Q4 2023 Energy Transfer LP Earnings Call

Good afternoon, and welcome to the energy transfer fourth quarter 2023 earnings Conference call.

Operator: Good afternoon, and welcome to the Energy Transfer Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode.

Participants will be in listen only mode.

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Operator: To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Tom Long. Please do so.

Please note that this event is being recorded.

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

Yes.

Thomas E. Long: Thank you operator, and good afternoon, everyone and welcome to the energy transfer fourth quarter 2023 earnings call.

Thomas E. Long: Thank you, operator, and good afternoon, everyone, and welcome to the Energy Transfer fourth quarter 2023 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 21E of the Security Exchange Act of 1934. 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, 2023, which we expect to file this Friday, February 16. I'll also refer to Adjusted EBITDA and Distributable Cash Flow, or DCF, both of which are non-GAAP financial measures.

Thomas E. Long: 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.

Thomas E. Long: 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 details in our Form 10-K for the full year ended December 31, 2023, which we expect to follow this for.

Speaker Change: Alrighty February the 16th.

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 <unk>.

Thomas E. Long: You'll find a reconciliation of our non-GAAP measures on our website. Let's start today by going over our financial results. For the full year 2023, we generated adjusted EBITDA of $13.7 billion, which is up 5% over 2022 and is a partnership record. DCF, a triple to the partners of energy transfer as adjusted, to $7.6 billion, which resulted in excess cash flow after distributions of approximately $3.6 billion

Speaker Change: Let's start today by going over our financial results for the full year 2023, we generated adjusted EBITDA of $13 7 billion, which is up 5% over 2022 and as a partnership record.

Speaker Change: DCF attributable to the partners of energy transfer as adjusted.

Speaker Change: $6 billion, which result in excess cash flow after distributions of approximately $3 6 billion.

Thomas E. Long: Operationally, we moved record volumes across all of our segments for the year ended 2023, which included record volumes on our legacy assets before including contributions from assets acquired in 2023. In addition, we exported a record amount of total NGLs from our Nederland and Marcus Hook terminals in 2023. For the fourth quarter of 23, we generated adjusted EBITDA of $3.6 billion compared to $3.4 billion for the fourth quarter of 2022. In our base business, we had strong performances across our operations, which included record volumes through our NGL pipelines and fractionators, as well as record volumes in our crude oil and midstream segments. DCF attributable to the partners of ET as adjusted was $2 billion compared to $1.9 billion for the fourth quarter of 2022. This resulted in excess cash flow after distribution of approximately $970 million.

Speaker Change: Operationally, we moved record volumes across all of our segments for the year ended 2023, which included record volumes on our legacy assets before including contributions from assets acquired in 2023. In addition, we exported a record amount of total Ngls out of our Nederland.

And Marcus Hook terminals in 2023.

Speaker Change: For the fourth quarter of 2003, we generated adjusted EBITDA of $3 $6 billion compared to $3 $4 billion for the fourth quarter of 2022.

Speaker Change: And our base business, we had strong performances across our operations, which included record volumes through our NGL pipelines and fractionator as well as record volumes in our crude oil and midstream segments D.

Speaker Change: DCF attributable to the partners of <unk> as adjusted was $2 billion compared to $1 $9 billion for the fourth quarter of 2022. This resulted in excess cash flow after distributions.

Speaker Change: Of approximately $970 million.

Thomas E. Long: On January 25th, we announced a quarterly cash distribution of 31.5 cents per common unit, or $1.26 on an annualized basis. This distribution represents an increase of 3.3% from 30.5 cents paid in the fourth quarter of 2022. Last year, Energy Transfer's Senior Unsecured Credit Rating was upgraded by Standard & Poor's to BBB with a stable outlook. And last week, we were pleased to see that Fitch has also upgraded Energy Transfer's Senior Unsecured Credit Rating to BBB with a stable outcome. This continued third-party acknowledgment reiterates the emphasis we have placed on balancing growth while improving our balance sheet and reducing our leverage. And in 2023, we made meaningful progress toward reaching the low end of our leverage range. Based on our calculations of the rating agency's methodologies and pro forma for the full year of acquisitions, our leverage ratios are now in the lower half of our 4 to 4.5 target range.

Speaker Change: On January 25th we announced a quarterly cash distribution of $31.05 per common unit or $1 26 on an annualized basis.

This distribution represents an increase of three 3% from 30 and have since paid in the fourth quarter of 2022.

Speaker Change: Last year energy transfers senior unsecured credit rating was upgraded by standard and poor's to triple B with a stable outlook.

Speaker Change: And last week, we were pleased to see that Fitch has also upgraded energy transfer as senior unsecured credit rating to triple B with a stable outlook.

Speaker Change: This continued third party acknowledgment reiterate the emphasis we have placed on balancing growth, while improving our balance sheet and reducing our leverage and in 2023, we made meaningful progress towards reaching the low end of our leverage range.

Speaker Change: Just on our calculations of the rating agencies methodologies and pro forma for full year of acquisitions, our leverage ratios are now in the lower half of our board of four and a half target range.

Thomas E. Long: As of December 31st, 2023, the total available liquidity under our revolving credit facilities was approximately $3.56 billion. In the fourth quarter of 2023, we spent approximately $380 million on organic growth capital. And for full year 2023, we spent approximately $1.6 billion on organic growth capital, primarily in the midstream and NGL and refined product segments, excluding Sun and USA Compression CapEx. The reduction in capital relative to our most recent guidance is a result of deferring approximately $300 million from 2023 into 2024 due to project in-service timing needs. In January 2024, we issued $3 billion of aggregate principal amount of senior notes and $800 million of junior subordinated notes and used the proceeds to refinance existing indebtedness and for general partnership purposes.

Speaker Change: As of December 31, 2023, the total available liquidity under our revolving credit facilities was approximately $3 $5 6 billion.

Speaker Change: During the fourth quarter of 2023, we spent approximately $380 million one organic growth capital.

Speaker Change: And for full year 2023, we spent approximately $1 6 billion organic growth capital, primarily in the midstream and NGL and refined products segments, excluding sun and USA compression capex the reduction in capital relative to our most recent guidance is <unk>.

Speaker Change: <unk> of deferring approximately $300 million from 2023 into 2024 due to project in service timing needs.

Speaker Change: In January 2024, we issued $3 billion of aggregate principal amount of senior notes and $800 million of junior subordinated notes and used the proceeds to refinance existing indebtedness and for general partnership purposes. In addition proceeds were used to redeem all of our outstanding <unk>.

Thomas E. Long: In addition, proceeds were used to redeem all of our outstanding Series C and Series D preferred units. We completed this redemption on February 9th, and we expect to redeem all of our outstanding Series E preferred units by May of 2024. Now turning to our results by segment for the fourth quarter, I'll start with NGL and Refined Products. Adjusted EBITDA was $1 billion compared to $928 million for the fourth quarter of 2022.

<unk> C and series D preferred units, we completed this redemption on February the ninth and we expect to redeem all of our outstanding series a series a preferred units by May of 2024 now turning to our results by segment for the fourth quarter and I'll start with NGL and refined products adjusted EBITDA.

Speaker Change: <unk> was $1 billion compared to $928 million for the fourth quarter of 2022.

Speaker Change: This was primarily due to strong performances across our transportation storage terminal in fractionation operations as well as lower operating expenses.

Thomas E. Long: This was primarily due to strong performances in transportation, storage, terminal, and fractionation operations, as well as lower operating expenses. NGL transportation volumes increased 10% to 2.2 million barrels per day compared to 2 million barrels per day for the same period last year. This increase was primarily due to higher volumes from the Permian region and on our NGL pipelines that deliver into our needling terminal, as well as on the Mariner East pipeline system. Average fractionated volumes increased 16% to a partnership record 1.1 million barrels per day compared to 982,000 barrels per day for the same period last year. Total NGL export volumes grew 13% over the fourth quarter of 2022 and 18% over the full year 2022.

Speaker Change: NGL transportation volumes increased 10% to $2 2 million barrels per day compared to 2 million barrels per day for the same period last year. This increase was primarily due to higher volumes from the Permian region and on our NGL pipelines that deliver into our Nederland terminal as.

As well as on the Mariner East pipeline system <unk>.

Speaker Change: Average fractionated volumes increased 16% to a partnership record $1 1 million barrels per day compared to 982000 barrels per day for the same period last year.

Speaker Change: Total NGL export volumes grew 13% over the fourth quarter of 2022, and 18% over full year 2022.

Speaker Change: This was primarily driven by increased international demand for natural gas liquids for 2023, we loaded more than 61 million barrels of ethane out of Nederland, and nearly 27 million barrels of ethane out of Marcus hook for.

For 2023, we continued to export more ngls than any other company and maintained approximately 20% market share of worldwide NGL exports.

Thomas E. Long: This was primarily driven by increased international demand for natural gas liquids. In 2023, we loaded more than 61 million barrels of ethane out of Nederland and nearly 27 million barrels of ethane out of Marcus Hook. For 2023, we continue to export more NGLs than any other company and maintain approximately 20% market share of worldwide NGL exports. For midstream, adjusted EBITDA was $674 million compared to $632 million for the fourth quarter of 2022. We saw record throughput this quarter, which was primarily the result of the addition of the Crestwood assets, as well as higher volumes from existing customers in the Permian, South Texas, and Mid-Continent regions. However, the strong volume growth was partially offset by lower natural gas and NGL prices.

Speaker Change: For midstream adjusted EBITDA was $674 million compared to $632 million for the fourth quarter of 2022.

Speaker Change: We saw record throughput this quarter, which was primarily the result of the addition of the Crestwood assets as well as higher volumes from existing customers in the Permian, South, Texas and mid continent regions. The strong volume growth was partially offset by lower natural gas and NGL prices.

Speaker Change: Gathered gas volumes increased 5% to 23 million <unk> per day compared to $19 4 million Btu per day for the same period last year.

Speaker Change: For the crude oil segment, adjusted EBITDA was $775 million compared to $571 million for the fourth quarter of 2022.

