Q4 2022 Energy Transfer LP Earnings Call

February 15, 2023

Good day and welcome to the energy transfer fourth quarter and full year 2022 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.

I would now like to turn the conference over to Tom Long Co CEO . Please go ahead.

Thank you operator, and good afternoon, everyone and welcome to the energy transfer fourth quarter 2022 earnings call.

I'm also joined today by Mackie Mccrea and other members of the senior management team who are here to help answer your questions. After our prepared remarks, hopefully you saw the 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>.

Of the Security Exchange Act of $19 34. These statements are based upon our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our Form 10-K for the full year ended December 31, 2022, which we expect to file this Friday February.

The 17th.

I'll also refer to adjusted EBITDA, and distributable cash flow or DCF, both 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 going over our financial results for full year 2022, we generated adjusted EBITDA of $13 1 billion, which reflects continued growth over 2021 and as a partnership record.

Attributable to the partners of energy transfer as adjusted was $7 4 billion, which.

Which resulted in excess cash flow after distributions of approximately $4 4 billion.

On an incurred basis, we had excess DCF of approximately $2 $4 billion after distributions of $3 $1 billion and growth capital of approximately $1 9 billion.

Operationally, we moved record volumes across all of our segments for the year ended 2022, which included record volumes on our legacy midstream intrastate and NGL transport systems as well as through our fractionator at Mont Belvieu.

In addition, we exported a record amount of Ngls out of our Nederland terminal in 2022, and we expect our exports to continue to grow into 2023.

Looking at our fourth quarter 2022 results. We were pleased to report another strong quarter during which we generated consolidated adjusted EBITDA of $3 4 billion, which was up more than 20% compared to the fourth quarter 2021.

DCF attributable to the partners as adjusted was $1 9 billion compared.

Compared to $1 6 billion for the fourth quarter 2021.

This resulted in excess cash flow after distributions of approximately $965 million.

On an incurred basis, we had excess DCF of approximately $360 million after distributions of $945 million and growth capital of approximately $605 million.

On January 25th we announced a quarterly cash distribution of <unk> 35 per common unit or $1 22 on an annualized basis.

This distribution represents a 75% increase over the fourth quarter of 2021, and as a 15% increase over the third quarter of 2022.

With this recent increase we've now restored our distribution level to where it was in the first half of 2020.

We greatly appreciate our equity investors, who have supported us over the last two plus years as we have diligently worked to lower our leverage and improve the financial stability of the partnership this will allow us to better capitalize on opportunities that will lead to the future success for the partnership and all of our <unk>.

Nick holders.

Future distribution increases will be evaluated on an annual basis, while balancing energy transfer's leverage targets growth opportunities and potential unit buybacks.

As of December 31, 2022, the total available liquidity under our revolving credit facilities was approximately $4 2 billion.

While we are not speaking directly for the rating agencies based on our internal calculations. We are now within the four to four five target leverage ratio range based on our calculations of the rating agencies leverage ratios.

Now turning to our results by segment for the fourth quarter I'll start with the NGL and refined products adjusted EBITDA was $928 million compared to $739 million for the same period last year. This change was primarily due to higher transportation fractionation and terminal server.

<unk> margins and the recognition of gains of hedged NGL inventory.

NGL transportation volumes on our wholly owned and joint venture pipelines increased to a record 2 million barrels per day compared to $1 9 million barrels per day for the same period last year.

This increase was primarily due to higher volumes from the Permian and Eagle Ford regions as well as on our NGL pipelines that deliver into our Nederland terminal.

And our average fractionated volume set a new partnership record, averaging 962000 barrels per day compared to 895000 barrels per day for the fourth quarter of 2021.

Fact during the fourth quarter of 2022 single day fractionation throughput at Mont Belvieu reached more than 1 million barrels for the first time in our partnerships history.

NGL export volume significantly exceeded fourth quarter and full year 2021 exports driven by record ethane and LPG exports out of our Nederland terminal. This was primarily driven by the second tranche of satellites contracts going into effect on July 1st which doubled the volume.

<unk> commitments from the initial term in 2022, we loaded nearly 43 million barrels of ethane out of Nederland.

And for full year 2023, we expect to load more than 60 million barrels.

In total we continue to export more ngls than any other company or country with our percentage of worldwide NGL exports remaining at approximately 20% of the world market.

For midstream adjusted EBITDA was $632 million compared to $547 million for the fourth quarter of 2021.

This was primarily due to increased throughput in all of our operating regions as well as the acquisition of the enable assets in December of 2021, and the Woodford Express assets in September of 2022.

Gather gas volumes were at a record $19 4 million Btu per day compared to $14 8 million <unk> per day for the same period last year.

Excluding enable and Woodford Express.

Gathered gas volumes on our legacy assets were up 8% over the same period last year.

For our crude oil segment, adjusted EBITDA was $571 million compared to $533 million for the same period last year. These results were driven by improved performance on our Texas crude pipeline system increased throughput at our Gulf Coast terminals.

Stronger refinery utilization and higher export demand as well as the addition of the enable assets in December of 2021.

Crude oil transportation volumes increased to $4 3 million barrels per day compared to three 8 million barrels per day for the same period last year.

This was driven by higher volumes on our Texas pipeline systems and on the Bayou Bridge pipeline. The addition of the enable assets as well as placing the Ted Collins link and Cushing South pipelines into service in.

In our Interstate segment, adjusted EBITDA was $494 million compared to $397 million for the fourth quarter of 2021. This was primarily due to increased transportation revenue related to higher contracted volumes and rates on several of our pipelines as well as the addition of the <unk>.

Interstate assets.

Volumes increased 33% over the same period last year and utilization on many of our Interstate pipelines, including trunk line Tiger FGT southeast supply header and Rover remains high.

And for our intrastate segment, adjusted EBITDA was $433 million compared to $274 million in the fourth quarter of last year.

This was primarily due to higher pipeline and storage optimization opportunities.

Fees on assets in the Haynesville as well as the addition of the enable assets utilization of our HPLC system remains strong due to the increased demand for our gas takeaway and our <unk> pipeline system continues to flow at or near capacity due to increased activity in the haynesville.

Now looking at recent developments on our ongoing growth projects.

I'll start with an update on our Lake Charles LNG project.

Demand for LNG remains strong as energy security has emerged as a key theme for LNG. In addition, U S. Natural gas producers have shown increase interest and committing a portion of their production to long term sales arrangements at European and Asian, natural gas or LNG index prices.

We view these two factors as key drivers towards securing additional long term LNG offtake agreements.

LNG market along the Gulf Coast is currently extremely competitive.

Given this level of competition it is taking us longer to reach than originally expected, but we are optimistic that we will bring this project to <unk>, we continue making progress on all aspects of the project and are working hard to sign up more customers and we will share additional information as it becomes available.

Okay.

Turning to our Nederland and Marcus Hook export terminals in November 2022, we completed dredging at Marcus Hook to increase the depth.

At one of our docs to 42 feet, which will allow us to fully load vlccs at this stock going forward. In addition, we recently completed a feed study on a potential expansion project at our Nederland terminal, which would provide us with additional NGL export capacity.

We're currently evaluating next steps and hope to provide more details on this opportunity in the near future.

We also expect to approve an optimization project at Marcus Hook that would add incremental ethane refrigeration and storage capacity.

GL demand both in the U S as well as from overseas customers continues to increase we are firm believers that there will be significant growth in international demand for many years to come.

Next construction of our Frac eight continues as scheduled and.

And we expect it to be in service in the third quarter of 2023.

This addition will bring our total Mont Belvieu fractionation capacity to approximately 115 million barrels per day.

Also during the fourth quarter, we brought a new storage cavern online at Mont Belvieu with a capacity of approximately 3 million barrels, which supports our ongoing purity growth at the fracs as well as growth at our docks at Nederland.

