of 2020.

This was largely the result of favorable NGL and natural gas prices as well as volume growth across most of our regions and the ramp up of recently completed assets in the northeast.

Gas volumes were $13.1 million <unk> per day, compared to 13 million Btu per day for the same period last year due to higher volumes in the Permian Ark, La Tex South to North, Texas regions as they continued to improve from low seen last year.

Permian Basin volumes have remained strong and Midland inlet volumes continue to be at or near record highs.

In our Interstate segment, adjusted EBITDA was $331 million <unk>.

Compared to $403 million for the second quarter of 2020, primarily due to contract expirations on Tiger and FEP as well as a shipper bankruptcy on Tiger, partially offset by an increase in transported volumes on Rover.

And for our intrastate segment, adjusted EBITDA was $224 million compared.

Compared to $187 million from the second quarter of last year. This was primarily due to demand volume ramp ups in the Permian and an increase in retained fuel revenues.

As well as a $39 million increase from revenues related to winter storm here.

There is no doubt the euro created much more demand for our pipeline and storage network and we're seeing this reflected in incoming calls and discussions with existing and new customers, who are looking to lock in firm transport <unk> storage agreements.

Now turning to our 2021 adjusted EBITDA guidance, we continue to expect our full year adjusted EBITDA to be between $12.9 billion.

The $13.3 billion.

Excluding any contribution from the announced enable acquisition and.

And moving to a growth capital update for the 6 months ended June 32021 energy transfer spent $715 million on organic growth projects, primarily in the NGL and refined product segment.

<unk> Sun and USA compression capex.

For full year 2021, we continue to expect growth capital expenditures to be approximately $1.6 billion pri.

Primarily in the NGL and refined products midstream and crude oil segments.

We continue to focus on aligning capital outlay with customer needs and remain disciplined in regard to all spending.

Any new projects are primarily expected to be focused on improving optionality around our existing assets.

And for 2022 and 2023, we continue to expect spend of approximately $500 million to $700 million per year.

Now looking briefly at our liquidity position as of June 32021.

Total available liquidity under our revolving credit facility was approximately $5 billion and our leverage ratio was 314 per our credit facility.

During the second quarter, we utilized cash from operations and proceeds from a $900 million series H preferred unit offering to reduce our outstanding debt by approximately $1.5 billion.

And year to date, we have reduced our long term debt by $5.2 billion.

And in May of this year, S&P and Moody's affirmed our credit ratings of Triple B minus and <unk>, 3 respectively, and both revised our outlook to stable from negative.

In addition in April we removed a layer of organizational complexity with the roll up of energy transfer operating company into energy transfer.

During the second quarter, we continued to see improved fundamentals and the completion of our NGL expansions at naval and has positioned us as 1 of the leading etch borders of Ngls in the world.

We expect our LPG and ethane export projects at our Nederland terminal to further ramp up throughout the rest of this year capital discipline and deleveraging continues to be among our top priorities and we continue to pay down debt in the second quarter, we remain committed to maintaining and improving our investment grade rating.

And we will look to return additional capital per unit holders in the form of unit buybacks <unk> distribution increases with the mixed dependent upon our analysis of market conditions at the time.

We also continue to explore development of alternative energy projects and opportunities to reduce our environmental footprint. Some of which are looking very promising and we hope to be announcing additional project. Shortly operator. Please open the lineup for our first question.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question you May press star 1 on your telephone keypad, a confirmation tone will indicate your line is on the question queue. You May Press Star 2 if you would like to remove your question from the Q4 participants using speaker equipment, it may be necessary to pick up your handset.

Net before pressing the star Keith Our first question comes from the line of Chanel are growth Shoney with UBS. Please proceed with your question.

Hi, good afternoon, everyone.

Maybe to start off just given all the comments that you made about capital allocation and so forth what I seem to think about your guidance for this year.

All the debt that you paid off during the most recent quarter. The recent preferred offering as well to it sort of suggests that you'd be below your <unk> target for leverage in the third or fourth quarter of this year. What are your priorities in terms of returning capital to unitholders.

Just sort of looking at current trading levels do buybacks become the priority or is there some other things that you're considering.

Good afternoon John.

Definitely appreciate the.

I appreciate the question here.

As you know we've got the 4 different options that we look at we are very excited that we've been able to pay off as much as we have this year with the $5.2 billion.

We are still not providing guidance as to exactly timing from that from <unk>.

Net standpoint, but I will say that the debt that has clearly been our focus at this point.

But I will say the distribution <unk> unit buybacks.

As well as the Capex, we're going to continue to look at it from an economic standpoint as to what makes sense, but it's great to be in this position and have this question right now so keep in mind that not putting it in any 1 order, but we clearly have the debt as the top and we've made great progress on that so you can appreciate.

The distribution on unit buyback is weak.

Worked diligently to stay very disciplined on the Capex front.

That makes sense and maybe that's a good transition to my my follow up question.

You've sort of maintained the.

Growth capital outlook for both 22 on 23 and $5 million to $700 million per year.

And are recognized on a long that.

Kind of in the <unk> bucket already.

Kind of interested in in the sort of the discussion you had in your prepared remarks, you had talked about a bunch of <unk>.

From carbon capture projects that you were looking at from the.

Sequestration, some with the oil recovery and so forth.

Are those projects also included in kind of that outlook that you want for the next 2 years on Capex.

If not do you have a sense around the price tag on that and how we can think it could potentially move as you move Jeff on the on those types of projects.

Yes.

This is mackie.

We have expressed as Tom Mason and his team are leading we are looking at a lot of stuff around ESG and as we have said anything that makes sense economic sense on rates of return we're going to pursue it right now there's really nothing on the horizon that has any kind of significant material capital cost to it that we're looking at any serious way for example, we've made.

The announcements on the solar front, we're really we're not investing anything where just the bar of.

Inexpensive electricity.

Some of these other carbon capture projects that we're looking at arc on require a lot of capital and or the partner that we're teaming up with we'll provide more of the cap. So right now we don't have really anything in there materially and we even have a little bit of a cushion to help grow our midstream business.

These rigs beginning in half.

Moving on and in Florida.

As far as gathering opportunities and things like that so no. We don't have much in there at all from a cost standpoint for ESG project.

Okay.

Really appreciate it I'll respect the 2 questions on all of a ton more so I'll jump back into queue. Thank you and have a great afternoon.