Speaker Change: This was primarily due to higher volumes with several of our pipelines higher terminal throughput as well as the acquisitions of the Lotus and Crestwood assets in May and November of last year.

Thomas E. Long: Gathered gas volumes increased 5% to 20.3 million MMBTUs per day compared to 19.4 million MMBTUs per day for the same period last year. For the crude oil segment, adjusted EBITDA was $775 million compared to $571 million for the fourth quarter of 2022. This was primarily due to higher volumes on several of our pipelines, higher terminal throughput, as well as the acquisitions of the Lotus and Crestwood assets in May and November of last year. Crude oil transportation volumes increased 39% to a record 5.9 million barrels per day compared to 4.3 million barrels per day for the same period last year. This was a result of higher volumes on our Texas pipeline system and the Bakken and Bayou Bridge pipelines, increased crude oil gathering volumes, as well as the acquisitions of Lotus and Crestwood. However, without the additions of Lotus and Crestwood, adjusted EBITDA and crude oil transportation volumes would still have increased 16% and 8%, respectively, compared to the fourth quarter of 2022. In our interstate segment, Adjusted EBITDA was $541 million compared to $494 million for the fourth quarter of 2022.

Crude oil transportation volumes increased 39% to a record $5 9 million barrels per day compared to $4 3 million barrels per day for the same period last year. This was a result of higher volumes on our Texas pipeline systems, and the Bakken and Bayou Bridge pipelines increased crude oil gas.

Speaker Change: During volumes as well as the acquisitions of Lotus and Crestwood.

Speaker Change: Without the additions of Lotus and Crestwood, adjusted EBITDA and crude oil transportation volumes would still have increased 16% and 8% respectively compared to the fourth quarter of 2022.

In our Interstate segment, adjusted EBITDA was $541 million compared to $494 million for the fourth quarter of 2022. This increase was primarily due to placing the Gulf run pipeline into service in December of 2022, as well as higher contracted volumes or several of our wholly owned.

Speaker Change: And joint venture pipelines vol.

Speaker Change: Volumes increased 5% over the same period last year due to the Gulf run pipeline being placed into service as well as higher utilization on many of our Interstate pipelines, including Transwestern Rover and trunk line we.

Speaker Change: We continue to fully utilize zone, one capacity on Gulf run and we're also maximizing deliveries into our trunk line pipeline from some too.

Speaker Change: Our team continues to work on the next phase of a potential capacity expansion to facilitate the transportation of natural gas from northern Louisiana to the Gulf Coast based upon customer demand.

And for our intrastate segment, adjusted EBITDA was $242 million compared to $433 million for the fourth quarter of last year.

Thomas E. Long: This increase was primarily due to placing the Gulf Run pipeline into service in December of 2022, as well as higher contracted volumes on several of our wholly owned and joint venture pipelines. Volumes increased 5% over the same period last year due to the Gulf Run pipeline being placed into service, as well as higher utilization on many of our interstate pipelines, including Transwestern, Rover, and Trunk Line. We continue to fully utilize Zone 1 capacity on Gulf Run, and we are also maximizing deliveries into our trunk line pipeline from Zone 2. Our team continues to work on the next phase of a potential capacity expansion to facilitate the transportation of natural gas from northern Louisiana to the Gulf Coast based upon customer demand. And for our intrastate segment, adjusted EBITDA was $242 million compared to $433 million for the fourth quarter of last year.

Speaker Change: Benefits from new contracts from several of our Texas pipelines as well as lower operating expenses were more than offset by decreases from lower optimization opportunities.

Speaker Change: Now turning to our acquisition of Crestwood equity partners, which we completed in November of 2023 <unk>.

Speaker Change: Integration of the combined operations has been going very well the combination of these complementary assets will allow us to continue to provide flexibility reliable and competitive services for our customers as we pursue additional commercial opportunities utilizing our improved connectivity and.

Speaker Change: <unk> footprint.

Speaker Change: We now expect to generate approximately $80 million of annual cost synergies by 2026 with $65 million in 2024.

Speaker Change: This is before any additional anticipated benefits from financial or commercial synergies. We are in the process of identifying and evaluating a number of commercial and operational synergies that are expected to enhance the operational capabilities of our systems by improving efficiencies and increasing the utilization and prop.

Speaker Change: The ability of our combined assets.

Speaker Change: These synergies include optimizing our west, Texas processing capacity, given the newly acquired Crestwood plants as well as utilizing spare NGL pipeline capacity out of the Delaware Basin and working with producers in West, Texas, and New Mexico to provide additional water gathering solutions. We're also looking at opportunities.

Thomas E. Long: Benefits from new contracts on several of our Texas pipelines, as well as lower operating expenses, were more than offset by decreases from lower optimization opportunities. Now turning to our acquisition of Crestwood Equity Partners, which we completed in November of 2023. Integration of the combined operations has been going very well.

Speaker Change: To move more barrels into our Bakken pipeline system for transport to the Gulf Coast and in the northeast we are evaluating options to transition LPG products previously transported by truck into our Mariner East pipeline system.

Thomas E. Long: The combination of these complementary assets will allow us to continue to provide flexibility, reliable, and competitive services for our customers as we pursue additional commercial opportunities utilizing our improved connectivity and expanded footprint. We now expect to generate approximately $80 million of annual cost synergies by 2026, with $65 million in 2024. This is before any additional anticipated benefits from financial or commercial centers.

Speaker Change: Now turning to our growth projects and starting with our Nederland and Marcus export terminals. Our NGL terminals continue to benefit from increased demand from both in the U S as well as from international customers.

Speaker Change: To address this demand construction is underway on our expansion to the NGL export capacity at.

Speaker Change: At Nederland, and we expect to be finished driving piles by the end of the month.

Speaker Change: This expansion is expected to give us the flexibility to load various products based upon customer demand.

Thomas E. Long: We are in the process of identifying and evaluating a number of commercial and operational synergies that are expected to enhance the operational capabilities of our systems by improving efficiency and increasing the utilization and profitability of our combined assets. These synergies include optimizing our West Texas processing capacity given the newly acquired Crestwood plants, as well as utilizing spare NGL pipeline capacity out of the Delaware Basin and working with producers in West Texas and New Mexico to provide additional water gathering solutions. We're also looking at opportunities to move more barrels into our Bakken pipeline system for transport to the Gulf Coast. And in the Northeast, we're evaluating options to transition LPG products previously transported by truck into our Mariner East pipeline system.

Speaker Change: We continue to expect the project to be in service in mid 2025.

Speaker Change: In addition, we are building new refrigerated storage at Nederland, which will increase our butane storage capacity by 33% and we will double our propane storage capacity. This will further increase our ability to keep customers ships loaded home time.

Speaker Change: Also we recently closed on the acquisition of two pipelines one from Mont Belvieu to our Nederland terminal and one from Mont Belvieu to the ship channel. We expect to have term transportation commitments on the Mont Belvieu to Nederland pipeline in the near future, which will have the ability to flow at least 70000 barrels per day.

Speaker Change: Hey, there.

Speaker Change: This will provide much needed capacity for several products in high demand both internationally and domestically.

Speaker Change: And we are in discussions to provide transportation for potentially multiple products on the pipeline that extends from Mont Belvieu to Houston.

Speaker Change: And at our Marcus Hook terminal, we have commenced construction on the first phase of an optimization project that would add incremental ethane refrigeration and storage capacity. In addition, we have begun expanding our processing capacity at several of our existing 200 million cubic feet per day cryogenic processing plants.

Thomas E. Long: Now turning to our growth projects and starting with our Niederland and Marcus Export Terminals. Our NGL terminals continue to benefit from increased demand from both in the U.S. as well as from international customers. To address this demand, construction is underway on our expansion to the NGL export capacity at Nederun, and we expect to be finished driving piles by the end of the month. This expansion is expected to give us the flexibility to load various products based upon customer demand. We continue to expect the project to be in service in mid-2025. In addition, we are building new refrigerated storage at Nederland, which will increase our butane storage capacity by 33% and will double our propane storage capacity. This will further increase our ability to keep customers' ships loaded on time.

Speaker Change: And we see opportunities to add approximately 100 to 150 million cubic feet per day of processing capacity, and our west and South Texas regions at favorable capital cost when compared to building a new processing plant.

Speaker Change: In November 2023, we announced a heads of agreement or HOA with total energies.

Speaker Change: For crude offtake from our proposed believes Moreland offshore project additional customers remain very engaged and interested in our project recognizing the value of fully loading vlccs and the reduced execution risk that comes with repurposing existing underutilized assets.

Speaker Change: Next on an update for Lake Charles LNG project.

Speaker Change: As most of you are aware the Biden administration recently imposed a moratorium on the approval of LNG exports by the department of energy, while the Doa conduct studies to determine whether LNG exports are in the public interest.

Thomas E. Long: Also, we recently closed on the acquisition of two pipelines, one from Montbellevue to our Needlin terminal and one from Montbellevue to the ship channel. We expect to have term transportation commitments on the Montbellevue to Needlin pipeline in the near future, which will have the ability to flow at least 70,000 barrels per day. This will provide much needed capacity for several products in high demand, both international and domestic. And we are in discussions to provide transportation for potentially multiple products on the pipeline that extends from Mott Bellevue to Houston. And at our Marcus Hook Terminal, we have commenced construction on the first phase of an optimization project that would add incremental ethane refrigeration and storage capacity. In addition, we have begun expanding our processing capacity at several of our existing 200 million cubic feet per day cryogenic processing plants.

Speaker Change: The Biden administration stated that these studies would focus on the cumulative impact of LNG exports on climate change U S natural gas prices and the impact of LNG facilities on our local communities.

Speaker Change: The Doa most recently conducted similar studies in 2019 and based on the results of those studies. The Doa subsequently approved several LNG export projects.

Speaker Change: In light of the extremely low natural gas prices in the U S. Currently and the beneficial climate impacts from the use of natural gas compared to coal for power generation. It would be difficult to believe that these new studies wont continue to conclude that LNG exports are in the U S public interest.

Speaker Change: Lake Charles LNG applied for a new LNG export authorization in August of 2023 and requested approval by February of 2020 for.