This brings our total underground NGL storage capacity at Mont Belvieu to approximately 60 million barrels.

Out in the Permian in December we placed our 200 million cubic foot per day Graywolf processing plant into service and it is already ramping up more quickly than anticipated as a reminder, this plant which is located in the Delaware basin is supported by new commitments and growth from existing customer.

Contracts.

Construction continues on the bird plant, our <unk> 200 million cubic foot per day processing plant in the Delaware Basin. This plant remains on schedule to be in service in the second quarter of 2023.

In addition, we continue to evaluate the necessity and potential timing of adding another processing plant in the region.

Regarding Permian takeaway, we also recently completed modernization and Debottlenecking work on our Oasis pipeline, which added at least an incremental 60000 Mcf per day of takeaway capacity out of the Permian Basin.

We also placed the Gulf run pipeline into service in December Gulf Front, which is a 42 inch intrastate natural gas pipeline with 165 Bcf per day of capacity provides natural gas transportation between our upstream pipeline network.

And from the Haynesville shale for delivery to the Gulf coast connecting some of the most prolific natural gas producing regions in the U S with the LNG export market.

As well as many markets along the Gulf Coast. It is backed by a 20 year commitment for one one Bcf per day from Golden Pass LNG and we recently concluded a non binding open season on Gulf run due to growing producer demand.

We were pleased with the results of the open season and customer discussions are ongoing which will likely necessitate additional facilities beyond the initial design of 165 Bcf per day.

We are already utilizing a significant portion of zone, one capacity on Gulf run and we've added additional customer commitments through zone, two which is being delivered into our trunk line pipeline.

In addition to these ongoing projects, we continue to evaluate and have customer discussions regarding a number of other projects that are over the long term could provide strong returns and significant upside to our business. We remain optimistic that we can bring these projects.

And look forward to sharing any significant updates on these potential projects at the appropriate time.

On the alternative energy front, we continue to make progress on our carbon capture and storage project with capture point.

That is related to our north Louisiana processing plants, the class six permit for the sequestration site.

It was filed by capture point with the EPA in June of 2022.

We also recently executed a letter of intent with oxy related to Oxy, Magnolia hub and Alan parish, Louisiana North of the Lake Charles Industrial complex.

Pursuant to the letter of intent energy transfer and Oxy are working together to obtain long term commitments of cotwo from the industrial customers and the Lake Charles Louisiana area.

If this project reaches FID.

Energy transfer would construct a sealed to pipeline to connect the customers to Rpc's sequestration site and Alan parish, Louisiana.

<unk> filed applications with the EPA for two class six injection wells in 2021, Oxy is a leader in the Ccs sector.

And we're pleased to be working with them to make this project successful.

In addition, we're evaluating numerous opportunities to capture and either utilized or store to see.

<unk> across our systems.

Now looking at our growth capital spend for the full year of December 31, 2022 energy transfer spent approximately $1 9 billion organic growth projects, primarily in the midstream Interstate and NGL and refined product segments, excluding sun and USA compression capex.

For full year 2023, we expect growth capital expenditures to be between one six and $1 8 billion.

Which will be spent primarily in the midstream NGL and refined products and Interstate segments.

Capital includes projects that will address growing demand like Frac aid at Mont Belvieu, the Bayer processing plant in the Permian basin compression and optimization projects on existing pipelines, new treating capacity in the haynesville additional gathering and compression build out in the Permian improved.

<unk> and emission reduction work.

As well as preliminary spend related to carbon capture projects. In addition, this number does include a small amount of capital that was pushed from 2022 into 2023 due to project in service timing needs.

A significant amount of our 2023 capital spend is comprised of projects that are expected to be online and contributing cash flow before the end of 2023 at very attractive returns.

Now for our 2023 adjusted EBITDA guidance.

Given the continued domestic and international demand for our products and services.

The ability of our base business to operate through various market cycles as well as our market outlook for the year, we expect our adjusted EBITDA to be between $12 9 billion and $13 3 billion.

Our business continues to provide stable cash flows and opportunities for optimization and expansion and in 2023, we expect utilization in all of our core segments to increase.

With the current forward curve for commodity prices and spreads our guidance does not assume the same upside benefits from pricing and spreads that we experienced in 2022.

As a result of our commitment to strengthening our balance sheet throughout 2022, we entered 2023 and a much stronger financial position and we expect to maintain our leverage target range of 4% to four five times, we will continue to place emphasis on strategically allocated cash flow in a manner that.

Best positions us to further improve our financial flexibility and leverage invest in high returning growth projects and return value to unitholders.

We remain bullish about the future of our industry and the growing worldwide demand for crude oil natural gas and natural gas liquids and refined products.

As we look for additional ways to address existing and new demand for our products. We will continue to pursue strategic growth projects that enhance our existing asset base and generate attractive returns as part of our capital allocation strategy.

This concludes our prepared remarks operator, please open the lineup for our first question.

We will now begin the question and answer session to ask a question you May Press Star then one on a touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Jeremy.

<unk> with JP Morgan. Please go ahead.

Jeremy you might be muted.

Yes.

Pardon me.

Yeah.

Jeremie your line is now.

Yeah good afternoon.

That's helpful to be on mute it. Thank you.

Maybe just going to start off here want to go to the Permian.

And kind of get a high level thoughts as you see it with regards to based on logistic needs and Permian gas takeaway has been in focus.

And we've seen volatility in wahhab prices. It just wondering what that means for for this year.

What's kind of embedded into the guidance, but more so I guess longer term, how you see based on the aggressive evolving and future opportunities for <unk>.

Along these lines, particularly as it relates to possible timing for a four year development.

Hey, Jeremy this is mackie.

Thank you.

Meehan basin, probably one of the most prolific basins in the world.

We love looking at the maps because as you know we have inter and intrastate pipelines come in every direction and out of that area, including three NGL pipelines and then of course.

Some significant pipeline capacity across the state.

As you know and everybody knows on this call Theres been.

<unk> growth in the natural gas volumes out of the Permian.

Theres been expansions or continue to be compression expansions are in the 42 inch getting built and then about this time last year, we kicked off warrior.

Starting to get its momentum and we continue to have momentum. So we don't know when the next <unk>.

It will be announced coming out of the <unk>.

Permian Basin, we do believe it will be ours when it happens.

Just a quick update on those volumes, we have contracted about 25% to 30% of what we need to get the.

Warrior, we're talking to another at least 50%, 60% what would be needed. It is a slow process based on what you. Just said when you have got negative spreads would have been higher than <unk> got a.

Net spread it's hard to get deals done, but certainly over the next three or four years on top of whats already been expanded bill that will need to be in another line and if there is while we do believe it will be ours.

Got it that's really helpful. And then kind of looking at the other side I guess downstream significant LNG development coming in the Gulf Coast, particularly in Louisiana over the balance of the decade here and it seems like you guys have quite the pipeline positioning in Louisiana, there to support that but just wondering.

It seems like these exports so looking for diversity of supply.

The Haynesville and also maybe kind of more connectivity into Texas and the Permian just wondering how you see that unfolding over time and what opportunities that could present ETE.

Yes. This is a common theme I'd say throughout every question I think this as we look at our pipeline that and look at what energy transfer can do on moving volumes to the Gulf Coast Express Louisiana after.

<unk> enabled.

Great.

I'm sorry for retail it's pipes in North, Louisiana, we have connections from Carthage to Aerie Bill in our Gulf run, we connect almost to the Gulf Coast pipeline. So, we're so well positioned both to feed our own LNG project.

Should we get that too.

But regardless, even our results we're seeing volumes find their way from up North Marcellus Apple and trunk line through all of our pipeline system to the Gulf coast already to feed the growing demand for LNG. So, we're so well positioned and pretty excited about the full utilization even expansions.