Our next question comes from the line of Jean Ann Salisbury with Bernstein. Please proceed with your question.

Hi, with the definitely expansion being up are you are you seeing or expecting more flows or since theres excess pipeline out of the Bakken should we think of it more like new Nbc's will start so you'll get paid but we may not see the flows right away.

This is mackie again, yes, we have seen for August.

Significant increase and nominations and we're seeing the flows begin.

And also yes to your question around Nbc's NBC on the optimization.

<unk> did kick in on August 1.

Perfect. Thanks, and then as you noted on the Interstate segment was down sequentially due to contract expirations on Tiger and Fayetteville at pretty materially.

That kind of the end of the original context, I think maybe there's a little there is 1 more in Fayetteville Express next year, but for this year is there any more exploration coming in the back half or is this kind of the new venue base.

We are seeing the bottoms as you mentioned there was 1 small 1 on FEP next year or the end of this year, but now we're kind of in.

Years past, Bob pretty quickly and we are we are but we are seeing so much growth around some of these pipelines in north Louisiana on and excited about being able to move a lot of it that gas out really both ways, but also adding back into Texas into our intrastate system. So.

We believe we've seen the bottom of the barrel there we'll see more growth quick example around interest rates. We recently sold out the vast majority of our capacity from West, Texas to California through RTW system for the next 2 years at Max tariff rate not sure why we had a company come in that believes the value from <unk>.

Gas in California must be on the way up.

So we're seeing it from positive and we said that a while around transwestern, well, where when contracts roll off we actually.

Add new contracts at higher fees. So there are some pluses also the interstates more seasonal this is not a.

Second quarter is not a high throughput necessarily for our Interstate system.

But we do pretty much the upside from here.

Great. Thanks, so much.

Our next question comes from the line of Keith Stanley with Wolfe Research. Please proceed with your question.

Hi, good afternoon, maybe I could follow up on enable some just on feedback and questions you've gotten from the FTC has anything been surprising to date or is the process been as expected.

Just want to confirm next steps in the process. It sounds like you still have to respond to their second request is that right.

Yes. This is Mackie again, yes, that's correct.

We are responding to their second request were a little surprised we thought that that after extending at 30 more days from initial 30 day that we would resolve all of their questions and issues, but we.

We remain confident that we will be closing in the not too distant future and.

And we will continue to be very cooperative with FTC and feel real good about getting to finish line certainly.

Great.

Separate question is just on the crude segment.

So crude EBITDA was down year over year.

And thats from the second quarter of 'twenty.

You mentioned, you're hoping things are kind of close or I guess should we think of this as close to a bottom for that segment. I think there was a reference to the majority of the contracts now rolling off so should we think of EBITDA on crude is bottoming and is there anything that can kind of turn that segment around.

Yes. This is mackie again actually the segment has been turned around.

Given example on.

On the majority of our pipelines, we were at about $2.5 million barrels a day pre pandemic and oil.

Back up to about 50000 barrels less than that so our volumes have recovered.

Almost 95% to 9.8% from where they were these are the volumes across Texas and now the Bakken So a lot of room.

Good things happen on the crude as far as volumes, we can't really control the spreads the spreads per part of the quarter widened out a little bit they've narrowed that kind of go back and forth. It's clearly.

Factors too much crude capacity across Texas. So we continue to look at Repurposing. Thank and also providing more value than just point to point b through our systems.

But our crude team has done a fantastic job.

Starting in January until now we've added about 5 to 600000 barrels a day of crude cross all of it we didn't have at the beginning of this year, albeit at much tighter spreads and margins than what we saw year on year and a half ago, but we can only control what we can gather and transport for our customers.

And the spread will be what they'll be so.

And I guess final on our complete the question Yeah, we feel like we're kind of at the bottom.

Think that we're going to continue to keep our volumes where they are for growth. We of course from have kicked in the MVC for optimization project, that's new revenues that are coming in so similar.

Similar to Interstate which.

The 2 most struggling segments. They all hit on all the others. Please ask about we're pretty excited about those now in the future, but anyway, we similar to Interstate we feel like we've got the bottom and everything's kind of up from here.

Thank you very much.

Our next question comes from the line of Pearce Hammond with Simmons Energy. Please proceed with your question.

Yes, good afternoon, and thanks for taking my questions. My first is 2 years ago, you announced the office in Beijing.

And not just to build business in China, but also throughout Asia and you highlighted earlier the success, you're having with the orbit JV. So I'm just curious.

Whats your line of sight to other opportunities in Asia for energy transfer.

How how do you see that market evolving over the next few years.

It's it's.

It's Mac again, we are extremely excited the pandemic really put a kind of a pause on not only.

LPG and ethane, but also crude it kind of slowed everything down and everything.

Everybody knows the economy.

Around the world, especially on the U S, but China is coming back.

We have pages of.

Companies that we're talking to different sizes for both ethane and LPG.

Expansion projects, we are we very much expect over the next year, if not sooner within 6 months too.

Get to <unk> on another expansion, whether it's at Marcus hook or at Nederland.

We've always been proud of the fact that we're the only company in the country that can export both from the Gulf Coast and from Nederland infrastructure, I mean Gulf coast and from Marcus Hook and <unk>.

The structure and negotiate these deals with.

A lot of these Chinese companies and give them that option, but also give us the option.

Which makes our assets more reliable and gives both of those terminals.

Difficult benefit so that was a long winded answer to yes, it's picked up in a big way we're in conversations with numerous companies in China as well as many others around the world and we couldnt be more excited about.

What we've done from the export build out capacity for ethane and LPG and crude oil for that matter and where the future is going to beta around the world.

Exceptionally well situated.

To meet the market demands and future.

Well. Thank you Matthew for that and then my follow up pertains to Panama announcement, I know, it's super early but just curious from a high level. What do you see energy transfer bring in Panama of what would be the advantages to energy transfer.

Just from a high level thoughts on on what could be in the country.

Yes.

We're really excited about that what a great group of people everybody. We've met with their on the government has been just a pleasure to work with and we're real excited about where all that's gone what do we bring the table. If you look back over the last not that many years, we've gone from kind of nothing to now as you heard on Tom's remarks to export Ngls in the world.

So that kind of says something.

Just made a statement from about 2 terminals that we have.

And what this terminal provides.

The country of Panama to benefit from moving barrels that are much in need throughout the world.

To the Pacific side of their country and become a major hub for the Asian markets as well as per the South American market. So we bring on the expertise we bring a we will be able to bring the barrels.