Speaker Change: The recently announced moratorium on approvals of LNG export creates uncertainty as to when the dose studies will be completed and whether the criteria for approving LNG export projects will be changed.

Speaker Change: Despite these uncertainties Lake Charles LNG continues to pursue the development of the project and is extremely thankful for the continued support of its LNG customers.

Speaker Change: And now for an update on other projects on the Blue ammonia front, we are working with several companies to evaluate the feasibility of ammonia projects that would include the opportunity to supply and transport natural gas to the ammonia facility and to transport <unk> third part a sequestration.

Thomas E. Long: In total, we see opportunities to add approximately 100 to 150 million cubic feet per day of processing capacity in our West and South Texas regions at favorable capital costs when compared to building a new processing plant. In November 2023, we announced a Heads of Agreement, or HOA, with Total Energies for crude offtake from our proposed Blue Marlin offshore project. Additional customers remain very engaged and interested in our project, recognizing the value of fully loading VLCCs and the reduced execution risk that comes with repurposing existing underutilized assets. Next, an update on our Lake Charles LNG project. As most of you are aware, the Biden administration recently imposed a moratorium on the approval of LNG exports by the Department of Energy while the DOE conducts studies to determine whether LNG exports are in the public interest. The Biden administration stated that these studies would focus on the cumulative impact of LNG exports on climate change.

Speaker Change: <unk> sites. We're also looking at opportunities to provide other infrastructure services, including transport and sequestration.

Speaker Change: <unk> storage and deepwater marine loading.

Speaker Change: Property near our Lake Charles and Nederland facilities.

Speaker Change: Additionally, we are working on carbon capture and sequestration projects to our processing plants and treating facilities in north, Louisiana, South, Texas and West Texas.

We are evaluating other C O two pipeline projects that would connect two emitters to seal to sequestration site.

Speaker Change: Before moving to discuss our 2024 guidance, we wanted to quickly address another topic.

Our practice is not to comment on pending litigation. However, given that we have received a number of questions about the Louisiana pipeline matter, we would like to provide some important context recently several third parties approach to energy transfer about crossing various pipes, we own and operate in Louisiana, including three of our common carrier.

Speaker Change: <unk> gathering systems and other lines.

Speaker Change: These three parties proposed between 140, and 160 crossings as well as seeking to secured loan segments have proposed parallel pipe within our existing rights of way and Workspaces as a consequence, we requested certain technical information from these parties regarding these crossings too.

Thomas E. Long: U.S. natural gas prices and the impact of LNG facilities on local communities. The DOE most recently conducted similar studies in 2019. And based on the results of these studies, the DOE subsequently approved several LNG export projects. In light of the extremely low natural gas prices in the U.S. currently and the beneficial climate impacts from the use of natural gas compared to coal for power generation, it would be difficult to believe that these new studies won't continue to conclude that LNG exports are in the U.S. public interest. Lake Charles LNG applied for a new LNG export authorization in August of 2023 and requested approval by February of 2024.

Speaker Change: Allow us to evaluate their technical feasibility and potential issues between these new proposed pipes and our existing operations.

Speaker Change: The parties, making these requests largely rejected or ignored are very reasonable request instead on at least two occasions. They told us. They would began construction on these new pipes, whether we agreed to the crossings are not.

Speaker Change: At that point.

Speaker Change: We had no choice, but to enforce our property rights by filing legal actions to prevent these crossings pending our ability to evaluate the technical details of the crossing.

Speaker Change: In the process of enforcing our property rights one of their requesting parties has alleged that energy transfer is using unfair or anti competitive practices to block all pipeline crossings request in Louisiana and in effort to stifle competition and monopolize the pipeline capacity moving gas.

Thomas E. Long: The recently announced moratorium on approvals for LNG export creates uncertainty as to when the DOE studies will be completed and whether the criteria for approving LNG export projects will be changed. Despite these uncertainties, Lake Charles LNG continues to pursue the development of the project and is extremely thankful for the continued support of its LNG customers. And now for an update on other projects. On the blue ammonia front, we are working with several companies to evaluate the feasibility of ammonia projects.

Speaker Change: Gas from the Haynesville.

Speaker Change: And these.

Speaker Change: These practices are threatening the expansion of pipeline infrastructure in Louisiana.

Speaker Change: These statements are unfounded and falls in our opinion. These parties are skirting state and federal regulations and regulatory oversight.

Speaker Change: Seeking to quickly build large diameter pipe high pressure pipelines across state lines and calling them gathering.

Speaker Change: To this end we encourage you to read the submission we filed and docket number 84356 in the 40 <unk> Judicial District Court in Desoto parish, Louisiana, which set forth our positions on the facts and the law.

Thomas E. Long: That would include the opportunity to supply and transport natural gas to the ammonia facility and to transport CO2 to third-party sequestration sites. We're also looking at opportunities to provide other infrastructure services, including transport and sequestration, ammonia storage, and deep water marine loading on property near our Lake Charles and Nederland facilities. Additionally, we're working on carbon capture and sequestration projects at our processing plants and treating facilities in North Louisiana, South Texas, and West Texas. We are evaluating other CO2 pipeline projects that would connect CO2 emitters to CO2 sequestration. Before moving to discuss our 2024 guidance, we wanted to quickly address another topic. Our practice is not to comment on pending litigation.

Speaker Change: We do not want to litigate the matter on this earnings call.

Speaker Change: However, we want to underscore that energy transfer it takes very seriously its obligations to operated assets safely and reliably.

Speaker Change: Energy transfer is simply seeking to protect its legal property rights under the Louisiana law. Indeed, not a single court has found that ETE somehow acted in bad faith and defending its lawful property rights.

Speaker Change: Nonetheless, any pipeline that is unable to agree to terms on pipeline crossing is free to exercise rights of condemnation or expropriation as applicable.

Speaker Change: To accomplish the crossings as it seeks to do so under state or federal law energy transfer has never taken the position that others cannot cross us ever just that they must satisfy us that they will not adversely affect our existing lines create additional cost for us put us at risk under our.

Thomas E. Long: However, given that we have received a number of questions about the Louisiana pipeline matter, we would like to provide some important content. Recently, several third parties approached Energy Transfer about crossing various pipes we own and operate in Louisiana, including three of our common carrier pipelines, gathering systems, and other lines. These three parties proposed between 140 and 160 crossings, as well as seeking to secure long segments of proposed parallel pipe within our existing rights-of-way and workspaces. As a consequence, we requested certain technical information from these parties regarding these crossings to allow us to evaluate their technical feasibility and potential issues between these new proposed pipes and our existing operations. The parties making these requests, which are largely rejected or ignored, are very reasonable requests.

Speaker Change: Existing FERC certificate, and then justifiably piggyback.

Speaker Change: All of our efforts to build pipelines and compliance with state and federal rules, including in some cases significant environmental reviews.

Speaker Change: We appreciate that long distance transmission lines have become increasingly difficult to build particularly given entrenched environmental opposition no one knows that better than energy transfer.

Speaker Change: As we have been clear energy transfer embraces markets and vigorous competition.

Speaker Change: But this also means respecting property rights and playing by the rules.

Speaker Change: And looking ahead at our 2020 for organic growth capital guidance, we expect growth capital expenditures to be between $2.

Four and $2 6 billion for 2020 inclusive of the $300 million.

Speaker Change: Deferral from 2023, which will be spent primarily in the NGL and refined products and midstream segments. This capital is made up of expansions to our export facilities and storage tanks at Nederland optimization work at Marcus Hook, and new pumping station to increase our NGL takeaway capacity from the Permian.

Speaker Change: New crude oil pipeline connections and new trading capacity in the Haynesville. In addition, this capital includes a large number of blocking and tackling projects, including processing plant capacity additions compression and laterals two existing pipeline systems additional gathering and compression build out.

Thomas E. Long: Instead, on at least two occasions, they told us they would begin construction on these new pipes whether we agreed to the crossings or not. At that point... We had no choice but to enforce our property rights by filing legal actions to prevent these crossings, pending our ability to evaluate the technical details of the crop. In the process of enforcing our property rights, one of the requesting parties has alleged that Energy Transfer is using unfair or anti-competitive practices to block all pipeline crossing requests in Louisiana in an effort to stifle competition and monopolize the pipeline capacity, moving gas from the Haynesville and these practices are threatening the expansion of pipeline infrastructure in Louisiana. These statements are unfounded and false.

Speaker Change: As well as improved efficiencies and emissions reductions work we.

Speaker Change: We also continue to evaluate a number of other potential growth projects that we hope to bring to <unk>.

However, as we look at our potential backlog of high returning growth projects. We continue to expect our long term annual growth capital run rate to be approximately $2 3 billion.

Speaker Change: Now turning to our 2024 adjusted EBITDA guidance, given the ability of our business to provide stable cash flows and operate through various market cycles as.

Speaker Change: As well as our market outlook, we expect our adjusted EBITDA to be between $14 5 billion and $14 8 billion.

Thomas E. Long: In our opinion, these parties are skirting state and federal regulations and regulatory oversight by seeking to quickly build large-diameter pipe high-pressure pipelines across state lines and calling them gatherings. To this end, we encourage you to read the submission we filed in docket number 84356 in the 42nd Judicial District Court in DeSoto Parish, Louisiana, which sets forth our positions on the facts and on the law. We do not want to litigate the matter on this earnings.

Speaker Change: In 2024, we expect utilization of assets within our core segments to remain strong and that recently acquired assets will provide growth and synergy opportunities.

Speaker Change: Worldwide demand for crude oil and natural gas natural gas liquids and refined products continues to grow and we will continue to position ourselves to meet this demand by strategically targeting optimization and expansion projects that enhance our existing asset base generate attractive returns and meet this.

Speaker Change: Growing demand for our products and services as.

Speaker Change: As a result of our continued emphasis on strengthening our balance sheet. We are in the strongest financial position in energy transfer history, and this will allow us the flexibility to balance pursuing new growth opportunities with further leverage reduction maintaining our targeted distribution growth rate and increasing echo.