<unk> of our systems across.

The south.

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

Thank you.

Our next question comes from Brian Reynolds with UBS. Please go ahead.

Hi, good afternoon, everyone maybe to start off on just on just the guidance. It implies kind of limited growth year over year based off of the presentation, where you put out some puts and takes with commodity declines offset by volume growth. So I was just curious if you could perhaps just unpack the base assumptions, maybe around the commodity deck and then.

As well just high level view on Permian and Haynesville growth to help us square the guidance. Thanks.

Okay, you bet, Brian This is Tom long.

Really when you look at 2022 obviously it was it was a great year for US again with the results that you are.

Sure.

Given to you right now, but when you really look at the volumes. If you remember we started off the year with our guidance of about 11 eight to $12 $2 billion. When you looked at it and then we saw the prices start spiking up through the year with the conflict occurred over and over in Ukraine.

Likewise, when we got to the first quarter in our first quarter call. We talked about the optimization opportunities that our comm ops group were able to achieve and we said that was probably two 225 million to $250 million. So it gave us a real shot in the arm as well as in the prices and as we continued through the.

A year, if you're comparing 2022 results with what we've got in the guidance for 2023, Youre going to have about probably $4 million to $600 million that was coming just from the what we call the price and the spreads that we saw so the.

<unk> the last part of your question I think as far as the shop assumptions go we're pretty much using the forward curve, we're staying in kind of the down the middle of the fairway.

That's that's kind of the walk forward from 'twenty two to 'twenty three but you can see once again between the numbers that I gave you there for the first quarter and then the pricing for the full year.

Hopefully that gives you a little bit of a bridge of where we are so we're very excited with what we've been able to achieve with the.

With the various projects are various assets that are coming online that we continue to see as well as the volumes. So.

We're obviously very.

Very excited to be able to.

But numbers of 12 nine to 13 313.

$13 3 billion.

Great I appreciate the feedback maybe as my follow up I. Appreciate some of the color on the prepared remarks around around Lake Lake Charles LNG, just maybe taken a little bit longer than expected I'm curious if you could just talk a little bit more about one just the equity interest in the project to to Spa contracting it seems like broadly speaking, it's very hard to.

<unk> LNG in any environment and then lastly, just any update on the EPC provider I guess in the greater context is there just a focus on returns for this project versus I guess just pursuing this project just to ultimately bring value to the downstream system.

Yes.

You bet Ryan this is mackie again.

And you hit the nail on the head it has taken us longer than we had anticipated it is extremely competitive out there.

The.

Need for natural gas for many years to come is out there.

International customers throughout that are looking for supplier, especially reliable.

Cheaper gas supplies in the U S, but it's extremely competitive and we are disappointed we're not further along and signing up customers, but even as we speak we have Tom Mason and his team were actually over therefore on a two week trip meeting with customers some of which were down the road quite a ways on consummating, new deals, which will certainly make public so we're work.

And hard on that front.

We've got to work cut out for US we still believe we have the best project for a number of reasons, especially with the ability to feed it from so many different basins. So we're still very excited about it on the EPC front, we have received some of our cost and over the next 60 days.

To 90 days were going to fine tune those we're going to put kind of to get a better understanding about a risk and mitigation of those risks, but but really our focus right now is on getting the customers.

We've got a great effort on that and we still remain optimistic that we will get it.

Great I appreciate the color I'll leave it there until your evening.

Okay.

Our next question comes from Michael Brown with Wells Fargo. Please go ahead.

Hi, Thanks, Good afternoon, everyone. So maybe just wanted to talk about start with capital allocation for 2023.

Tom in your prepared remarks, you seem to indicate that.

Deleveraging.

<unk> to be a priority. So I'm wondering if you're thinking that you want to push towards the lower end of that four to four five.

Our leverage target and then how should we think about dividend growth rate in 2023, and then anything on buybacks. Thanks.

Yes, good afternoon, Michael well.

I'll start I'll start with this.

When you are when you really look at it we have been just absolutely.

Just more more than pleased if you will that we've been able to get the distributions back up to about 22 really when you look at a lot of the distribution cuts that were made back back that year.

We're very proud with what we've been able to achieve I think.

Probably one of the few that we're able to get it back up to the.

The pre pre cut levels. So when you when you really look at the allocation we're going to.

Where did it well we're going to continue to probably.

Keep a lot of financial flexibility and some dry powder, which means we will keep it at the lower end of that four to four five.

We will continue to focus on bringing that down as far as the leverage ratio. When you really look at the capital projects that we've talked about here, although we start off with this capex number of where we are we're going to continue.

To look at.

Acquisitions, and so when you when you focus on that and you see where we kind of what we did in 2022 with some of the smaller type acquisitions.

One six to $1 eight does not include.

Anything that might come along on.

On the consolidation front, so we're going to allocate dollars to the continued growth of the company.

And then third we're.

Going to look at returning capital to the unitholders and that we'll be evaluating the distributional levels like I mentioned in the prepared remarks that.

We're going to be looking at that distribution more more on an annual type basis.

Not a whole lot of other guidance at this point that we're going to provide at this time, but we're going to continue to look at possible unit buybacks. So we put both of those in that same returning capital to the unit holders, but thats the way I think in summary.

Answering your question.

Okay, great. Thanks for that and then also just wanted to ask you about your gas storage business I Wonder. If you can just talk generally about the trends youre seeing in storage rates and then just remind us kind of whats your average length of your storage contracts on how much merchant capacity you have.

Hey, Matt this is mackie.

Got the total of about 150 bcf throughout the country of storage.

Average kind of storage.

He is a little bit different.

We have been able to consummate over the past five or six months.

Storage related deals with transportation to some power plants in Texas as well as in Oklahoma, what happened with <unk> kind of.

Some folks up and Thats what were kind.

Advertising for a while.

You don't lock in demand charge or reserve space storage and pipeline capacity you could be in trouble when times are tight. So we have been successful some of those deals are three to five years a lot of our storage.

Contract, maybe as low as a year or two I won't get into a lot of specifics.

Competitive reasons, but we've got a wide variety of customers in a wide variety of needs and then of course whatever.

Merchant capacity is available we have got an optimization team that capitalizes on that value when those opportunities arise.

Alright, thanks, so much.

Yes.

Our next question comes from Mark <unk> with Barclays. Please go ahead. Thanks.

Good afternoon.

Just to start wondering if you could share your latest thoughts on a potential C corp currency and if thats something that could be on the table here in 2023.

Yes, Mark this is Tom long.

We do have.

A team that's working on that.

I guess the way I would tell you is that we are spending.

Quite a quite a bit of time on evaluating that.

We feel pretty good about probably a 2023, we're going to be a little bit careful about putting guidance out there right now, but it's something that we still think we still think makes a lot of sense and are spending a lot of timeline, but can't.

Can't really guide you any closer than that.

Great.

I appreciate that.

And then going back to when you announced the enabled transaction I believe at the time you referenced the opportunity to integrate.

Some of those GMP assets with your Gulf Coast Frac assets over time I was just wondering if you could give us an update on that or are we starting to see that here in 2023 years, thats still a little bit longer dated.

Hey, Mark this is Mackie, let me kind of break it down a little bit with the enable assets. Some of the things we have been able to do for example out in the Panhandle Western Oklahoma.

Been able to actually.

Shutting down a couple of smaller plants and move those at.

At much higher margins save a lot of operating costs.

With better return so theres been some synergies there theres also been synergies on connecting some of the enabled pipelines for example in North Louisiana too.

Our carpet still Lisa some of their Interstate pipelines, and then as far as connecting the dots between up.

Oklahoma and the Gulf Coast, Yes, we will be having the vast majority of the liquids that are the tailgate of enables cryo will be delivered to our fractionated when those contracts run out in a couple of years.