We're going to be able to operate at really in effect 4 terminals a hub on the Atlantic side civic side and the 2 that we have today. So we're very excited.

As you mentioned in the very early on.

Part of this we look forward to where this is going on and hopefully get into FY <unk>.

Not too distant future.

Thank you Mackie.

Our next question comes from the line of Jeremy Tonet with J P. Morgan. Please proceed with your question.

Hi, good afternoon.

John.

Just wanted to start off with the EBITDA guidance, if I could here because it seems like you've already completed a good portion of it over half year to date and so just wondering if theres something that you expect them to show up in the back half of the year that would be a headwind relative to the beginning of the year on.

Or anything else to think of here or is it really just kind of conservatism with not raising the guidance at this point just trying to understand drivers within the range a bit better.

Listen I'll start off with it.

Good afternoon.

Jeremy.

We think our guidance is really down the middle of the fairway.

12, 9% to $13.3 and Youre right. We've had a great start to the year with the first 6 months, but when you really look at it and you kind of look at the forward curves that we've used for the pricing which were stayed right in line with that for all the various commodities and you've heard you've heard us talk a lot about the volumes et.

Right.

That's the reason why we kept the range a little bit wider.

But once again, we feel very good about this we don't really feel like there's any any headwinds on this we're very excited about the next the last half of the year next 2 quarters.

I don't know Im looking at <unk> to see if you'd like to add anything more to the to the answer here, but we do feel very good we do not see headwinds.

Yeah, I guess, what I'll add is that kind of joked a minute ago about that.

No questions, yet around midstream or interstate or Ngls, but.

By 8 percentage if you look at just the Permian alone it's up 15%. So we are extremely well situated to where these rigs are as everybody knows you bring the gas the plants connected these plants on a residue intra and interstate systems and our NGL system. So.

If you look at what kind of feeding into our NGL system.

Both our lone star pipelines in our Mont Belvieu Fracs.

We're now tracking about 900, a little over 900000 barrels per day.

If you look back a year ago. When we first brought on Frac 7 I think we did about 920 or 930 was our high but that's a little misleading because when we brought on Fracs and wait a bunch Ngls elaborating storage. So we're kind of feedback from the field from the plant plus out of storage. It's different today, we are filling our fracs per day.

<unk> from the field from the tailgate of all beef plant in fact, we're actually injecting somewhere on grade into into story. So we are the NGL segment is just unbelievably exciting we can't say enough about our team on all the effort. We put together the end of 2020 beginning of 'twenty 1 around getting the orbit project completed on.

<unk> and finalizing all this LPG growth and boy are we incredibly well situated to benefit from that all the way from the wellhead through the Fracs and then on to the export market so pretty.

Pretty excited about that and that will kind of help feed into our EBITDA on the last half of the year.

Got it Thats really helpful. There and then.

Pivoting over here it seems like a number of studies out there ive talked about given the density of tier 2 emissions off the Gulf Coast. There is really a good opportunity for kind of a C. O..2 hub concept Oh on the Texas Gulf Coast, particularly as it relates to Houston, there between pet Chem and heavy industry emissions and just wondering over time.

If these DC initiatives passed I would support <unk>.

U S economics, what role do you see for ETE here over time, and do you believe that C. O..2 storage sequestration is more of an offshore or onshore solution over time, just given the pros and cons of each side here.

This is mackie again.

First thing I'll say is that if you look kind of along the Gulf Coast. There is nobody that has more pipelines.

All different sorts than us so as we look to repurpose pipelines, if there's opportunities to repurpose them to move Cotwo flu gas from some of these industrial long because there is nobody probably better situated than us, but we're not really out chasing.

Seo to sequestration project out in the Gulf Wroughton, Tim book to what we're doing is looking at projects that are related to our assets and doing what we can to work with third parties to figure out a way to either.

Capture that or to process or whatever the case may be so.

As I mentioned earlier, Tom basins, but a great team together, we're evaluating numerous opportunities and we will certainly move portal those that make good economic sense.

Got it that's helpful I'll leave it there thanks.

Our next question comes from the line of Michael Blum with Wells Fargo. Please proceed with your question.

Thanks, Good afternoon.

I wanted to ask on non res.

<unk> now that you're just about less.

From 2 quarters away from finally, getting this project fully done I Wonder if you can give us some clarity in terms of.

How much of the project ultimately costs, what the economics look like and would you expect to sign additional shippers up once the pipeline is fully up and running.

Michael I'll start if Tom wants to add anything.

Cost a lot I'll start with that.

On the up the volumes.

Today, we can move about 220 to 225000, the next phase which will be completed.

Feel real good about sometime in September we'll put us north of $260 by the end of the year will be north of $2.80, possibly approaching 300000 barrels a day, so I'm real excited about getting.

That whole franchise to the income.

There are.

You've got to kind of have the outlet and then the volumes come the volumes are there theres enormous reserves of of Ngls in the Marcellus and Utica Theres nobody positioned.

To be able to get that out besides us every other analyst kind of pool and so we are we do have the opportunity to expand.

We will be able to move as I said about 280 to 300000, but we can expand on <unk> pumps. We also have enormous capability to incur.

Increase our chilling and storage on the acreage we on their Marcus Hook and also we have.

The capability of expanding our dock capacity. So we are extremely well situated to handle and to be the pipeline cost.

Provider of choice for all the barrels out of that basin.

And we're pretty excited that we're almost there.

Got it. Thank you my other question was just on the Permian clear.

Clearly theres a lot of excess crude pipeline out of the Permian right now.

And it seems like there will be need for natural gas had another natural gas pipeline on expansion at some point in the next couple of years John.

Just wondering if that's something a potential conversion of a crude line.

Natural gas is something that you would look at it or do you feel like Youre crude lines are basically full and they're not it's not the misuse.

<unk>.

Michael I think the best way, we will answer that is theres nothing uptake. So we will continue to look at all of our pipeline assets to see.

If some other product would be more profitable and more efficient for our partnership so right now our team has done a as I've mentioned earlier on a fabulous job of kind of recover on our volumes in a short period of time this year.

We have a group of kind of a new group that's working diligently to continue the momentum. So we'll see how things go no doubt the crude pipeline the industries. So good at this at overbuilding in the us on all of them have overbuilt.

But we feel pretty good where we're at we wish spreads a little bit wider but we will continue to analyze and look at every opportunity as far as gas we've got the ability to move quite a bit of gas from west Texas.