Thomas E. Long: However, we want to underscore that Energy Transfer takes very seriously its obligations to operate its assets safely and reliably. Energy Transfer is simply seeking to protect its legal property rights under Louisiana law. Indeed, not a single court has found that ET somehow acted in bad faith in defending its lawful property rights.

Speaker Change: Returns to our unit holders. This concludes our prepared remarks operator. Please open the lineup for the first question.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Thomas E. Long: Nonetheless, any pipeline that is unable to agree to terms on pipeline crossing is free to exercise rights of condemnation or expropriation, as applicable, to accomplish the crossing as it seeks to do so under state or federal law. Energy Transfer has never taken the position that others cannot cross us ever, just that they must satisfy us that they will not adversely affect our existing lines, create additional costs for us, put us at risk under our existing FERC certificate, and unjustifiably piggyback on our efforts to build pipelines in compliance with state and federal rules, including, in some cases, significant environmental reviews. We appreciate that long-distance transmission lines have become increasingly difficult to build, particularly given entrenched environmental opposition.

You are using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

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

Speaker Change: The first question comes from Jeremy Tonet with JP Morgan. Please go ahead.

Jeremy Bryan Tonet: Hi, good afternoon.

Jeremy Bryan Tonet: Hey, Jeremy.

Jeremy Bryan Tonet: Just wanted to start off if I could.

Jeremy Bryan Tonet: Maybe some of the drivers that feed into the guidance here, we've seen a bit of volatility in commodity prices and the environment overall and just wondering I guess.

Jeremy Bryan Tonet: Latest expectation for producer activity in the Haynesville, what have you how that factored in or any other key drivers did callout for the upside versus the low side of the guidance.

Thomas E. Long: No one knows that better than energy transfer. As we have been clear, energy transfer embraces markets and vigorous competition, but this also means respecting property rights and playing by the rules.

Speaker Change: Hey, Julian just back out and start.

Speaker Change: Yes.

Julian: Lower gas prices in North, Louisiana certainly.

Julian: Lower we probably will see a slowdown but right now we haven't seen it.

Thomas E. Long: Now looking ahead at our 2024 Organic Growth Capital Guidance, we expect growth capital expenditures to be between $2.4 and $2.6 billion in 2024, inclusive of the $300 million deferral from 2023, which will be spent primarily in the NGL and refined products and midstream segments. This capital is made up of expansions to our export facilities and storage tanks at Needlin, optimization work at Marcus Hook, and new pumping stations to increase our NGL takeaway capacity from the Permian, new crude oil pipeline connections, and new storage capacity in Hainesville. In addition, this capital includes a large number of blocking and tackling projects, including processing plant capacity additions, compression, and laterals to existing pipeline systems. Additional Gathering and Compression Buildout, as well as Improved Efficiencies and Emissions Reduction Work

Julian: <unk> basin, where we have.

Julian: Tremendous amount of assets, we see growth even in a lower gas price environment with the higher oil prices, we continue to see growth and we are projecting.

Julian: Modest if not.

Julian: Fairly significant growth out of the Permian basin other areas of Berry's mid continent.

Relatively flat and other areas.

Julian: Our assets are pretty stable.

Julian: And Jeremy this is Tom.

Thomas E. Long: In addition.

The pricing that you brought up.

Jeremy Bryan Tonet: On your question just then.

Thomas E. Long: We use the forward curve and this so this is the latest.

Thomas E. Long: The latest forecast, we have we always stay kind of down the middle of the middle of the road with the range that we put out at the beginning of the year. So.

Thomas E. Long: Thing that we have.

Thomas E. Long: We've seen.

Thomas E. Long: Even here in the first quarter et cetera.

Thomas E. Long: <unk> latest forecast everything included so.

Speaker Change: Feel good about it.

Look forward to another great year.

Speaker Change: Got it okay. So it sounds like kind of a conservative outlook in producer activity, given given where the strip is there.

Thomas E. Long: We also continue to evaluate a number of other potential growth projects that we hope to bring to FID. However, as we look at our potential backlog of high-returning growth projects, we continue to expect our long-term annual growth capital run rate to be approximately $2 to $3 billion. Now turning to our 2024 Adjusted EBITDA guidance, given the ability of our business to provide stable cash flows and operate through various market cycles, as well as our market outlook, we expect our adjusted EBITDA to be between $14.5 billion and $14.8 billion.

Speaker Change: Maybe maybe pivoting a little bit towards capital allocation, even with the capital program that you guys laid out as it is it seems like there's going to be a significant amount of surplus cash flow and now you've kind of.

Speaker Change: Stronger credit metrics getting to Triple B, just wondering how you think about this.

Speaker Change: <unk>.

Speaker Change: Surplus cash flow, what's the I guess.

Speaker Change: Priority ranking for the capital allocation at that point.

Speaker Change: Well it's.

Speaker Change: Its probably pretty consistent to where we've been.

Speaker Change: The main difference is that we have got to the lower side of our four to four five.

Thomas E. Long: In 2024, we expect utilization of assets within our core segments to remain strong, and that recently acquired assets will provide growth and synergy opportunities. Worldwide demand for crude oil and natural gas, natural gas liquids, and refined products continues to grow, and we will continue to position ourselves to meet this demand by strategically targeting optimization and expansion projects that enhance our existing asset base, generate attractive returns, and meet this growing demand for our products and services. As a result of our continued emphasis on strengthening our balance sheet, we are in the strongest financial position in energy transfer history, and this will allow us the flexibility to balance pursuing new growth opportunities with further leveraged reduction, maintaining our targeted distribution growth rate, and increasing equity returns to our unit holders. This concludes our prepared remarks. Operator, please open the line up for the first question. We will now begin the question and answer session. To ask a question, you may press the star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: We said before it wasn't even hurt.

Speaker Change: To go a little bit.

Speaker Change: It gave us a little bit more dry powder to be able to continue to look at look at growth opportunities et cetera. So if you kind of move through that you can go into the growth capital that we've talked about obviously.

Very disciplined on our projects and.

Speaker Change: How we approve them and get them to FY days, we're going to we're going to continue to focus on that likewise and then we're going to go.

Speaker Change: Turning to look at that.

Speaker Change: Of course, the distribution growth that we've put out there three 5%.

Speaker Change: The equity side of the equation.

Based upon the Capex spend and what we're seeing out there and remember we're always looking at this long term.

Speaker Change: Not just looking at.

Speaker Change: Numbers that we're reporting for the quarter, but.

Speaker Change: We will continue to evaluate as course unit buybacks.

Speaker Change: Along with the distribution growth so.

Speaker Change: Let's see how everything continues to play out we couldn't agree with you more of that.

Speaker Change: Lot of free cash flow is when.

Speaker Change: When you do the math on that on the guidance, we've given out there and with.

Speaker Change: And with the the other capital allocation topics that we've talked about here. So good very good question. Thank you got it so buybacks are not off the table at this point and just how to think about it.

Operator: To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Jeremy Tonet with JP Morgan. Please go ahead. Hi, good afternoon. Hey, Jeremy.

Oh, no that's exactly right.

Speaker Change: Absolutely.

Speaker Change: They definitely around the diamond.

Speaker Change: Thank you.

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

Jeremy Bryan Tonet: Just want to start off, if I could, you know, maybe some of the drivers that feed into the guidance here. We've seen a bit of volatility in commodity prices and the environment overall, and just wondering, I guess, the latest expectation for producer activity in the Haynesville, what you have, how that factored in, or any other key drivers you'd call out for the upside versus the low side of the guidance. Hey everyone, this is Macky Atkins-Starr.

Speaker Change: Would it be possible to get more detail on the projects in the Capex budget for this year I think I'm good on the NGL export projects.

Speaker Change: Could you talk a little more about the new NGL pumping capacity that you had described the processing plants like how many and where.

Speaker Change: Apologies if I missed it during the prepared remarks.

Speaker Change: Hey, Jamie this is Mac I think I'll cover that question.

Mac: If youre looking at it.

Mac: If you're talking about are upgrades.

Mac: Our two 200000 day cryo out in West, Texas, and the Delaware.

Mac: Can vary optimally and at a low cost compared to adding a new processing plant at $20 to 40000 Mcf.

Marshall S. McCrea: Yeah, with the lower gas prices in North Louisiana, certainly, if they get any lower, we probably will see a slowdown. But right now, we haven't seen it. Out in the Permian Basin, where we have a tremendous amount of assets, we see growth even in the lower gas prices environment; with the higher oil prices, we continue to see growth, and we are projecting modest, if not, fairly significant growth out of the Permian Basin. In other areas, it varies mid-continent, relatively flat, and other areas where our assets are. And Jeremy, this is Tom, I think in addition to the pricing that you brought up in your question just then. We've used a forward curve in this. So this is the latest forecast we have. We always stay kind of down the middle of the road with the range that we put out at the beginning of the year.

So we are looking at that.

Mac: We can move quicker on that is just added compression in some cases.

Mac: <unk>.

Mac: Has.

Mac: We also have already done that in the Eagle Ford we've already added about 50 or 60000 a day.

Mac: Very low cost.

Mac: And then if you.

Mac: Some of the other capex if youre looking at.

Mac: Our.

Expansion at Nederland.

Mac: Looking at the ability.

Mac: Tom said.

Mac: As our opening remarks of doubling our propane capacity.

Mac: The increase in our butane capacity about 33%.

Mac: Even though the markets can be really tight next 18 months, we have a tremendous amount of.

Mac: Capability.

Mac: Increasing our export volumes starting about mid 2025.

Mac: Not only are we excited about that but the international market is very excited about that a lot of that that we've already that we're in.

Thomas E. Long: So anything that we've seen, even here in the first quarter, et cetera, this would be our latest forecast, everything included. So feel good about it and look forward to another great year.

Mac: So the expanding has already been out for three to five years once those projects come online.

Mac: We're doing the best we can be prudent.

Our capital.

Mac: And meet the needs of our customers and obligations that we have.

Speaker Change: Great and thank you for that and as a follow up on I believe that some of the original dapple contracts roll. This year and can you discuss if you're blending and extending that or anything you can share about that re contracting process.