Got it I appreciate the time.

Okay.

Our next question comes from John Mckay with Goldman Sachs. Please go ahead.

Hey, Thanks for the time I appreciate it maybe I just wanted to talk about the Haynesville a little bit I know you've touched on a couple of other questions. So far.

But be curious to hear your view on what the basin looks like given where gas prices have gone.

What youre thinking for basin growth overall, and what that could mean for your gathering footprint, specifically and maybe for the opportunity to get more contracts on Gulf run.

Okay.

Hey, John This is Mackie again, yes, I did mentioned a minute ago, we have three Interstate 42 inch pipes 142 inch intrastate multiple other pipes, we connect cartilage repair Bill we know are connected from the.

The haynesville down to our trunk line system and Golden pass, so where we are.

So well positioned the reserves are there do we have a strong opinion of whether gas prices go below $2, where they'll keep drilling we don't know, but we do know that these wells come on at 50 or 60000, a day, you don't need a real high gas price to justify drilling those.

We haven't had any huge indications of slowdown in fact, where we're adding significant treating capacity in north Louisiana. So we believe that.

The reserves are going to grow and much of that volume is going to hit our system.

Alright, that's helpful. Thanks, maybe just a follow up on the Capex guide talked a little bit about potential.

NGL export Debottlenecking projects.

It wasn't clear is that in the current growth guide or is that something we'd see more in 'twenty four.

And then more broadly not I'm not trying to pin you down on the 24 number but is the 'twenty three capex level kind of.

A reasonable run rate to think about now that a lot of the bigger projects that rolled off.

I'll start this and then maybe Tom can follow.

Our flexible and expansion in our potential expansion up at Marcus Hook those are not in our guidance numbers.

However, as we alluded to last call and have been for a while we will expand its going to happen.

Wouldnt be surprised if we announce something by the next.

Call.

We have the volume to justify it we're just trying to make the most prudent decision I'll do we expand Nederland first do we expand Marcus hook first or with some of the successes in the negotiations going on do we expand boat.

So that is a very positive side of our business we've been.

Growing over the last five or six years enormously with the world has an insatiable desire for Ngls, we think thats kind of growth in many many years to come and we believe will play a bigger role than anybody else in the industry are meeting that demand. So we.

We do anticipate making some announcements.

In the fairly near future on expanding our export capacity.

And.

Scott I'm going to go ahead and jump in here too. This is Tom long as far as the second part of your question. There as you can see we gave the guidance of one six to $1 8 billion for for a company our size.

You can probably also appreciate that we've got a lot of opportunity. So that's really the number that we're starting the year here based upon projects. We've identified what we've talked about these other projects and you stated that correctly.

The other projects that have not got to.

We're not including in this so as those come along through the year, we will talk more about those which could impact that number but I think the.

I think the other thing too.

To make sure you stay focused on from a from a capex standpoint is that.

It doesn't include some of the some of the small M&A type of opportunities. So a lot of these a lot of this growth capital our projects right now that are pretty short builds we get good returns very good returns on them and at the same time, we get good good capital.

Returns on them in a shorter period of time, let's say less less than 12 months. So we're at where.

We're going to continue to focus on doing the things that need to strengthen the company and continue to grow it and so you will expect.

Much more to come with with the Capex that we're looking at so hey, John This is Matt add one more thing to keep in mind, we have built a franchise up there. We're the only company that can transport growth of LPG, we're the only company.

Sport through pipelines growth in ethylene we have the ability to increase our ethane capacity by three times, what will move today, we can more than double our LPG capacity. So when we're talking about expansion at Marcus Hook, we're going to have.

Decent good rate of return on those expansion expansion capital and then very little capital foresight pump stations to utilize existing capacity that's already in the ground.

Alright, that's great really clear I appreciate all the color.

Okay.

Our next question comes from Jean Ann Salisbury with.

Steve. Please go ahead.

How much do you anticipate that both Brian can physically.

Golden pass kind of online and are you getting paid for all contracts today.

Even before that.

Jean Ann this is Mackie again.

That contract has a foundation customer Golden pass, yes, they began paying demand charges first part of this year.

Actually ramp up later in the year and we will be fully utilized net pipeline as much as possible I believe we followed almost up to half a bcf a day actually physical volumes. In addition to the demand charges that will get go pass its are.

Expectations that that team will continue to fill that pipe up every bit of capacity is available until it begins being utilized by Golden pass.

As you know probably that's 165 Bcf of capacity that we can easily expand.

Yes that makes sense.

And then do you think on Lake Charles and the Pet Chem project.

It's somewhat dependent on each other in terms of the share that you are willing to take just hypothetically if one of them.

<unk> kind of not reached would that increase your appetite to take a greater share there or are you thinking.

Completely independent.

Yeah.

This is Tom long I'll chime in here first.

We look at them as independent they are not in the same same dialogue when we look at it in other words are our desire is to continue to look at market for all the products that we handle and so when you start looking at Pat can start looking at <unk>.

LNG you start have to start looking at the upstream benefits that we see and we think they both on a standalone basis.

It makes sense, we won't take them, we'll take them to EFI date, but they are independent.

Great. That's all for me thanks.

Our next question comes from Chase Mulvehill with Bank of America. Please go ahead.

Hey, good afternoon everybody.

Yes.

Quick question on the Midstream segment, obviously took a big step down in the fourth quarter.

Probably more so related to pumps.

But could you talk about how much in the fourth quarter that really reflected kind of spot commodity pricing versus.

What.

Further downside you might have as you kind of roll in lower commodity prices and I realize that you are using the strip for your guidance, but just trying to understand and level set things relative to the fourth quarter.

Yes. This is Tom long.

It is those pop contracts.

Yeah.

All of that as far as the way you described it but the midstream the midstream area is the area that we get or when you look at 2020, we did enjoy a lot of the higher higher commodity prices.

As we went through the year and saw that and that's the that's probably one of the segments that we continue to look at when we gave the guidance for 2023 that it is it is a lot about the pricing now remember we are still using that forward curve for 2023.

That's what we that's what we've got baked into it but we still remain very bullish on the volumes and what we're seeing and we're going to obviously capture all the value. We can continue to grow that segment.

Okay makes sense.

And you probably have a decent look into Canada.

Pet Chem demand.

We're starting to see kind of early signs.

I guess, a bottoming of pet Chem demand.

Potentially a pickup in the back half.

24.

Would be curious on your thoughts so.

Demand.

And you see that kind of the near term and maybe even the companies within them.

Yes.

Hi, Chase, we started started losing yes, yes.

If I don't ask it again, but as everybody probably knows we do have the teams are working diligently on a very unique probably one of the most flexible.

Projects, that's ever been built in the world and we are in a difficult time, we're in a very down cycles. There is really no spread similar to.

What's happening on a warrior, where theres just no spread it's hard to get companies commit. However, we are in dialogue with several equity partners, both of which will take a significant part.

Part of the yield out.

We do think it's a.

Our project at some point, we will get there.

It's tough timing right now based on kind of where the crack spreads are but to your point it is a cycle and maybe but.

You can start seeing maybe by the latter part of 2024, we start to see in the upside of that cycle and so as we kind of get deeper into 'twenty three different. This year, we are optimistic it will get more momentum and hopefully get that.

Okay, perfect I'll turn it over.

Our next question comes from Colton Bean with Tudor Pickering Holt. Please go ahead.

Afternoon, just shifting back to Gulf run you mentioned, the deliverability through zone, two and the trunk line I think the teams previously looked at extending the terminix beyond start to add downstream connectivity can you just update us on where you stand on that project and what you need to see to move forward.

You bet.

This is mackie again, we had an open season, well back not that far back, but last year and it was.