We have on some of these contracts falling off from 4.5 years from now.

Some fairly significant volume so we welcome everybody to <unk>.

It is looking to expand or looking to secure space in 'twenty 4 'twenty 5 on a new pipeline. We certainly can accommodate a new pipeline, but also can accommodate with capacity that we'll have available as well today.

So anyway, we'll continue to look at everything and whatever makes the most sense will converted or or keep it net that service.

Thanks Mac.

Our next question comes from the line of Gabe Moreen with Mizuho. Please proceed with your question.

Hey, good afternoon, everyone someone new to the Panama question. So I don't want to give guidance, but maybe I can ask about the enable FTC saga here and I think youre surprised they're getting so many requests.

From a bigger picture if you think the FTC may be.

Raising the bar here, a little bit on consolidation I don't know, whether it's in energy or just in general do you think.

That changes your approach at all to future M&A or consolidation within the sector, which I think as we mentioned on previous questions too much capacity out there, which I think we'd all agree as needed.

Yes, I can.

Starting 1 of Tom's can follow up I guess, but I don't know how to characterize it I guess.

We did a lot.

Looking at this as we were announcing it and we just don't see any issues. There is so much competition out there everywhere will enable as pipelines, we really don't see any issues, but we were a little frustrated disappointed with the second request. However.

We do feel like we're working very well with the FTC. We are doing what they've asked Warren with us around the timing and so right now I'd say, we're pretty confident as we said earlier that we're going to provide them with everything that they've asked for and that will be able to close the not too distant future.

Hey, Bill I'll chime in here this is Tom.

We still feel very strong that consolidation is the right right to path to go in the midstream space.

Therefore, we we won't let our foot off the gas pedal here, we think there's a lot of good good drivers to bringing bringing.

Bringing assets together a lot of optimization that can be done so yeah, no no no plans to really really let off on.

Our efforts towards consolidation.

Got it thanks, Michael Thanks, Tom and maybe a kind of a follow up to that.

Yeah.

You didn't mention M&A related to that as sort of the capital allocation option, although I assume it's still would be an option I think there were some <unk>.

Some media reports about potentially being interested in going downstream on looking at petrochemicals. So so I was wondering if you can maybe comment on those.

On that and then maybe also willing to another deal where the FTC has interfered theres some interstate gas pipelines out there I was wondering if those types of assets might be of interest income will say COVID-19 on appeared off on these synergies to existing because what's going on.

<unk>.

Alright, well why don't I start off with the first part of your question then.

Day Mackey for the second part.

Very much interested in moving downstream, we think thats a natural fit for all the things that we've talked about today all the things that you've seen that we've been doing we think it's the perfect situation.

On a natural situation if you will.

Natural path for us to go down to look at look downstream. So yes, we are continuing to have dialog and it is something that where we remain very interested in.

Okay. Thanks, guys.

That concludes our question and answer session.

To hand, it back to Tom long for closing remarks.

As always we appreciate all of you joining us today. Thank you for your support and we look forward to talking to you in the near future.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

[music].

Greetings and welcome to energy transfer a second quarter earnings call.

Time, all parts of events on a listen only mode.

And answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Tom Long Chief Financial Officer. Thank you you may begin.

Thank you operator, good afternoon, everyone and welcome to the energy transfer second quarter 2021 earnings call.

Thank you for joining us today.

Many of the Security Exchange Act of 1934. These statements are based on our current beliefs as well as certain assumptions and information currently available to US and are discussed in more detail on our quarterly report on form 10-Q for the quarter ended June 32021, which.

We expect to be filed this Thursday August 5th.

I'll also refer to adjusted EBITDA, and distributable cash flow or DCF, all of which are non-GAAP financial measures you will find a reconciliation of our non-GAAP measures on our website.

Like to start today by looking at some of our second quarter highlights we generated adjusted EBITDA of $2.6 billion and DCF attributable to the partners of <unk> as adjusted of $1.4 billion, our excess cash flow after distributions was approximately $980 million.

On an incurred basis, we had excess DCF of approximately $625 million after distributions of $414 million and growth capital of approximately $355 million. The increased results over the second quarter of 2020 were primarily due to high.

Here earnings and the midstream intrastate and NGL and refined product segments.

In May the acquisition was approved by enable unit holders and the only remaining condition to closing is obtaining HSR clearance.

The FTC has issued request for additional information and documentary material.

Commonly known as second request, which extended the HSR waiting period.

Yeah.

Energy transfer and enable are working diligently to provide the relevant information to the FTC and have engaged in constructive dialogue with them throughout this process.

We continue to believe that the FTC low grant unconditional clearance of the transaction and then we will close the transaction in the second half of 2021.

I'll now walk you through recent developments.

On our major growth projects, and we will start with our Cushing to naval on pipeline.

In early June we commenced joint tariff service to provide crude oil transportation from our Cushing terminal to our Nederland terminal.

This project also provides the capability to deliver powder River and DJ basin barrels to our Nederland terminal B in an upstream connection with our white cliffs pipeline.

In addition to customer demand, we are moving forward with phase 2 of this project, which will increase the capacity to 120000 barrels per day.

2 is expected to be in service in the first quarter of 2022 and is underpinned by third party commitments.

Minimal capital spend is required for this project.

Net construction of the Ted Collins link is progressing and we continue to expect it to be in service in the fourth quarter of 2021. Upon initial completion on this project will provide crude oil transportation up to 150000 barrels per day from West, Texas and needle to our Houston terminal, which <unk>.

Can be expanded to 300000 barrels per day.

Now looking to Dakota access and Mei.

D C District Court denied the plaintiff's motion for an injunction to shut down Dakota access.

And thereafter dismiss the plaintiffs lawsuit against the Army Corps, we continue to cooperate with the Army Corps and their preparation of the environmental impact statement.

We recently placed the next phase of incremental capacity.

The Bakken pipeline optimization project into service.

Which is supported by minimum volume commitments from long term customers.

With completion of this phase of the optimization Dakota access now has the ability to flow approximately 750000 barrels per day.

Let's take a look at marrow Mariner East system second quarter 2021, NGL volumes through the Mariner East pipeline system increased approximately 15% over the second quarter of 2020.

Low us to begin utilizing additional capacity as our next phase of Mariner East is brought on line later this year.