Jeremy Bryan Tonet: Okay, so it sounds like kind of a conservative outlook and producer activity given where the strip is. Maybe pivoting a little bit towards capital allocation, even with the capital program that you guys have laid out as it is, it seems like there's going to be a significant amount of surplus cash flow. And now you've kind of hit stronger credit metrics, getting to triple B.

Speaker Change: You bet. This is mackie again as you can imagine that's a very.

Speaker Change: Sensitive quest.

Speaker Change: Question from the standpoint of competition, but.

Marshall S. McCrea: As far as when it contracts fall off and kind of what our approaches.

I will answer it this way, we're very cost that we will keep our pipeline full and increase the volumes through times certainly if the volumes grow in the Bakken.

Thomas E. Long: Just wondering how you think about this surplus cash flow? What's the, I guess, Priority Ranking for the Capital Allocation at that point? Well, it's probably pretty consistent with where we've been. The main, main difference is that we have got to the lower side of our four to four and a half.

Marshall S. McCrea: First outlet out there we can at the best cost we can feed all the refineries are many of the refineries in the Midwest, we come down to the Gulf Coast of course feed all the refineries and the Port Arthur area and of course through our Bayou Bridge pipeline, we can well volumes all over to St. James. So there is no other pipeline that you can close the other options and <unk>.

Marshall S. McCrea: We feel real good about as contracts roll off that will do very well on re contracting or selling on a spot basis.

Thomas E. Long: And like we said before, it wouldn't even hurt to go, you know, a little bit lower if it gave us a little bit more dry powder to be able to continue to look at, you know, growth opportunities, etc. So if you kind of move through that, you go into the growth capital that we've talked about, obviously, very disciplined in our projects and how we approve them and get them to FIDs. So we're going to continue to focus on that. And then we're going to look at, of course, the distribution growth also that we put out there, the 3% to 5%, which is the equity side of the equation. You know, based upon the CapEx spend and what we're seeing out there, and remember, we're always looking at this long term.

Speaker Change: Great. Thanks, a lot for that metric.

Speaker Change: Sure.

Our next question comes from Keith Stanley with Wolfe Research. Please go ahead.

Keith: It's Keith.

Keith T. Stanley: First question.

Keith: You've made some progress on repaying some of the preferred equity and you mentioned and other series to take out in May.

How are you viewing the preferred stock right now over the next few years and how do you kind of way using excess cash to repay that versus other uses.

Keith: Yes listen that SaaS.

Keith: We're actually.

Keith: Barry.

Alright got it and the fact that we are able to start bringing bringing some of that back back in as far as the.

Perpetual preferred thank.

Keith: Thank you you're going to see us to continue to look at those.

Keith: And youre going to.

Keith: As we look at as we look at even cash flow and where our cost of debt is it makes a lot of sense for us to continue to.

<unk>.

Keith: To bring those back in so I think thats, how youll see us.

Keith: Kind of prioritize when you look at our.

Keith: Our debt total debt, you'll see us working on those on those first going forward.

Thomas E. Long: We're not just looking at, you know, the numbers that we're reporting for the quarter. But where we will continue to evaluate is, of course, Unit 5X, along with distribution growth. So let's see how everything continues to play out. We couldn't agree with you more that a lot of free cash flow is when you do the math on the guidance we've given out there and with, you know, the other capital allocation topics that we've talked about here. So, it was so good.

Keith: It's probably worth mentioning that even with the with the Crestwood acquisition as you know some we had some more come in come in with that one we're going to continue to be opportunistic.

Keith: Those.

Keith: When they make sense economic sense, we will.

Keith: We'll look at calling those but we always are very diligent in looking at the math.

Keith: On those and when centers they make economic sense, we will we will jump.

Speaker Change: Great. Thanks.

Jeremy Bryan Tonet: Good. Very good question. Thank you. Got it. So buybacks are not off the table at this point. Is that how you think about it? Oh no, that's exactly right.

Speaker Change: Second question.

One of your peers recently said they think one to two new Permian gas takeaway projects move forward this year.

Speaker Change: I might have missed it but I don't think you mentioned warrior today.

Thomas E. Long: Absolutely. They definitely are on the table. Thank you. Our next question comes from Jean Ann Salisbury with Bernstein. Please go ahead.

Speaker Change: So my question is do you agree with the view that one to two pipelines probably move forward and any update on warrior and.

Jean Ann Salisbury: Hi. Would it be possible to get a dash more detail on the projects in the CapEx budget for this year? I think I'm good on the NGL export projects, but could you talk a little more about the new NGL pumping capacity that you described, and the processing plans, like how many and where? Apologies if I missed it during the prepared remark. This is Mackie.

Speaker Change: How optimistic you are on moving that forward kind of with or without Lake Charles.

Speaker Change: Yes. This is mackie I'll answer that I get an update on where your yes, we'd love to say, where they were sold out 10 year land charge ready to go but that's not where we're at.

Marshall S. McCrea: We have sold about 25% of our goal. We're in negotiations with about 1617 Bcf of additional customers. All of them are looking for a lot of them are looking for different places to take the gas. There is no project been contemplated.

Marshall S. McCrea: I think I can cover that question. If you're looking at, if you're talking about our upgrade on some of our 200,000-day cryos out in West Texas and in Delaware, we can, very optimally and at a low cost compared to adding a new processing plant, add 20,000 to 40,000 MCF per cryo. So we are looking at that. We can move quicker on that. It's just adding compression in some cases, treating or de-hives.

Marshall S. McCrea: We're close to where your where it provides access to almost every major city gate and the state of Texas. It goes to all the major hubs Carthage Katy.

Marshall S. McCrea: It also goes to.

Marshall S. McCrea: A lot of power.

Marshall S. McCrea: Power plants, either directly or indirectly with connected the majority of our plants.

Marshall S. McCrea: It's by far the best project, that's out there with the pause from the Doe.

Marshall S. McCrea: There are there is a customer that was looking at that thats been the policy. However, we continue to push forward we're.

Marshall S. McCrea: We also have already done that in the Eagle Perk. We've already added about $50,000 or $60,000 a day at a very low cost. And then if you're on some of the other CapEx, if you're looking at an... are. Expansion at Niederland.

Marshall S. McCrea: We're not saying that it's imminent, we do think there will be another pipeline need it in the next two and a half years.

Marshall S. McCrea: And.

Marshall S. McCrea: If that were to happen, we do believe it will be ours.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Brian <unk> with UBS. Please go ahead.

Brian: Hi, good afternoon, everyone maybe.

Marshall S. McCrea: We're looking at the ability, as Tom said in his opening remarks, of doubling our propane capacity and increasing our butane capacity by 33%. So even though the market's going to be really tight for the next 18 months, we have a tremendous amount of capability to increase our export volumes starting about mid-2025. And not only are we excited about that, but the international market is very excited, too. A lot of what we're in the process of expanding has already been sold out for three to five years once those projects come online. So we're doing the best we can to be prudent within our capital and meet the needs of our customers and obligations. Thank you for that.

Brian: Maybe to follow up on some of the guidance on the EBITDA side relative to the S. Four guide I assume.

Brian: Can just talk about maybe some of the differences between today's guidance and yes for I assume a lot of it's related to some.

Underlying growth Capex assumptions that were and Thats four along with maybe some marketing that was include there. So it'd be great. If you could just provide us an update on maybe your expectations for marketing, which I believe you typically excluded from our guidance.

Brian: Yes.

Speaker Change: I'll definitely start off here and then Mackie you want to add something more you can.

Speaker Change: Yes.

Speaker Change: By far the.

Speaker Change: Larger driver.

Speaker Change: The difference between the S. Four was the commodity prices.

Speaker Change: When you look at where.

What we used back then when that was filed we are substantially lower now with our commodity prices. So.

Jean Ann Salisbury: And as a follow-up, I believe that some of the original DAPL contracts will expire this year. Can you discuss whether you're blending and extending those or anything you can share about that recontracting process? You bet. This is Mackie again.

Speaker Change: And then also.

Speaker Change: First maybe deferring some of that capital.

Speaker Change: I think it's another piece of that that that you'll you'll see in the <unk>.

Marshall S. McCrea: As you can imagine, that's a very sensitive question from the standpoint of competition, but as far as when contracts fall off and kind of what our approach is, but I will, I will answer, We are very confident that we will keep our pipeline full and increase the volumes through time, certainly if the volumes grow in the bucket. We're the best outlet out there, we can, at the best cost. We feed all the refineries, or many of the refineries, in the Midwest.

Speaker Change: The difference between that S. Four and now so those are those are probably the two the two largest.

Speaker Change: The largest drivers.

Speaker Change: Great makes sense and as a follow up just touching on M&A Sanofi.

Speaker Change: Sunoco made a large acquisition over the past months, so kind of just curious from an ETE value perspective or are there other opportunities to optimize ETS system with additional access.

Speaker Change: Access to different types of assets, whether it's crude or ngls and refined products.

Marshall S. McCrea: We come down to the Gulf Coast, of course, and feed all the refineries in the Port Arthur area. And, of course, through our Bayou Bridge pipeline, we can flow volumes all the way to St. James. So there's no other pipeline that's even close, no other options than ours we feel real good about as contracts roll off, that we'll do very well on recontracting, and for selling. Fund Great. Thanks a lot for that, Mackie, here. Our next question comes from Steve Stanley with Wolf Research. Please go ahead. Hi, it's Keith.

Speaker Change: Obviously, a great acquisition, but by Sunoco.

Speaker Change: Very very very good fit for them.

Speaker Change: And I'll say theres not theres not been discussion sonoco this wasn't sunoco transaction and.

Speaker Change: They are doing a great job of proceedings are getting all the approvals.

Speaker Change: And even.

Speaker Change: Moving a little bit into the integrations, but.

Speaker Change: I Wouldnt say theres been any discussions on that.

Speaker Change: Alright fair enough I'll leave it there for the rest of your day.

Our next question comes from Jackie.

Jackie: Goldman Sachs. Please go ahead.

Hi, good afternoon.