Turning really successful in regards to the demand. So we're looking at a bunch of things it doesn't take a lot of pipe to get down to connect our affiliated.

Company, FGT, which would help some of those customers. We also of course, we're looking at potentially expanding extending it down to lake Charles.

We can add compression only and add a bcf or it.

It may mean that Loopnet pipeline and building an entire new 42 inch not only down two trunk line, but also down to Florida and other of the intrastate pipeline. So as the volume growth out of the Haynesville as customers are looking for.

More gas not only on the Louisiana Gulf Coast, all the way to Florida, We do expect some of.

Significant expansions of development system.

Great and then Mac you back on the NGL export expansion can you just frame for us the scope that you are looking at at Nederland, and Marcus Hook I mean is that incremental refrigeration, mostly birth that youre looking at just trying to get a sense of the total capital that might be required.

At both.

Different tracks. This may take but generally both expansions right now would be 70000 barrels a day that would include both refrigeration and tanks both at Nielsen <unk>.

Great. Thank you.

Our next question comes from Michael.

Yes.

Custom Ano with Pickering energy. Please go ahead.

Hey, good afternoon, everyone.

Just had a couple of clarification questions if I could.

First on the <unk>.

Comment that you made Tom on the distribution increases.

You said that Youll look to increase them annually is it fair to assume that we're in a stable level here until January of 'twenty four.

Okay.

That's.

We're going to always evaluate these as <unk>.

Each quarter when the when the distribution is approved by the board, but wanted to make sure we communicated to the street that our our goal was to get back to about 22, we're obviously very very pleased to see it at a two times coverage ratio. When you. When you look at the fourth quarter is what I'm, referring to but it's something that we're going.

Probably get back into the kind of the normal evaluations on an annual type basis.

Clearly when you look at.

Once again, we kind of look at the capital allocation of the debt continue to bring the debt down but also these projects we're talking about.

I know I've said already earlier on this call, but we're going to continue to look at these good projects to continue to strengthen the company, but it's really more on an annual basis that we'll be looking at at some type of some type of an evaluation as to where we are so.

Okay, Yes.

That's very clear.

And then also to clarify on that the midstream commentary from earlier.

Was there any.

Mike offsetting benefits in other segments from the lower.

Maybe like pop realizations in midstream I guess like did the intrastate segment benefit from.

<unk> et cetera that there was kind of some puts and takes there across.

The franchise.

This is Mac.

Hard to answer that question, but if you just reflect and look at our results.

As we said.

In every segment, we hit records so yes.

Midstream might have got a little bit tighter in GOP, maybe not as strong or maybe you had this year.

That's kind of the advantage of inter transfer we're so diversified in all the different aspects from crude NGL.

Midstream to our intra and interstate pipelines and so.

For example.

We hit record volumes of silver.

Inter states as.

As well as other of our pipeline system. So sure there is.

There is offsets with.

Some of our segments may struggle like midstream certainly that's offset many times, but maybe our crude business.

NGL business.

Okay got it thats helpful.

Okay.

I'm sorry.

Do you have another question I'll say that's helpful. That's all for me.

Okay. This concludes our question and answer session I would like to turn the conference back over to Tom long for any closing remarks.

Oh you bet.

Again, thank all of you for joining us today.

Another great year, we've delivered.

We would be remiss, if we didn't think the all of the team members of energy transfer for delivering another great year into getting our balance sheet back to where it needs to make our financial flexibility.

Didn't just happen by accident so.

Huge compliment to the entire energy transfer team and we can't Thank all of you enough for your continued support and we look forward to talking to you all of you in the near future.

Okay.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

[music].

CEO . Please go ahead.

Thank you operator, and good afternoon, everyone and welcome to the energy transfer fourth quarter 2022 earnings call.

As a reminder, we will be making forward looking statements within the meaning of section 20 <unk>.

The 17th.

I'll also refer to adjusted EBITDA, and distributable cash flow or DCF, both 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 going over our financial results for full year 2022, we generated adjusted EBITDA of $13 1 billion, which reflects continued growth over 2021 and as a partnership record.

Attributable to the partners of energy transfer as adjusted was $7 4 billion, which.

Which resulted in excess cash flow after distributions of approximately $4 4 billion.

On an incurred basis, we had excess DCF of approximately $2 $4 billion after distributions of $3 $1 billion and growth capital of approximately $1 9 billion.

In addition, we exported a record amount of Ngls out of our Nederland terminal in 2022, and we expect our exports to continue to grow into 2023.

DCF attributable to the partners as adjusted was $1 9 billion.

Compared to $1 6 billion for the fourth quarter 2021.

This resulted in excess cash flow after distributions of approximately $965 million.

On an incurred basis, we had excess DCF of approximately $360 million after distributions of $945 million and growth capital of approximately $605 million.

On January 25th we announced a quarterly cash distribution of $30.05 per common unit or $1 22 on an annualized basis.

This distribution represents a 75% increase over the fourth quarter of 2021, and as a 15% increase over the third quarter of 2022.

With this recent increase we've now restored our distribution level to where it was in the first half of 2020.

Take holders.

Future distribution increases will be evaluated on an annual basis, while balancing energy transfer's leverage targets growth opportunities and potential unit buybacks.

As of December 31, 2022, the total available liquidity under our revolving credit facilities was approximately $4 2 billion.

Now turning to our results by segment for the fourth quarter I'll start with NGL and refined products adjusted EBITDA was $928 million compared to $739 million for the same period last year. This change was primarily due to higher transportation fractionation and terminals serve.

<unk> margins and the recognition of gains of hedged NGL inventory <unk>.

NGL transportation volumes on our wholly owned and joint venture pipelines increased to a record 2 million barrels per day compared to $1 9 million barrels per day for the same period last year.

This increase was primarily due to higher volumes from the Permian and Eagle Ford regions as well as on our NGL pipelines that deliver into our Nederland terminal.

And our average fractionated volumes set a new partnership record, averaging 962000 barrels per day compared to 895000 barrels per day for the fourth quarter of 2021.

In fact during the fourth quarter of 2022 single day fractionation throughput at mountain Bellevue reached more than 1 million barrels for the first time in our partnerships history.

Volume commitments from the initial term in 2022, we loaded nearly 43 million barrels of ethane out of Nederland and.

And for full year 2023, we expect to load more than 60 million barrels.

In total we continue to export more ngls than any other company or country with our percentage of worldwide NGL exports remaining at approximately 20% of the world market.

For midstream adjusted EBITDA was $632 million compared to $547 million for the fourth quarter of 2021.

Gather gas volumes were at a record $19 4 million <unk> per day compared to $14 8 million <unk> per day for the same period last year.

Excluding enable and Woodford Express.

Gathered gas volumes on our legacy assets were up 8% over the same period last year.

Finery utilization and higher export demand as well as the addition of the enable assets in December of 2021.

Crude oil transportation volumes increased to $4 3 million barrels per day compared to three 8 million barrels per day for the same period last year.

Interstate assets.

Volumes increased 33% over the same period last year and utilization on many of our Interstate pipelines, including trunk lines Tiger FGT southeast supply header and Rover remains high.

And for our intrastate segment, adjusted EBITDA was $433 million compared to $274 million in the fourth quarter of last year.

This was primarily due to higher pipeline and storage optimization opportunities.

Now looking at recent developments on our ongoing growth projects.

I'll start with an update on our Lake Charles LNG project.

We view these two factors as key drivers towards securing additional long term LNG offtake agreements.

LNG market along the Gulf Coast is currently extremely competitive.

Given this level of competition it is taking us longer to reach than originally expected, but we are optimistic that we will bring this project to FID, we continue making progress on all aspects of the project and are working hard to sign up more customers and we will share additional information as it becomes available.

Okay.