Now a brief update on our naval and terminal during the second quarter, we completed the remaining expansion of our LPG facilities at Nederland.

With the addition of our LPG and ethane expansion is completed in late 2020 and early 2021. We are now capable of exporting approximately 700000 barrels per day of Ngls from our Nederland terminal.

And when combined with our export capabilities from <unk>, Marcus Hook terminal as well as our Mariner west pipeline, which exports more than 55000 barrels per day of ethane to Canada.

Our total NGL export capacity is now over 1.1 million barrels per day, which is among the largest in the world.

In fact in May and June we exported more ngls than any other company or country in the world with our daily throughput averaging over 850000 barrels per day in June.

We see an increasing need for products in markets beyond North America, and we are striving to meet this need with our grilling export business.

At our expanded Nederland terminal volumes have continued to increase throughout the first half of this year and we expect them to continue to increase throughout the remainder of 2021.

And export volumes under our orbit ethane export joint venture have seen strong growth.

Through June we loaded more than 9 million barrels of ethane out of this facility since placing it into service.

Our Permian Bridge project.

Which will connect our gathering and processing assets in the Delaware basin with our G&P assets in the Midland Basin.

This project is a good example of how we can preserve capital spend as we strategically look for ways to optimize repurpose and expand our assets to provide us with competitive advantages.

Lastly in July we announced the signing of a memorandum of understanding with the Republic of Panama to study the feasibility of jointly developing a proposed trans Panama Gateway pipeline.

The project would include terminals on the Pacific and Atlantic side of Panama to be connected by a pipeline for the receipt transportation and export of LPG to international markets.

This project would provide relief for the increasing traffic of <unk> through the Panama Canal and provide high volume specific loading optionality for customers in Asia.

That we expect to sign after receipt of regulatory approval.

We're also continuing to explore several opportunities for solar and wind projects on our existing acreage in the northeast and recently signed an agreement with a large utility company to jointly pursue solar and wind development on an energy transfer attracting Kentucky.

On the carbon capture front, our Marcus Hook project continues to look promising based on preliminary cost estimates and designed feasibility studies.

This project would involve capturing seal to from the flue gas and delivering it to customers with produce food grade Sidoti.

We're also pursuing 2 carbon projects near our systems, 1 involving the capture of Cotwo from processing plants for use in enhanced oil recovery and the second for a carbon utilization project.

Our engineering and operations teams are constantly working to explore ways to reduce emissions across our facilities.

And as we've discussed previously our dual drop compressors continued win environmental awards for reducing cotwo emissions by utilizing their ability to run off electric power as well as natural gas.

An important distinction for our dual draft compressors versus all electric compressors is that Dol draft helps grid reliability as the electric demand can be volatile.

Especially on some remote areas of operations.

Finally, we expect to publish ESG data on the energy infrastructure Council and GPA midstream ESG template in the near future and we're also continued to address various and accuracy and third party ESG reports due to a lack of effort by certain third parties to discover and report accurate information.

<unk>.

Now, let's take a closer look at our second quarter results consolidated adjusted EBITDA was $2.6 billion.

Compared to $2.4 billion for the second quarter of 2020.

DCF attributable to the partners as adjusted was $1.4 billion for the second quarter compared to $1.3 billion for the second quarter of 2020. The increased results were primarily driven by improved earnings in the midstream intrastate and NGL and refined product segments on July 20 <unk>.

We announced a quarterly cash distribution of <unk> 15, and a quarter cents per common unit of <unk> 61, Samsung Annualised basis.

This distribution will be paid on August 19th to unitholders of record as of the close of business on August 6.

Turning to our results by segment, we'll start with the NGL and refined products segment.

Our adjusted EBITDA was $736 million compared to $674 million for the same period last year. This was primarily due to higher export volume speeding our Nederland terminal increased throughput on our Mariner east pipeline and at our Marcus Hook terminal as well as increased storage and fractionation.

<unk> and refinery services margin.

NGL transportation volumes on our wholly owned and joint venture pipelines increased to $1.7 million barrels per day compared to $1.4 million barrels per day for the same period last year. This on.

Increase was primarily due to increased export volumes feeding into our Nederland terminal from the initiation of service on our propane and ethane export projects as well as increased volumes on our Mariner East pipeline system.

On our fractionator average fractionated volume was 833000 barrels per day compared to 836000 barrels per day for the second quarter of 2020.

Since the end of the second quarter transportation and fractionation volumes have continued to increase.

For our crude oil segment, adjusted EBITDA was $484 million compared to $519 million for the same period last year.

This was primarily due to lower average tariff rates on our Texas crude oil pipeline system as well as decrease in our crude oil acquisition and marketing business.

We did see higher volumes on our Bakken and Bayou bridge pipelines, which have improved from the lows of last year.

We have now seen the majority of the major contract roll offs on our Permian Express system, and we will look to capture better margins going forward as the market improves.

From midstream adjusted EBITDA was $477 million compared to $367 million for the second quarter of 2020.

This was largely the result of favorable NGL and natural gas prices as well as volume growth across most of our regions and the ramp up of recently completed assets in the northeast.

Gathered gas volumes were $13.1 million Btu per day compared to 13 million Btu per day for the same period last year due to higher volumes in the Permian Ark, La Tex South to North, Texas regions as they continue to improve from low seen last year.

Permian Basin volumes have remained strong and Midland inlet volumes continue to be at or near record highs.

In our Interstate segment, adjusted EBITDA was $331 million.

Compared to $403 million for the second quarter of 2020, primarily due to contract explorations on Tiger and FEP as well as a shipper bankruptcy on Tiger, partially offset by an increase in transported volumes on Rover.

And for our intrastate segment, adjusted EBITDA was $224 million compared to $187 million from the second quarter of last year. This was primarily due to demand volume ramp ups in the Permian and an increase in retained fuel revenues.

As well as a $39 million increase from revenues related to winter storm here.

There is no doubt the euro created much more demand for our pipeline and storage network and we are seeing this reflected in incoming calls and discussions with existing and new customers, who are looking to lock in firm transport <unk> storage agreements.

Now turning to our 2021 adjusted EBITDA guidance, we continue to expect our full year adjusted EBITDA to be between $12.9 billion.

On the $13.3 billion.

Excluding any contribution from the announced enable acquisition.

Moving to a growth capital update for the 6 months ended June 32021 energy transfer spent $715 million on organic growth projects, primarily in the NGL and refined product segments, excluding sun and USA compression capex.