Keith T. Stanley: First question. You made some progress on repaying some of the preferred equity, and you mentioned another series to take out in May. How are you viewing the preferred stock right now over the next few years, and how do you kind of weigh using excess cash to repay that versus other years? Yeah, listen. That's, uh... We're actually, you know, very, very, very excited. The fact that we're able to start bringing some of that back, you know, back in as far as Perpetual Prefers. I think you're going to see us continue to look at those, and you're going to... As we look at even cash flow and where our cost of debt is, it makes a lot of sense for us to continue to bring those back in. So I think that's how you'll see us kind of prioritize when you look at our Debt Total Debt. You'll see us working on those first.

Jackie: First I just wanted to start off on it on exports. It looks like for NGL exports continue to be strong, though slightly down a little bit quarter over quarter.

What drove that and how do you view exports going into 'twenty for <unk>.

Jackie: See any upward pressure on margins as that dock capacity remains tight until you see those expansions online on May 25.

Jackie: Yes, Jackie this is mackie.

Marshall S. McCrea: What a great business, we have with our export at Nederland and at market. So we're very excited about what we've built and what we're building out. However, there is a lot of issues that are involved expect with shipping and so if there's issues with the Panama Canal.

Marshall S. McCrea: The Red Sea.

Marshall S. McCrea: Timing of ships some months, we may exceed our expectations and somewhat less so every month or every quarter kind of habits up and down but overall, we see our steady.

Marshall S. McCrea: Steady, where we've been <unk> slight growth pretty much completely fill up our entire export capacity in the short term over the next 18 months. We believe we are going to see some very very good margins for that business for the spot business that we haven't been able to date.

Thomas E. Long: You know, it's probably worth mentioning that, you know, even with the Crestwood acquisition, as you know, some, we had some more come in with that one. We're going to continue to be opportunistic on those. When they make sense, economic sense, we'll, you know, we'll, we'll look at calling those. But we always are very diligent in looking at the math on those. And as soon as they make economic sense, we will, we will jump. Great, thanks. Second question. One of your peers recently said they think one to two new Permian gas take-away projects will move forward this year. I might have missed it, but I don't think you mentioned Warrior today.

Marshall S. McCrea: Over demand in the international market than what the U S is capable of exporting.

Marshall S. McCrea: <unk> very well next 18 months to capture that upside and then as I mentioned earlier, we're very excited about renewable projects that will bring in significant revenue.

Marshall S. McCrea: Our export business.

Speaker Change: Got it great. Thanks, Thanks, Ken.

Speaker Change: And then just as a follow up.

Speaker Change: We saw some partial contribution from the Crestwood acquisition. This quarter I'm wondering if you would be able to quantify what synergies we were able to capture for the remainder of 2003 and if you see any additional opportunities at this point beyond that 80 million annual cost synergies.

Keith T. Stanley: So my question is, do you agree with the view that one to two pipelines will probably move forward? And any updates on Warrior? how optimistic you are on moving that forward kind of with or without Lake Charles. Yeah, this is Mackie. I'll answer that. Again, an update on Warrior is we love to say we're at FID, we're sold out for 10 years, demand charge, we're ready to go, but that's not where we're at. We have sold about 25% of our gold. We're in negotiations with about 1.6, 1.7 BCF of additional customers. All of them are looking for, or a lot of them are looking for, different places to take the gas. There's no project that's even contemplated that's anywhere close to Warrior, where it provides access to almost every major city gate.

Speaker Change: Disclosed and the potential timing of when you expect to see that downstream gains from the acquisition.

Speaker Change: Yes.

Speaker Change: After after you get a chance to start.

Speaker Change: Going through all the.

Speaker Change: All of the various cost as an organization, we always try to be fairly conservative we're doing it with with what information we have at the time meeting public information, but after you get really further into these things.

Speaker Change: And start looking at organizations et cetera.

Speaker Change: You'll find that a lot of times, you're always hopeful that you can find more so the 80 million run rate that we've talked about.

Speaker Change: A cost.

Speaker Change: Standpoint is something that we feel very very comfortable with putting that number out there and of course $65 million is what we put out for 2025 four but.

Speaker Change: When you start looking at crossed it systems.

Marshall S. McCrea: The state of Texas, it goes to all the major hubs, Carthage, KDU, etc. It also goes to a lot of the power plants, either directly or indirectly, are connected to the majority of power plants. So it's by far the best project that's out there. With the pause from the DOE, there is a customer that was looking at that. That's gonna pause a little bit.

Speaker Change: And all the other.

And all the other type of costs that are.

Speaker Change: Barry sometimes that once again you can see.

When youre in the middle of these things are early in the process.

Speaker Change: It's always good to be able to find those and I want to make sure we stop for a moment.

Speaker Change: Huge complement to our team.

Speaker Change: I know, we said before is no one is better out there and integrating these companies and we are.

Marshall S. McCrea: However, we continue to push forward. We're not saying that FID is imminent, but we do think there will be another pipeline needed in the next two and a half years. And if that were to happen, we do believe it would. Our next question comes from Brian Reynolds with UBS. Please go ahead. Good afternoon, everyone.

Speaker Change: Had a lot of experience at it.

Speaker Change: And we move we move quickly efficiently and effectively as we go through it but.

Speaker Change: As mentioned in the in the prepared remarks upfront.

We remain on multiple fronts very excited about some commercial opportunities that we hope Mackie you want to.

Brian Reynolds: Maybe I could follow up on some of the guidance on the EBITDA side relative to the S-IV guide. I assume, you know, if you could just talk about maybe some of the differences between today's guidance and the S-IV. I assume a lot of it's related to, you know, some underlying growth CapEx assumptions that were in that S-IV, along with maybe some marketing that was included there. So, it'd be great if you could just provide us an update on maybe your expectations for marketing, which I believe you typically exclude from the guide. Yeah, listen, I'll, I'll definitely start off here.

Adding anything more to that.

Marshall S. McCrea: Other than what you.

Marshall S. McCrea: In the opening script.

Marshall S. McCrea: We'll dig in in every every acquisition.

Marshall S. McCrea: And that we do we discover more and more under the under Roger We turn it over.

Speaker Change: To elaborate a little bit more on his opening remarks, we are seeing significant logistics and maybe even deferred on some costs are fully utilizing all of the assets when combined with the new quest with assets in the Delaware Basin. There's also some things we can do in the DJ basin that we're looking at up in the Bakken.

Speaker Change: A lot of those barrels.

Speaker Change: And the way to our pipeline, we think they will we think that will also bring more business to our crude oil pipeline out of the.

Speaker Change: North Dakota and in the northeast we see some are starting to see some real commercial advantages to working together with that team and.

Speaker Change: Doing two things one helping that business grow distribution with propane and butane Crestwood built and then on the other side, where they can bring in volumes with their contracts and with their relationship into our Mariner franchise, where deliveries to market. So.

Thomas E. Long: And then if Mackie wants to add something more, you can. By far the largest driver of the difference between the S4 was commodity prices. I think when you look at what we used back then when that was filed, we are substantially lower now with our commodity prices. And then also, you know, deferring, maybe deferring some of the capital, I think is another piece of that that you'll see in the difference between that S4 and now. So those are probably the two largest drivers.

Speaker Change: Tom said, we're just getting started with pretty excited about the things that we're already seeing.

Speaker Change: No makes sense I appreciate the color here. Thank you so much.

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

Michael Huang: Thanks, Good afternoon, everyone. So.

Thomas E. Long: Great, makes sense. And as a follow-up, just touching on M&A, you know, Sunoco, you know, made a large acquisition over the past month. So kind of just curious from an ET value perspective: are there other opportunities to optimize the ET system with additional access to different types of assets, whether it's crude or NGLs or refined products? Obviously, a great acquisition by Sunoco. It's a very, very good fit for them.

Michael Huang: I know you have a growth capex target of $2 3 billion, but.

Michael Huang: You also discussed quite a few potential projects on the prepared remarks today, some of which could be quite large so I am wondering if that $3 billion is a hard cap.

Michael Huang: You consider going above that range, if the returns make sense.

Speaker Change: Yes, listen I'll start and then we'll go with Mackie.

Marshall S. McCrea: No there was not a there is not a hard cap as we look at the suite. Once again, we will evaluate projects that make economic sense and when we when we pull it altogether is reasonably gave the range of 2.42.

Thomas E. Long: And I will say, there's not been any discussion about Sunoco. This was a Sunoco transaction. And they are doing a great job of proceeding through getting all the approvals. And even, you know, moving a little bit into the integration. But I wouldn't say there's been any discussion.

Marshall S. McCrea: Two six and keep in mind that that did include $300 million of rollover from 2023.

Marshall S. McCrea: Debt.

You didn't.

Marshall S. McCrea: It Didnt make it in.

Marshall S. McCrea: Into service at the time, so those got rolled into into 2024, so make sure you baked that in there but.

Thomas E. Long: All right, fair enough. I'll leave it there. Enjoy the rest of your day.

Brian Reynolds: Our next question comes from Jackie Coletas with Goldman Sachs. Please go ahead. Hi, good afternoon.

Marshall S. McCrea: <unk>.

Marshall S. McCrea: What is there anymore.

Marshall S. McCrea: Sales on that one Michael as far as.

To your question here.

Speaker Change: No that covers it I appreciate it.

Jackie Coletas: First, I just want to start off on exports. It looks like NGL exports continue to be strong, though slightly down a little bit quarter over quarter. What drove that?

Speaker Change: Maybe my second question just wanted to ask obviously you were very active in 2023 on the M&A front.

Speaker Change: So wanted to just get your thoughts on on what the landscape looks like.

Jackie Coletas: And how do you view exports going into 24? And do you see any upward pressure on margins as that dock capacity remains tight until you see those expansions online in mid-25? Yeah, Jackie. This is Mackie.

Speaker Change: In 2024 for you and are you still kind of in digestion mode.

Speaker Change: Or are you kind of ready to roll with the next deal presents itself.

Speaker Change: Zero.

Speaker Change: That is a good question I think we've been saying for some time, we've been very consistent on our M&A discussions with.