Turning to our Nederland and Marcus Hook export terminals in November 2022, we completed dredging at Marcus Hook to increase the depth.

Evaluating next steps and hope to provide more details on this opportunity in the near future.

We also expect to approve an optimization project at Marcus Hook that would add incremental ethane refrigeration and storage capacity.

<unk> demand both in the U S as well as from overseas customers continues to increase we are firm believers that there will be significant growth in international demand for many years to come.

Next construction of our Frac eight continues as scheduled and.

And we expect it to be in service in the third quarter of 2023 Mr.

This addition will bring our total Mont Belvieu fractionation capacity to approximately 115 million barrels per day.

This brings our total underground NGL storage capacity at Mont Belvieu to approximately 60 million barrels.

Out in the Permian in December we placed our 200 million cubic foot per day Grey Wolf processing plant into service and it is already ramping up more quickly than anticipated as a reminder, this plant which is located in the Delaware basin is supported by new commitments and growth from existing customer.

Contracts.

Instruction continues on the bird plant, our <unk> 200 million cubic foot per day processing plant in the Delaware Basin. This plant remains on schedule to be in service in the second quarter of 2023.

In addition, we continue to evaluate the necessity and potential timing of adding another processing plant in the region.

Connecting some of the most prolific natural gas producing regions in the U S with the LNG export market.

We were pleased with the results of the open season and customer discussions are ongoing which will likely necessitate additional facilities beyond the initial design of 165 Bcf per day.

We are already utilizing a significant portion of selling one capacity on Gulf run and we've added additional customer commitments through zone, two which is being delivered into our trunk line pipeline.

And look forward to sharing any significant updates on these potential projects at the appropriate time.

On the alternative energy front, we continue to make progress on our carbon capture and storage project with capture point.

That is related to our north Louisiana processing plants, the class six permit for the sequestration site.

It was filed by capture point with the EPA in June of 2022.

We also recently executed a letter of intent with oxy related to oxy as Magnolia hub and Alan parish, Louisiana North of the Lake Charles Industrial complex.

Pursuant to the letter of intent energy transfer and Oxy are working together to obtain long term commitments of cotwo from the industrial customers and the Lake Charles Louisiana area.

If this project reaches FID.

Energy transfer would construct a seal to pipeline to connect the customers to oxy is sequestration site and Alan parish, Louisiana.

<unk> filed applications with the EPA for two class six injection wells in 2021, Oxy is a leader in the Ccs sector.

And we're pleased to be working with them to make this project successful.

In addition, we're evaluating numerous opportunities to capture and either utilized or store the <unk>.

<unk> across our systems.

For full year 2023, we expect growth capital expenditures to be between one six and $1 8 billion.

Which will be spent primarily in the midstream NGL and refined products and Interstate segments.

As capital includes projects that will address growing demand like Frac aid at Mont Belvieu, the bare processing plant in the Permian basin compression and optimization projects on existing pipelines, new treating capacity in the haynesville additional gathering and compression build out in the Permian improved.

<unk> and emission reduction work.

A significant amount of our 2023 capital spend is comprised of projects that are expected to be online and contributing cash flow before the end of 2023 at very attractive returns.

Now for our 2023 adjusted EBITDA guidance.

Given the continued domestic and international demand for our products and services.

The ability of our base business to operate through various market cycles as well as our market outlook for the year, we expect our adjusted EBITDA to be between $12 9 billion and $13 3 billion.

Our business continues to provide stable cash flows and opportunities for optimization and expansion and in 2023, we expect utilization in all of our core segments to increase.

With the current forward curve for commodity prices and spreads our guidance does not assume the same upside benefits from pricing and spreads that we experienced in 2022.

As a result of our commitment to strengthening our balance sheet throughout 2022, we entered 2023 and a much stronger financial position and we expect to maintain our leverage target range of four to four five times, we will continue to place emphasis on strategically allocated cash flow in a manner that.

Best positions us to further improve our financial flexibility and leverage invest in high returning growth projects and return value to unitholders.

We remain bullish about the future of our industry and the growing worldwide demand for crude oil natural gas and natural gas liquids and refined products.

This concludes our prepared remarks operator, please open the lineup for our first question.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Jeremy.

Net with JP Morgan. Please go ahead.

Jeremy you might be muted.

Yes.

Pardon me.

Okay.

Jeremie Your line is now live.

Yeah good afternoon.

That's helpful to be on mute it. Thank you.

Maybe just going to start off here want to go to the Permian.

And kind of get a high level thoughts as you see it with regards to based on logistic needs and Permian gas takeaway has been in focus.

And we've seen volatility in wahhab prices. It just wondering what that means for for this year.

What's kind of embedded into the guidance, but more so I guess longer term, how you see based on the aggressive evolving and future opportunities for <unk>.

Along these lines, particularly as it relates to possible timing for a four year development.

Hey, Jeremy this is mackie.

When we think about the <unk>.

Permian Basin, probably one of the most prolific basins in the world we.

We love looking at the maps because as you know we have inter and intrastate pipelines come in every direction and out of that area.

Including three NGL pipelines and then of course.

Some significant pipeline capacity across the state.

As you know and everybody knows on this call Theres been.

<unk> growth in the natural gas volumes out of the Permian.

Theres been expansions or continue to be compression expansions or the 42 inch getting built and then about this time last year, we kicked off warrior.

Starting to get some momentum and we continue to have momentum. So we don't know when the next <unk>.

It will be announced coming out of the <unk>.

Permian Basin, we do believe it will be ours when it happens.

Just a quick update on those volumes we.

We have contracted about 25% to 30% of what we need to get <unk>, we're talking to another at least $50 to 60% what would be needed. It is a slow process based on what you. Just said when you have got negative spreads would have been higher than <unk> got.

It seems like these exports so looking for diversity of supply.

The Haynesville and also maybe kind of more connectivity into Texas and the Permian just wondering how you see that unfolding over time and what opportunities that could present ETE.

After binding enable we now have three I'm.

I am sorry for 42 inch pipes in North, Louisiana, we have connections from Carthage to parity Bill in our Gulf run, we connect almost to the Gulf Coast pipeline. So, we're so well positioned both to feed our own LNG project.

Should we get that too.

<unk> of our systems across.

The south.

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

Thank you.

Our next question comes from Brian Reynolds with UBS. Please go ahead.

Hi, good afternoon, everyone maybe to start off on just on just the guidance.

<unk> kind of limited growth year over year based off of the presentation, where you put out some puts and takes with commodity declines offset by volume growth. So I was just curious if you could perhaps just unpack the base assumptions, maybe around the commodity deck and then as well just high level view on Permian and Haynesville growth to help us square the guidance. Thanks.

Okay, you bet, Brian This is Tom long.

Really when you look at 2022 obviously it was it was a great year for US again with the results that you are.

Sure.

Given to you right now, but when you really look at the volumes do you remember we started off the year with our guidance of about 11, 8% to $12 $2 billion. When you looked at it and then we saw the prices start spiking up through the year with the conflict.

Kurt over and over in Ukraine, but likewise, when we got to the first quarter in our first quarter call. We talked about the optimization opportunities that our comm ops group, we're able to achieve and we said that was probably two 225 million to $250 million. So it gave us a real shot in the arm.

As well as in the prices and as we continued through the year, if you're comparing 2022 results with what we've got in the guidance for 2023, Youre going to have about probably $4 million to $600 million that was coming just from the what we call the price and the spreads that we saw so the.

<unk> the last part of your question I think as far as the shop assumptions go we're pretty much using the forward curve, we're staying in kind of the down the middle of the fairway.

Hopefully that gives you a little bit of a bridge of where we are so we're very excited with what we've been able to achieve with the.

With the various projects are various assets that are coming online that we continue to see as well as the volumes. So.

We're obviously very.