For full year 2021, we continue to expect growth capital expenditures to be approximately $1.6 billion.

Primarily in the NGL and refined products midstream and crude oil segments.

We continue to focus on aligning capital outlay with customer needs and remain disciplined in regard to all spending.

Any new projects are primarily expected to be focused on improving optionality around our existing assets.

And for 2022 and 2023, we continue to expect spend of approximately $500 million to $700 million per year.

Now looking briefly at our liquidity position as of June 32021.

Available liquidity under our revolving credit facility was approximately $5 billion.

And our leverage ratio was 314 per our credit facility.

During the second quarter, we utilized cash from operations and proceeds from a $900 million series H preferred unit offering to reduce our outstanding debt by approximately $1.5 billion.

And year to date, we have reduced our long term debt by $5.2 billion.

And in May of this year, S&P and Moody's affirmed our credit ratings.

Triple B minus and <unk>, 3 respectively, and both revised our outlook to stable from negative and.

In addition in April we removed a layer of organizational complexity with the roll up of energy transfer operating company into energy transfer.

During the second quarter, we continued to see improved fundamentals and the completion of our NGL expansions at Nederland has positioned us as 1 of the leading exporters of Ngls in the world.

We expect our LPG and ethane export projects at our Nederland terminal to further ramp up throughout the rest of this year capital discipline on deleveraging continues to be among our top priorities and we continue to pay down debt in the second quarter, we remain committed to maintaining and improving our investment grade rating.

And we will look to return additional capital per unit holders in the form of unit buybacks <unk> distribution increases with the mixed dependent up on our analysis of market conditions at the time.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.

I'd like to ask a question you May press star 1 on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star 2 if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star Keith. Our first question comes from the line of Chanel are growth Shani.

UBS. Please proceed with your question.

Hi, good afternoon, everyone.

Maybe day to start off just given all the comments that you made about capital allocation and so forth what I seem to think about your guidance for this year.

All the debt that you paid off during the day. Most recent quarter are the recent preferred offering as well to it sort of suggests that you'd be below your 4.5 target for leverage in the third or fourth quarter of this year. What are your priorities in terms of returning capital to unitholders.

Just sort of looking at current trading levels do buybacks become the priority or is there some other things that you're considering.

Good afternoon generic definitely appreciate the.

I appreciate the question here.

As you know we've got the 4 different options that we look at we're very excited that we've been able to pay off as much as we have this year with the $5.2 billion.

We are still not providing guidance as to exactly timing from that from that standpoint, but I will say that the debt that has clearly been our focus at this point.

But I will say the distribution <unk> unit buybacks.

Unit buyback as we.

Worked diligently to stay very disciplined on the Capex from.

That makes sense and maybe that's a good transition to my follow up question.

You've sort of maintained the.

Growth capital outlook for both 22 on 23 and $5 million to $700 million per year.

And are recognized on a long acting.

Kind of in the <unk> bucket already.

Kind of interested in this sort of the discussion you had in your prepared remarks, you had talked about a bunch of <unk>.

Different carbon capture projects that you were looking at from a sequestration so I'm looking for.

Oil recovery and so forth.

Are those projects also included in kind of the outlook that you have for the next 2 years in Capex.

If not do you have a sense around the price tag on that and so and how you can think it could potentially move as you move to FY day on those types of projects.

Yeah Shneur.

This is mackie.

The announcements on the solar front, we're really we're not investing anything we're just a buyer of.

Inexpensive electricity.

Some of these other carbon capture projects that we're looking at arent on require a lot of capital and or the partner that we're teaming up with we'll provide more of the cap. So right now we don't have really anything in there materially and we even have a little bit of a cushion to help grow our midstream business.

These rigs beginning in half.

Moving on and as.

As far as gathering opportunities and things like that so no. We don't have much in there at all from a cost standpoint for ESG project.

Okay.

Really appreciate it I'll respect the 2 questions, but I'll get some more so I'll jump back with Keith Thank you and have a great afternoon.

Our next question comes from the line of Jean Ann Salisbury with Bernstein. Please proceed with your question.

Hi, with the <unk>.

<unk> expansion being up are you are you seeing or expecting more flows or since theres excess pipeline out of the Bakken should we think of it more like new Nbc's will start so you'll get paid but we may not see the flows right away.

Okay.

This is mackie again, yes, we have seen for August.

<unk> increase and nominations and we're seeing the flows began and.

And also yes to your question around Nbc's NBC on the optimization.

<unk> did kick in on August 1.

Perfect. Thanks, and then as you noted on the Interstate segment was down sequentially due to contract expirations on Tiger and Fayetteville at pretty materially.

That kind of the end of the original contracts I think maybe there's a little there is 1 more in Fayetteville Express next year, but for this year is there any more exploration coming in the back half or is this kind of the new the new base.

We are seeing the bottoms as you mentioned there was 1 small 1 on FEP next year or the end of this year, but now we're kind of.

In years past, Bob pretty quickly and we are we are but we're seeing so much growth around some of these pipelines in north Louisiana on and excited about being able to move a lot of it that gas out really both ways, but also adding it back into Texas into our intrastate system. So.

We believe we've seen the bottom of the barrel there we will see more growth.

Quick example, around Interstate we recently have sold out the vast majority of our capacity from West, Texas to California through RTW system for the next 2 years at Max tariff rate not sure why we had a company come in that believes the value for gas in California must be on the way up.

So we're seeing some positive and we said that a while around transwestern, well, where when contracts roll off we actually.

Add new contracts at higher fees. So there are some pluses to also the interstates more seasonal this is not a.

Second quarter is not a high throughput necessarily for our intrastate system.

We do pretty much the upside from here.

Great. Thanks, so much.

Yeah.

Our next question comes from the line of Keith Stanley with Wolfe Research. Please proceed with your question.

Hi, good afternoon, maybe I could follow up on enable some just on feedback and questions you've gotten from the FTC has anything been surprising to date or is the process been as expected and.

I just want to confirm next steps in the process. It sounds like you still have to respond to their second request is that right.

Yes. This is Mackie again, yes, that's correct.

We are responding to their second request were a little surprised we thought that day.

Net after extending at 30 more days from initial 30 day that we would have.

Resolved all of their questions and issues, but we.

We remain confident that we will be closing in the not too distant future and we.

And we will continue to be very cooperative with FTC and feel real good about getting to finish line sooner than later.

Great.

Separate question is just on the crude segment.