Marshall S. McCrea: What a great business we have with our export business at Niederland and at Marcus Hook. We're very excited about what we've built and what we're building out. However, you know, there are a lot of issues that are involved, especially with shipping. So, if there's issues with the Panama Canal or with the Red Sea, you know, the timing of shifts, some months we may exceed our expectations, and some months less. So, every month or every quarter, it kind of goes up and down.

Speaker Change: With everyone that we felt like it made a lot of sense in the midstream space and Youre seeing it you are seeing it now and we're going to continue to evaluate opportunities, but the other thing thats worth highlighting here is that we are staying very disciplined with these.

Speaker Change: With these acquisitions to even.

Speaker Change: Some of them with no premium just doing that in the market.

Speaker Change: And it's you.

You can see the results if they are accretive they are deleveraging and that's the reason why we've ended up with that.

Marshall S. McCrea: But overall, we see our steady where we've been and our slight growth pretty much completely fill up. Our entire export capacity in the short term, over the next 18 months, we believe we're going to see some very, very good margins for that business. For the spot business that we have available today, there's a significant over demand in the international market than what the U.S. is capable of exporting, and we are positioned very well next April to capture that upside, and then, as I mentioned earlier, we're very excited about bringing on projects that will bring in significant revenue for our equity. Got it, great, thanks, it makes sense.

Speaker Change: With the continued growth in our distributions at the same time that our balance sheet is strengthening.

Speaker Change: And it's showing in our ratings et cetera. So.

Speaker Change: It's.

Speaker Change: It's one of those where it makes sense and where it has to fit.

Speaker Change: And remember as large as large as we are there's a lot of a lot on the fits that so we'll continue to evaluate and we continue to look at opportunities.

Speaker Change: This concludes our question and answer session.

Speaker Change: I would like to turn the conference back over to Tom long for any closing remarks.

Thomas E. Long: Well once again I want to express a lot of appreciation to all of you for joining us today.

Thomas E. Long: Always thank you for for a lot of really good questions. Good dialogue and as you can see we've got a lot of really good things to talk about and therefore, we look forward to continuing dialogue even after this call with any.

Jackie Coletas: And then, just as a follow-up, you know, we saw some partial contributions from the Crestwood acquisition this quarter. Wondering if you would be able to quantify, you know, what synergies you were able to capture for the remainder of the year, and if you see any additional opportunities at this point beyond that 80 million annual cost synergies disclosed, and the potential timing of when you expect to see that downstream gain from the acquisition. Yeah, you know, after you get a chance to start going through all the various costs in an organization, we always try to be fairly conservative. We're doing it with what information we have at the time, meaning public information. But after you get really further into these things and start looking at organizations, etc., I think you'll find that a lot of times you're always hopeful that you can find more.

Thomas E. Long: With anyone so.

Thomas E. Long: Everyone have a great day.

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

Thomas E. Long: So the 80 million run rate that we've talked about from a cost standpoint is something that we feel very comfortable with putting that number out there. And, of course, 65 million is what we put out for 2025-4. But when you start looking across at systems and all the other types of costs that are buried sometimes that, once again, you can't see when you're in the middle of these things or early in the process of them. It's always good to be able to find those.

[music].

Thomas E. Long: And I want to make sure we stop for a moment and give a huge compliment to our team. I know we've said before, no one is better out there at integrating these companies than we are. We've had a lot of experience with it, and we move quickly, efficiently, and effectively as we go through it. But, as mentioned in the prepared remarks up front, we remain very excited about some of the commercial opportunities, and I don't know, Mackie, if you want to add anything more to that. CERA, other than what it did in the opening script.

Thomas E. Long: We're still digging in. Every acquisition that we do, we discover more and more, and Roger. I want to elaborate a little bit more on his opening remarks.

Marshall S. McCrea: We are seeing significant logistics savings and maybe even deferred on some costs, fully utilizing all of the assets when combined with the new Crestwood assets in the Delaware Basin. There are also some things we can do in the DJ Basin that we're looking at up in the Bakken. A lot of those barrels haven't found their way to our pipeline yet, but we think now they will also bring more business to our crude oil pipeline out of North Dakota and in the Northeast. We are starting to see some real commercial advantages to working together with that team. Dept., doing two things.

Marshall S. McCrea: One, helping that business grow the distribution of propane and butane that Crestwood built. And then, on the other side, where they can bring in volumes with their contracts and with their relationship to our Mariner franchise for deliveries to Marcus Hook. So, as Tom said, we're just getting started, but pretty excited about the things that we're going to do.

Michael Jacob Blum: I appreciate the color here. Thank you so much. Our next question comes from Michael Blum with Wells Fargo. Please go ahead. Thanks. Good afternoon, everyone.

Thomas E. Long: So I know you have a growth CapEx target of $2 to $3 billion, but you also discussed quite a few potential projects in your prepared remarks today, some of which could be quite large. So I'm wondering if that $3 billion is a hard cap, or if you consider going above that range. Yeah, listen. I'll start and then we'll go with Mackey.

Thomas E. Long: No, there was not a hard cap as we look. Once again, we'll evaluate projects that make economic sense, and when we pull it all together, that's the reason we gave the range of 2.4 to 2.6. And keep in mind that that did include $300 million of rollover from 2023 that didn't make it into service at the time, so those got rolled into 2024, so make sure you bake that in there. Would you use any more details on that with Michael as far as the... question here?

Thomas E. Long: No, that covers it. I appreciate it. Maybe my second question just wanted to ask, obviously, you were very active in 2023 on the M&A front. So I wanted to just get your thoughts on what the landscape looks like in 2024 for you, and are you still kind of in digestion mode, or are you kind of ready to roll with the next? Hey, the roll.

Thomas E. Long: Michael, no, that is a good question. I think we've been saying for some time, we've been very consistent in our M&A discussions with, you know, everyone that we felt like it made a lot of sense in the midstream space. And you're seeing it. You're seeing it now.

Thomas E. Long: And we're going to continue to evaluate opportunities. But the other thing that's worth highlighting here is that we are staying very disciplined with these acquisitions and even doing some of them with no premium, just doing them at the market. And you can see the results. They're accretive, and they're deleveraging. And it's the reason why we've ended up with, you know, continued growth in our distributions at the same time that our balance sheet is strengthening, and it's showing in our ratings, etc. So it's, you know, it's one of those where it makes sense and where it's a fit. And remember, as large as we are, there's a lot on the fit side.

Thomas E. Long: So we'll continue to evaluate them and continue to look them up. This concludes our question and answer session. I would like to turn the conference back over to Tom Long for any closing remarks.

Speaker Change: [music].

Thomas E. Long: Well, once again, I want to express a lot of appreciation to all of you for joining us today. We always thank you for a lot of really good questions and good dialogue, and as you can see, we've got a lot of really good things to talk about. And therefore, we look forward to continuing dialogue even after this call with anyone. Thank you, everyone. You all have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thomas Long, Elvira Scotto, Michael Blum, Colton Bean, Keith Stanley, Energy Transfer Equity Elvira Scotto, Michael Blum, Colton Bean, Keith Stanley, Energy Transfer Equity Elvira Scotto, Michael Blum, Colton Bean, Keith Stanley, Energy Transfer Equity, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, Good afternoon and welcome to the Energy Transfer 4th Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

Thomas E. Long: To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Tom Long. Please do so.

Thomas E. Long: Thank you, operator, and good afternoon, everyone, and welcome to the Energy Transfer fourth quarter 2023 earnings goal. 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 21E of the Security Exchange Act of 1934. 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, 2023, which we expect to file this Friday, February 16. I'll also refer to Adjusted EBITDA and Distributable Cash Flow, or DCF, both of which are non-GAAP financial measures.

Thomas E. Long: You'll find a reconciliation of our non-GAAP measures on our website. Let's start today by going over our financial results. For the full year 2023, we generated adjusted EBITDA of $13.7 billion, which is up 5% over 2022 and is a partnership record. DCF, a triple to the partners of energy transfer as adjusted.

Thomas E. Long: $7.6 billion, which resulted in excess cash flow after distributions of approximately $3.6 billion. Operationally, we moved record volumes across all of our segments for the year ended 2023, which included record volumes on our legacy assets before including contributions from assets acquired in 2023. In addition, we exported a record amount of total NGLs out of our Nederland and Marcus Hook terminals in 2023. For the fourth quarter of 23, we generated adjusted EBITDA of $3.6 billion compared to $3.4 billion for the fourth quarter of 2022. In our base business, we had strong performances across our operations, which included record volumes through our NGL pipelines and fractionators, as well as record volumes in our crude oil and midstream segments. DCF attributable to the partners of ETE as adjusted was $2 billion compared to $1.9 billion for the fourth quarter of 2022.

Speaker Change: [music].

Thomas E. Long: This resulted in excess cash flow after distribution of approximately $970 million. On January 25th, we announced a quarterly cash distribution of 31.5 cents per common unit, or $1.26 on an annualized basis. This distribution represents an increase of 3.3% from 30.5 cents paid in the fourth quarter of 2022. Last year, Energy Transfer's senior unsecured credit rating was uprated by Standard & Poor's to BBB with a stable outlook. And last week, we were pleased to see that Fitch also upgraded Energy Transfer's Senior Unsecured Credit Rating to BBB with a stable outcome. This continued third-party acknowledgment reiterates the emphasis we have placed on balancing growth while improving our balance sheet and reducing our leverage. And in 2023, we made meaningful progress toward reaching the low end of our leverage range. Based on our calculations of the rating agencies, methodologies, and pro forma for the full year of acquisitions, our leverage ratios are now in the lower half of our 4 to 4.5 target range.

Speaker Change: Good afternoon, and welcome to the energy transfer fourth quarter 2023 earnings Conference call.

Speaker Change: All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Thomas E. Long: As of December 31st, 2023, the total available liquidity under our revolving credit facilities was approximately $3.56 billion. In the fourth quarter of 2023, we spent approximately $380 million on organic growth capital. And for full year 2023, we spent approximately $1.6 billion on organic growth capital, primarily in the midstream and NGL and refined product segments, excluding Sun and USA Compression CapEx. The reduction in capital relative to our most recent guidance is a result of deferring approximately $300 million from 2023 into 2024 due to project in-service timing needs. In January 2024, we issued $3 billion of aggregate principal amount of senior notes and $800 million of junior subordinated notes and used the proceeds to refinance existing indebtedness and for general partnership purposes.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Speaker Change: Please note that this event is being recorded.