Very excited to be able to.

But put numbers of the 12 nine to 13 313.

$13 3 billion.

Great I appreciate the feedback maybe as my follow up I. Appreciate some of the color on the prepared remarks around around like a lake Charles LNG, just maybe taken a little bit longer than expected I'm curious if you could just talk a little bit more about one just the equity interest in the project to to Spa contracting it seems like broadly speaking, it's very hard to.

Yes.

You bet Ryan this is mackie again.

And you hit the nail on the head.

Taken us longer than we had anticipated it is extremely competitive out there.

The.

Need for natural gas for many years to come is out there.

International customers throughout that are looking for suppliers, especially reliable.

Cheaper gas supplies in the U S, but it's extremely competitive and we are disappointed we're not further along and signing up customers, but even as we speak we have Tom Mason and his team were actually over there for on a two week trip meeting with customers some of which were down the road quite a ways on consummating, new deals, which will certainly make public so we're worth.

And hard on that front.

We've got to work cut out for US we still believe we have the best project.

For a number of reasons, especially with the ability to feed it.

Basins. So we're still very excited about it on the EPC front, we have received some of our cost and over the next 60 days.

90 days, we're going to fine tune those we're going to put.

To get a better understanding about a risk and mitigation of those risks, but but really our focus right now is on getting the customers.

And we've got a great effort on that and we still remain optimistic that we will get it.

Great appreciate the color I'll leave it there until your evening.

Sure.

Our next question comes from Michael Brown with Wells Fargo. Please go ahead.

Hi, Thanks, Good afternoon, everyone. So maybe just wanted to talk about start with <unk>.

Capital allocation for 2023.

Tom in your prepared remarks, you seem to indicate that.

Leveraging our is it continues to be a priority. So I'm wondering if you're thinking that you want to push towards the lower end of that four to four five.

Leverage target and then how should we think about dividend growth rate in 2023, and then anything on buybacks. Thanks.

Yes, good afternoon Michael.

I'll start I'll start with this.

When you are when you really look at it we have been just absolutely.

Just more more than pleased if you will that we've been able to get the distributions back up to about 22 really when you look at a lot of the distribution cuts that were made back back that year.

We're very proud with what we've been able to achieve I think Rob.

Probably one of the few that we're able to get it back up to the to the pre precut levels. So when you when you really look at the allocation, we're going to you're awarded it well, we're going to continue to probably.

Keep a lot of financial flexibility and some dry powder, which means we will keep it at the lower end of that four to four five so we'll continue to focus on bringing that down as far as the leverage ratio. When you really look at the capital projects that we've talked about here and that we start off with this capex number of where we are we're going to continue.

Yeah.

To look at.

Acquisitions, and so when you when you focus on that and you see where we kind of what we did in 2022 with some of the smaller type acquisitions.

The one six to $1 eight does not include anything that might come along.

On the consolidation front, so we're going to allocate dollars to the continued growth of the company and then third we're.

Going to look at returning capital to the unitholders and that we'll be evaluating the distributional levels like I mentioned in the kind of the prepared remarks that.

We're going to be looking at that distribution more more.

Annual type basis.

Answering your question.

Hey, Matt this is mackie.

Got the total of about 150 bcf throughout the country of storage.

So everything kind of storage.

These are little bit different.

We have been able to consummate over the past five or six months.

Some storage related deals with transportation to some power plants in Texas as well as in Oklahoma, what happen with Euro kind of.

What some folks up.

Advertising for a while if you if you don't.

Lock in demand charge or our reserves base storage and pipeline capacity you could be in trouble when times are tight. So we have been successful some of those deals are three to five years a lot of our storage.

Contracts may be as low as a year or two won't get a lot of specifics.

Competitive reasons, but we've got a wide variety of customers in a wide variety of needs and then of course whatever.

Capacity is available we have got an optimization team that capitalizes on that value when those opportunities arise.

Alright, thanks, so much.

Yes.

Our next question comes from Mark Sollecito with Barclays. Please go ahead.

Thanks. Good afternoon, maybe just to start wondering if you could share your latest thoughts on a potential C Corp currency and if thats something that could be on the table here in 2023.

Yes, Mark this is Tom long, we do have.

A team that's working on that.

The way I would tell you is that we are spending.

Quite a quite a bit of time on evaluating that.

And are spending a lot of time on it but.

Can't really guide you any closer.

Great.

No I appreciate that.

And then going back to when you announced the enabled transaction I believe at the time you referenced the opportunity to integrate.

Some of those GMP assets with your Gulf Coast Frac assets overtime. So I was wondering if you could give us an update on that or are we starting to see that here in 2023 years, thats still a little bit longer dated.

Hey, Mark this is Mackie, let me kind of break it down a little bit with the enable assets. Some of the things we have been able to do for example out in the Panhandle Western Oklahoma.

Been able to actually.

Shut down a couple of smaller plants and move those at.

Much higher margins save a lot of operating costs.

With better return so theres been some synergies there theres also been synergies on connecting some of the enabled pipelines for example in north Louisiana to our carpet still Lisa some of their Interstate pipelines and then as far as connecting the dots between.

Oklahoma and the Gulf Coast.

Yes.

We will be having the vast majority of the liquids that are the tailgate of enables.

<unk> will be delivered to our fractionated when those contracts run out in a couple of years.

Got it I appreciate the time.

Yes.

Our next question comes from John Mckay with Goldman Sachs. Please go ahead.

Hey, Thanks for the time I appreciate it.

I just wanted to talk about the Haynesville, a little bit I know you've touched on a couple of other questions. So far.

But be curious to hear your view on what the basin looks like given where gas prices have gone.

Youre thinking for basin growth overall, and what that could mean for maybe your gathering footprint, specifically and maybe for the opportunity to get more contracts on Gulf run.

Okay.

Trunk line system and Golden pass.

We're so well positioned the reserves are there do we have a strong opinion of whether gas prices go below $2, where they'll keep drilling.

Don't know, but we do know that these wells come on at 50 or 60000, a day, you don't need a real high gas price to justify drilling those.

We haven't had any huge indications of slowdown in fact.

We're adding significant treating capacity in north, Louisiana, So we believe that.

The reserves are going to grow and much of that volume is going to hit our system.

Alright, that's helpful. Thanks, maybe just a follow up on the Capex guide talked a little bit about potential.

NGL export Debottlenecking projects.

It wasn't clear is that in the current growth guide or is that something we'd see more in 'twenty four.

And then more broadly I'm not trying to pin you down on the 24 number but is the 'twenty three capex level kind of.

A reasonable run rate to think about now that a lot of the bigger projects that rolled off.

I'll start this and then maybe Tom can follow but yes.

Our flex for expansion in our potential expansion up at Marcus Hook those are not in our guidance numbers.

However, as we alluded to last call and have been for a while we will expand its going to happen.

Wouldnt be surprised if we announce something by the next.

Call.

So that is a very positive side of our business we've been.

Growing over the last five or six years enormously with the world has an insatiable desire for Ngls, we think thats kind of growth in many many years to come and we believe we will play a bigger role than anybody else in the industry are meeting that demand. So.

We do anticipate making some announcements in.

In the fairly near future on expanding our export capacity.

And.

John I'm going to go ahead and jump in here too. This is Tom long as far as the second part of your question. There as you can see we gave the guidance of one six to $1 8 billion for for a company our size.

The other projects that have not got to.

We're not including in this so as those come along through the year, we will talk more about those which could impact that number but I think the.

I think the other thing too.

To make sure you stay focused on from a from a capex standpoint is as that.

Returns on them in a shorter period of time, let's say less less than 12 months. So we're at where we're going.

Continue to focus on doing the things that need to strengthen the company and continue to grow it and so you will expect.