So crude EBITDA was down year over year.

And thats from the second quarter of 'twenty.

Yes. This is mackie again actually the segment has been turned around.

Given example on.

On majority of our pipelines, we were at about $2.5 million barrels a day pre pandemic and we're back up to about 50000 barrels less than that so our volumes have recovered.

Almost 95% to 9.8% from where they were these are the volumes across Texas and now the Bakken. So a lot of really good things happening on the crude as far as volumes, we can't really control the spreads the spreads per part of the quarter widened out a little bit they've narrowed that kind of go back and forth. It's clearly.

Factors too much crude capacity across Texas. So we continue to look at repurpose from bank and also providing more value than just 1 data point b through our systems.

But our crude team has done a fantastic job.

And the spreads will be what they'll be so.

And I guess final on our complete the question Yeah, we feel like we're kind of on Nevada, We think that we're going to continue to keep our volumes where they are for growth. We of course from have kicked into nbc's for optimization project. That's new revenues that are coming in so.

Similar to Interstate which.

Thank you very much.

Our next question comes from the line of Pearce Hammond with Simmons Energy. Please proceed with your question.

Good afternoon, and thanks for taking my questions.

First just 2 years ago, you announced the office in Beijing.

And not just to build business in China, but also throughout Asia and you highlighted earlier. The success you are having with the orbit JV. So I'm just curious.

Whats your line of sight to other opportunities in Asia for energy transfer.

How how do you see that market evolving over the next few years.

It's.

<unk> again, we are extremely excited the pandemic really put our cash.

A pause on not only.

LPG and ethane, but also crude it kind of slowed everything down and everything as everybody knows the economy.

Around the world, especially in the U S, but China is coming back.

We have pages of.

Companies that we're talking to different sizes for both ethane and LPG expansion projects. We are we very much expect over the next year, if not sooner within 6 months too.

Get to EFI day on another expansion, whether it's at Marcus hook or at.

On the Nederland.

A lot of these Chinese companies and give them that option, but also give us the option.

Which makes our assets more reliable and gives both of those terminals are significant benefit. So that was a long winded answer to yes. It's picked up in a big way we're in conversations with numerous companies in China as well as many others around the world and we couldnt be more excited about what we've done from the export build.

Capacity for ethane and LPG and crude oil for that matter and where the future is going to beta around the world.

Exceptionally well situated.

To meet the market demands and future.

Well. Thank you Maggie for that and then my follow up pertains to Panama announcement, I know, it's super early but just curious from a high level. What do you see energy transfer bring in Panama of what would be the advantages to energy transfer.

Just from a high level thoughts on what could be in the country.

Yes.

We're really excited about that what a great group of people everybody. We've met with their on the government has been just a pleasure to work with and we're real excited about where all that's gone what do we bring the table. If you look back over just the last not that many years, we've gone from kind of nothing to now as you heard on Tom's remarks, the export of NGL in the world.

So that kind of says something.

Yes.

What about 2 terminals that we have.

And what this terminal provides.

The country of Panama to benefit from moving barrels that are much in need throughout the world.

To the specific side of their country and become a major hub for the Asian markets as well as per the South American market. So we bring the expertise we bring a we will be able to bring the barrels.

We're gonna be able to operate.

In effect 4 terminals a hub on the Atlantic set civic side and the 2 that we have today. So we're very excited.

As you mentioned in the very early on.

Part of this we look forward to where this has gone in and hope we get into FY <unk>.

Not too distant future.

Thank you Mackie.

Our next question comes from the line of Jeremy Tonet with J P. Morgan. Please proceed with your question.

Hi, good afternoon.

Just wanted to start off with the EBITDA guidance, if I could here because it seems like you've already completed a good portion of it over half a year to date and so just wondering if theres something that youre expecting to show up in the back half of the year that would be a headwind relative to.

At the beginning of the year or anything else to think of here is it really just kind of conservatism with not raising the guidance at this point just trying to understand drivers within the range a bit better.

Listen I'll start off with it.

Good afternoon.

Jeremy.

We think our guidance is really down the middle of the fairway.

12.9% to $13.3 and Youre right, we've had a great start to the year with the first 6 months, but when you really look at it and you kind of look at the forward curves that we've used for the pricing, which we stayed right.

Right in line with that for all the various commodities and you've heard you've heard us talk a lot about the volumes et cetera.

That's the reason why we kept the range a little bit wider.

But once again, we feel very good about this we don't really feel like there's any headwinds on this we're very excited about the next the last half of the year next 2 quarters.

I don't know Im looking at <unk> to see if you'd like to add anything more to the to the answer here, but we do feel very good we do not see headwinds.

Yeah, I guess, what I'll add is that kind of joked a minute ago about.

No questions, yet around midstream or interstate or Ngls, but.

We're still excited about what we're seeing we said it last time the rigs are moving in there moving in in a big way, we've seen our volumes in our midstream just from the first quarter of this year to the second quarter of this year go up by 8% and if you look at just the Permian alone. It's up 15%. So we are extremely well situated to where these rigs or is everybody.

<unk> you bring the gas to the plant to connect to these plants on a residue intra and Interstate systems and our NGL system. So.

If you look at what kind of feeding into our NGL system.

Both our lone star pipelines, and our Mont Belvieu Fracs, we're now tracking at about 900, a little over 900000 barrels per day.

If you look back a year ago. We first brought on track 7 I think we did about 929.30 was our high but that's a little misleading because when we brought on Brexit and the weight of bunch Ngls elaborating storage.

Feedback from the field from the plant plus out of storage. It's different today, we are filling up our fracs per day from the field from the tailgate of all these plants. In fact, we are actually injecting some low grade into into story. So we are.

The NGL segment is just unbelievably exciting we can't say enough about our team on all the effort. We put together the end of 2020 beginning of 'twenty 1 around getting the orbit project completed online and finalizing all this LPG growth and boy are we incredibly.

Incredibly well situated to benefit from that all the way from the wellhead through the Fracs and then on to the export market. So.

Pretty excited about that and that will kind of help feed into our EBITDA on the last half of the year.

Got it Thats really helpful. There and then.

Pivoting over here it seems like a number of studies out there ive talked about given the density you have seen 2 emissions off the Gulf Coast. There is really a good opportunity for kind of Sidoti hub concepts, Oh on the Texas Gulf Coast, particularly as it relates to Houston, there between pet Chem and heavy industry emissions and just wondering over time, yes.

Especially if these DC initiatives passed I would support <unk>.

<unk> economics, what role do you see for ETE here over time, and do you believe that C. O..2 storage sequestration is more of an offshore or onshore solution over time, just given the pros and cons of each side here.

This is mackie again.

First thing I'll say is that if you look kind of along the Gulf Coast. There is nobody that has more pipelines.

All different sorts than us so as we look to repurpose pipelines, if theres opportunities to repurpose them to move.

Or flu gas from some of these industrials along the coast Theres, nobody probably better situated than us, but we're not really out chasing say.

<unk> sequestration project out in the Gulf or out in Timbuktu, what we're doing is looking at projects that are related to our assets and doing what we can to work with third parties to figure out a way to.

Capture that or to process it or whatever the case may be so as I mentioned earlier, Tom basins, but a great team together, we're evaluating numerous opportunities and we will certainly move portal those that make good economic sense.

Got it that's helpful I'll leave it there thanks.

Our next question comes from the line of Michael Blum with Wells Fargo. Please proceed with your question.

Thanks, Good afternoon.

Well on Charles from non Res 2 to ask now that you're just about.

Less from 2 quarters away from finally, getting this project fully done I Wonder if you can give us some clarity in terms of.

How much of the project ultimately costs, what the economics look like and would.

Would you expect to sign additional shippers up once the pipeline is fully up and running.

Michael I'll start if Tom wants to add anything.

Cost a lot I'll start with that.

Around the up the volume.

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Today, we can move about 220 to 225000, the next phase which will be completed.

We feel real good about sometime in September we'll put us north of $2.60, and by the end of the year will be north of $2.80, possibly approaching 300000 barrels a day so real excited about getting.

That whole franchise to the end zone.

There are.

You got to kind of have the outlet and then the volumes come the volumes are there theres enormous reserves of of Ngls in the Marcellus and Utica there is nobody positioned.

To be able to get that out besides us every other kind of full and so we are we do have the opportunity to expand.

We'll be able to move us instead about 280 to 300000, but we can expand our 450 <unk> pumps. We also have enormous capability to <unk>.

Increase our chilling and storage on the acreage we on their Marcus Hook and also have you know.

Almost capabilities expanding our dock capacity. So we are extremely well situated to to handle and to be the pipeline.

And a provider of choice for all the barrels out of that basin.

So we're pretty excited that we're almost there.

Got it. Thank you my other question was just on the Permian clear.

Clearly theres a lot of excess crude pipeline out of the Permian right now.

And it seems like there will be need for natural gas had another natural gas pipeline on an expansion at some point in the next couple of years John.

Wondering if that's something a potential conversion of a crude line.

Natural gas is something that you would look at it or do you feel like Youre crude lines are basically full and they're not it's not the best use.

Sure.

Michael I think the best way, we will answer to that is there is nothing uptake. So we will continue to look at all of our pipeline assets to see.

If some other per.

Product would be more profitable and more efficient for our partnership so right now our team has done a as I mentioned earlier on a fabulous job of kind of recover on our volumes in a short period of time this year.

We have a group of kind of a new group that's working diligently to continue to build momentum. So we'll see how things go no doubt the crude pipeline the industries. So.

Good at this at Overbuilding in the us on all of them have overbuilt.

But we feel pretty good of where were at we wish spreads were a little bit wider but we will continue to analyze and look at every opportunity as far as gas we've got the ability to move quite a bit of gas from west Texas.

We have on some of these contracts falling off from 4.5 years from now.

Some fairly significant volume so we welcome everybody to this looking to expand or looking to secure space in 'twenty 4 'twenty 5 on a new pipeline. We certainly can accommodate a new pipeline, but also can accommodate with capacity that we'll have available as well today.

So.

Anyway, we'll continue to look at everything and wherever it makes the most sense will convert it or keep it net net.

Service.

Thanks Mac.

Our next question comes from the line of Gabe Moreen with Mizuho. Please proceed with your question.

Hey, good afternoon, everyone someone new to the Panama question, So I'll start and wanted to get on but maybe I can ask about the enable FTC saga here and I think youre surprised getting so many requests.

From a bigger picture if you think the FTC may be raised.

Raising the bar here, a little bit on consolidation I don't know, whether it's in energy Youre adjusted General.

Do you think that changes your approach at all to future M&A or consolidation within the sector, which I think as we mentioned on previous questions too much capacity out there, which I think we'd all agree as needed.

Yes, I can start and 1 of Tom's can follow up I guess, but I don't know how to characterize it I guess.

We did a lot.

Looking at this as we were announced on it and we just don't see any issues. There is so much competition out there everywhere will enable as pipelines, but we really don't see any issues, but we were a little frustrated and disappointed with the second request. However, we do feel like we're working very well with the FTC. We are doing what they've asked to work with us around the timing.

And so right now I'd say, we're pretty confident as we said earlier that we're going to provide them with everything that they've asked for and that we'll be able to close but not too distant future.

Hey, Bill I'll chime in here this is Tom.

We still feel very strong that consolidation is the right right path to go in the midstream space and therefore week, we won't let our foot off the gas pedal here, we think there's a lot of good good drivers to bringing.

Bringing assets together a lot of optimization that can be done. So yes, no no no plans to really really let off on.

Our efforts towards consolidation.

Got it thanks, Michael Thanks, Tom and maybe a kind of a follow up to that.

Yes.

You didn't mention M&A related to that as sort of a capital allocation option, although I assume it's still it would be an option I think there were some.

Some media reports about potentially being interested in going downstream on looking at petrochemicals. So I was wondering if you can maybe comment on those.

On that and then maybe also moving into another deal where the FTC has interfered theres some interstate gas pipelines out there I was wondering if those types of assets might be of interest even with day.

Moving on appeared Auckland, new synergies to existing marketplace.

Alright, why don't I start off with the first part of your question then.

<unk> for the second part.

Very much interested in moving downstream, we think thats a natural fit for all of the things that we've talked about today all the things that you've seen that we've been doing we think it's the perfect situation.

Natural situation if you will.

Natural path for us to go down.

To look at look downstream. So yes, we are continuing to have dialog on it is something that we are we remain very interested in.

Okay. Thanks, guys.

That concludes our question and answer session I would like to hand, it back to Tom long for closing remarks.

As always we appreciate all of you joining us today. Thank you for your support and we look forward to talking to you in the near future.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

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