Much more to come with with the Capex that we're looking at so hey, John This is Matt to add one more thing to keep in mind, we have built a franchise up there. We're the only company that can transport growth of LPG. We're the only company to transport through pipelines growth in ethylene we have the ability to increase our ethane capacity by.

Three times, what will move today, we can more than double our LPG capacity. So when we're talking about expansion at Marcus Hook, we're going to have a decent good rate of return on those expansion expansion capital and then very little capital for safe pump stations to utilize existing capacity that's already in the ground.

Alright, that's great really clear I appreciate it.

Color.

Okay.

Our next question comes from Jean Ann Salisbury with Bernstein. Please go ahead.

Okay and how much.

Do you anticipate that both Brian can physically well until Golden pass kind of online and are you getting paid for all contracts today.

Even before that.

Jean Ann this is Mackie again.

That contract has a foundation customer Golden pass, yes, they began paying demand charges first part of this year.

Actually ramp up later in the year and we will be fully utilized net pipeline as much as we possibly can I believe we flowed almost up to half a bcf a day actually physical volumes. In addition to the demand charges that will get go pass its are.

Expectations that that team will continue to fill that pipe up and every bit of the capacity is available until it begins being utilized by Golden pass.

As you know probably that's 165 Bcf of capacity that we can easily expand.

Yes that makes sense.

And then do you think on Lake Charles and the Pet Chem project and thanks.

So Mike.

And then on each other in terms of the share that you are willing to take just hypothetically if one of them.

<unk> kind of not reached with.

Would that increase your appetite to take a greater share.

Thank you Vanessa.

Completely independent.

Yeah.

This is Tom long I'll chime in here first.

Look at them as independent or not in the same same dialogue when we look at it in other words are our desire is to continue to look at market for all of the product.

We handle and so when you start looking at <unk> looking at LNG. You start you have to start looking at the upstream benefits that we see and we think they both on a standalone basis.

It would make sense.

Take them, we'll take them to EFI date, but they are independent.

Great. That's all for me thanks.

Our next question comes from Chase Mulvehill with Bank of America. Please go ahead.

Okay.

Hey, good afternoon, everybody, so I guess.

A quick question on the Midstream segment, obviously took a big step down in the fourth quarter.

Probably more so related to pumps.

But could you talk about how much in the fourth quarter that really reflected kind of spot commodity pricing versus.

What what further downside you might have.

You kind of roll in lower commodity prices and I realize that you are using the strip for your guidance, but just trying to understand and level set things relative to the fourth quarter.

Yes. This is Tom long.

It is those pop contracts.

Houston.

You nailed that as far as the way you described it but the midstream the midstream area is the area that we did it when you look at 2022, we did enjoy a lot of the higher higher commodity prices as we.

We still remain very bullish on the volumes and what we're seeing and we're going to obviously capture all the value. We can to continue to grow that segment.

Okay makes sense.

And you probably have a decent look into kind of.

Pet Chem demand.

We're starting to see kind of early signs.

I guess, a bottoming of pet Chem demand.

Potentially a pickup in the back half.

44.

I'd be curious on your thoughts so pet chem demand.

And you see that kind of in the near term and maybe moving up as we can.

Yes.

Hi, Chase, we started started losing yes, yes.

If I don't ask it again, but as everybody probably knows we do have the team to work diligently on a very unique probably one of the most flexible.

Projects, that's ever been built in the world and we are in a difficult time, we're in a very down cycles. There is really no spreads similar to.

Or what's happening on a warrior, where theres just no spreads and it's hard to get companies commit. However, we are in dialogue with several equity partners, both of which will take a significant.

Part of the yield out.

We do think it's a project at some point, we will get there.

It's tough timing right now based on kind of where the crack spreads are but to your point it is a cycle.

Hi.

You can start to seeing maybe by the latter part of 2024, we start to see in the upside of that cycle and so as we kind of get deeper into 'twenty three different. This year, we are optimistic that we'll get more momentum and hopefully get that.

Okay, perfect I'll turn it over thanks guys.

Our next question comes from Colton Bean with Tudor Pickering Holt. Please go ahead.

Afternoon shifting back to Gulf run you mentioned, the deliverability through zone, two and the trunk line I think the teams previously looked at extending the terminix beyond starts to add downstream connectivity can you just update us on where you stand on that project and what you need to see to move forward.

You bet.

This is mackie again, we had an open season well back.

As far back, but last year and it was.

Turning really successful in regards to the demand so.

We're looking at a bunch of things it doesn't take a lot of pipe to get down to connect our affiliated.

Company, FGT, which would help some of those customers. We also of course, we are looking at potentially expanding extending it down to lake Charles.

We can add compression only and add a bcf or it.

More gas not only on the Louisiana Gulf Coast, all the way to Florida, We do expect some of.

Significant expansions of development system.

Great and then Maggie back on the NGL export expansion can you just frame for us the scope that you are looking at at Nederland, and Marcus Hook I mean is that incremental refrigeration, mostly birth that youre looking at just trying to get a sense of the total capital that might be required.

At both.

Different tracks. This may take but generally both expansions right now would be 70000 barrels a day that would include both refrigeration and tanks both at Nielsen <unk>.

Great. Thank you.

Our next question comes from Michael.

Yes.

Cuts Amanda with Pickering Energy. Please go ahead.

Hey, good afternoon, everyone.

Just had a couple of clarification questions if I could.

First on the comment that you made Tom on the distribution increases.

You said that Youll look to increase them annually is it fair to assume that we're in a stable level here until January of 'twenty four.

Okay.

That's.

We're going to always evaluate these is each quarter when the when the distribution is approved by the board, but wanted to make sure we communicated to the street that our our goal was to get back to about 22, we're obviously very very pleased to see it at a two times coverage ratio. When you. When you look at the fourth quarter is what I'm referring to.

But it's something that we're going to <unk>.

Probably get back into the kind of the normal evaluations on an annual type basis.

Clearly when you look at.

Once again, we kind of look at the capital allocation of the debt continue to bring the debt down but also these projects we're talking about.

I know I've said already earlier on this call, but we're going to continue to look at these good.

<unk> continued to strengthen the company, but it's really more on an annual basis that we'll be looking at some type of some type of an evaluation as to where we are so.

Okay.

That's very clear.

And then also to clarify on that the midstream commentary from earlier.

Was there any.

Offsetting benefits in other segments from the lower.

Maybe like pop realizations in midstream I guess like did the intrastate segment benefit from lower raw et cetera that.

There was kind of some puts and takes there across the.

Franchise.

This is mackie.

Hard to answer that question, but if you just reflect and look at our results.

As we said.

In every segment, we hit records so yes.

Midstream might have got a little bit tighter in GOP might not as stronger or maybe you had this year.

It's kind of the advantage of energy transfer, we're so diversified in all the different aspects from crude NGL to.

The midstream to our intra and interstate pipelines and so.

For example.

Hit record volumes of silver.

Her states.

As well as other of our pipeline system. So sure there is.

There's offsets.

Some of our segments may struggle a bit like midstream certainly that's offset many times, maybe our crude business.

NGL business.

Okay got it thats helpful.

Okay.

I'm sorry.

Do you have another question I'll say that's helpful. That's all for me.

Okay. This concludes our question and answer session I would like to turn the conference back over to Tom long for any closing remarks.

Oh you bet.

Again, thank all of you for joining us today.

Another another great year, we've delivered in <unk>.

Remiss, if we didn't think the all the team members of energy transfer for delivering another great year into getting our balance sheet back to where it needs to make our financial flexibility.

It didn't just happen by by coincidence or accident. So.

Huge compliment to the entire energy transfer attainment, we can't thank all of you enough for your continued support and we look forward to talking to you all of you in the near future.

Okay.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Q4 2022 Energy Transfer LP Earnings Call

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