Speaker Change: I would now like to turn the conference over to Tom Long. Please go ahead.

Speaker Change: Yeah.

Thomas E. Long: Thank you operator, and good afternoon, everyone and welcome to the energy transfer fourth quarter 2023 earnings call.

Thomas E. Long: 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.

Thomas E. Long: 21.

Thomas E. Long: 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 details in our Form 10-K for the full year ended December 31, 2023, which we expect to file this for.

Thomas E. Long: In addition, proceeds were used to redeem all of our outstanding Series C and Series D preferred units. We completed this redemption on February 9th, and we expect to redeem all of our outstanding Series E preferred units by May of 2024. Now turning to our results by segment for the fourth quarter, I'll start with NGL and Refined Products. Adjusted EBITDA was $1 billion compared to $928 million for the fourth quarter of 2022.

Thomas E. Long: Heidi February 16th.

Thomas E. Long: 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.

Thomas E. Long: Let's start today by going over our financial results for the full year 2023, we generated adjusted EBITDA of $13 $7 billion, which is up 5% over 2022 and as a partnership record.

Thomas E. Long: DCF attributable to the partners of energy transfer as adjusted seven.

Thomas E. Long: This was primarily due to strong performances in transportation, storage, terminal, and fractionation operations, as well as lower operating expenses. NGL transportation volumes increased 10% to 2.2 million barrels per day compared to 2 million barrels per day for the same period last year. This increase was primarily due to higher volumes from the Permian region and on our NGL pipelines that deliver into our Needland Terminal as well as on the Mariner East pipeline system. Average fractionated volumes increased 16% to a partnership record 1.1 million barrels per day compared to 982,000 barrels per day for the same period last year. Total NGL export volumes grew 13% over the fourth quarter of 2022 and 18% over the full year 2022.

Thomas E. Long: $706 billion, which results in excess cash flow after distributions of approximately $3 6 billion.

Thomas E. Long: Operationally, we moved record volumes across all of our segments for the year ended 2023, which included record volumes on our legacy assets before including contributions from assets acquired in 2023.

Thomas E. Long: In addition, we exported a record amount of total Ngls out of our Nederland and Marcus Hook terminals in 2023.

Thomas E. Long: For the fourth quarter of 2003, we generated adjusted EBITDA of $3 $6 billion compared to $3 $4 billion for the fourth quarter of 2022.

Thomas E. Long: In our base business, we had strong performances across our operations, which included record volumes through our NGL pipelines and fractionator as well as record volumes in our crude oil and midstream segments.

Thomas E. Long: DCF attributable to the partners of ETP as adjusted was $2 billion compared to $1 $9 billion for the fourth quarter of 2022. This resulted in excess cash flow after distributions.

Thomas E. Long: This was primarily driven by increased international demand for natural gas liquids. For 2023, we loaded more than 61 million barrels of ethane out of Nederland and nearly 27 million barrels of ethane out of Marcus Hook. For 2023, we continue to export more NGLs than any other company and maintain approximately 20% market share of worldwide NGL exports. For midstream, Adjusted EBITDA was $674 million compared to $632 million for the fourth quarter of 2022. We saw record throughput this quarter, which was primarily the result of the addition of the Crestwood assets, as well as higher volumes from existing customers in the Permian, South Texas, and Mid-Continent regions. However, the strong volume growth was partially offset by lower natural gas and NGL prices. Gathered gas volumes increased 5% to 20.3 million MMBTUs per day compared to 19.4 million MMBTUs per day for the same period last year. For the crude oil segment, adjusted EBITDA was $775 million compared to $571 million for the fourth quarter of 2022.

Of approximately $970 million.

Thomas E. Long: On January 25th we announced a quarterly cash distribution of 31, and a half cents per common unit or $1 26 on an annualized basis.

Thomas E. Long: This distribution represents an increase of three 3% from 30 and have since paid in the fourth quarter of 2022.

Last year energy transfers senior unsecured credit rating was upgraded by standard and poor's to triple B with a stable outlook and.

Thomas E. Long: And last week, we were pleased to see that Fitch has also upgraded energy Transfer's senior unsecured credit rating to triple B with a stable outlook.

Thomas E. Long: This continued third party acknowledgment reiterate the emphasis we have placed on balancing growth, while improving our balance sheet and reducing our leverage and in 2023, we made meaningful progress towards reaching the low end of our leverage range.

Thomas E. Long: On our calculations of the rating agencies methodologies and pro forma for full year of acquisitions, our leverage ratios are now in the lower half of our four to four five target range.

Thomas E. Long: As of December 31, 2023, the total available liquidity under our revolving credit facilities was approximately $3 $5 $6 billion. During the fourth quarter of 2023, we spent approximately $380 million one organic growth capital.

Thomas E. Long: This was primarily due to higher volumes on several of our pipelines, higher terminal throughput, as well as the acquisitions of the Lotus and Crestwood assets in May and November of last year. Crude oil transportation volumes increased 39% to a record 5.9 million barrels per day compared to 4.3 million barrels per day for the same period last year. This was a result of higher volumes on our Texas pipeline system and the Bakken and Bayou Bridge pipelines increasing crude oil gathering volumes, as well as the acquisitions of Lotus and Crestwater. However, without the additions of Lotus and Crestwood, adjusted EBITDA and crude oil transportation volumes would still have increased 16% and 8%, respectively, compared to the fourth quarter of 2022. In our interstate segment, adjusted EBITDA was $541 million compared to $494 million for the fourth quarter of 2022.

Thomas E. Long: And for full year 2023, we spent approximately $1 $6 billion on.

Thomas E. Long: Growth capital, primarily in the midstream and NGL and refined product segments, excluding Sun and USA compression capex the reduction in capital relative to our most recent guidance as a result of deferring approximately $300 million.

Thomas E. Long: From 2023 into 2024 due to project in service timing needs.

Thomas E. Long: In January 2024, we issued $3 billion of aggregate principal amount of senior notes and $800 million of junior subordinated notes and used the proceeds to refinance existing indebtedness and for general partnership purposes. In addition proceeds were used to redeem all of our outstanding series.

Thomas E. Long: C and series D preferred units.

Thomas E. Long: We completed this redemption on February the ninth and we expect to redeem all of our outstanding series a series a preferred units by May of 2024 now turning to our results by segment for the fourth quarter and I'll start with NGL and refined products adjusted EBITDA was $1 billion compared to 928 million.

Thomas E. Long: This increase was primarily due to placing the Gulf Run pipeline into service in December of 2022, as well as higher contracted volumes on several of our wholly owned and joint venture pipelines. Volumes increased 5% over the same period last year due to the Gulf Run pipeline being placed into service, as well as higher utilization on many of our interstate pipelines, including Transwestern, Rover, and Trunk Line. We continue to fully utilize Zone 1 capacity on Gulf Run, and we're also maximizing deliveries into our trunk line pipeline from Zone 2. Our team continues to work on the next phase of a potential capacity expansion to facilitate the transportation of natural gas from northern Louisiana to the Gulf Coast based upon customer demand. And for our intrastate segment, Adjusted EBITDA was $242 million compared to $433 million for the fourth quarter of last year.

Thomas E. Long: For the fourth quarter of 2022.

Thomas E. Long: This was primarily due to strong performances across our transportation storage terminal in fractionation operations as well as lower operating expenses.

Thomas E. Long: NGL transportation volumes increased 10% to $2 2 million barrels per day compared to 2 million barrels per day for the same period last year. This increase was primarily due to higher volumes from the Permian region and on our NGL pipelines that deliver into our Nederland terminal.

Thomas E. Long: As well as on the Mariner East pipeline system.

Thomas E. Long: Average fractionated volumes increased 16% to a partnership record $1 1 million barrels per day compared to 982000 barrels per day for the same period last year.

Thomas E. Long: Total NGL export volumes grew 13% over the fourth quarter of 2022, and 18% over full year 2022.

Thomas E. Long: Benefits from new contracts on several of our Texas pipelines, as well as lower operating expenses, were more than offset by decreases from lower optimization opportunities. Now turning to our acquisition of Crestwood Equity Partners, which we completed in November of 2023. Integration of the combined operations has been going very well.

Thomas E. Long: This was primarily driven by increased international demand for natural gas liquids for 2023, we loaded more than 61 million barrels of ethane out of Nederland, and nearly 27 million barrels of ethane out of Marcus hook for.

Thomas E. Long: For 2023, we continued to export more ngls than any other company and maintained approximately 20% market share of worldwide NGL exports.

Thomas E. Long: The combination of these complementary assets will allow us to continue to provide flexibility, reliable, and competitive services for our customers as we pursue additional commercial opportunities utilizing our improved connectivity and expanded footprint. We now expect to generate approximately $80 million of annual cost synergies by 2026, with $65 million in 2024. This is before any additional anticipated benefits from financial or commercial centers.

Thomas E. Long: For midstream adjusted EBITDA was $674 million compared to $632 million for the fourth quarter of 2022.

Thomas E. Long: We saw record throughput this quarter, which was primarily the result of the addition of the Crestwood assets as well as higher volumes from existing customers in the Permian, South, Texas and mid continent regions. The strong volume growth was partially offset by lower natural gas and NGL prices gather.

Thomas E. Long: We are in the process of identifying and evaluating a number of commercial and operational synergies that are expected to enhance the operational capabilities of our systems by improving efficiency and increasing the utilization and profitability of our combined assets. These synergies include optimizing our West Texas processing capacity given the newly acquired Crestwood plants, as well as utilizing spare NGL pipeline capacity out of the Delaware Basin and working with producers in West Texas and New Mexico to provide additional water gathering solutions. We're also looking at opportunities to move more barrels into our Bakken pipeline system for transport to the Gulf Coast. And in the Northeast, we're evaluating options to transition LPG products previously transported by truck into our Mariner East pipeline system.

Thomas E. Long: Gas volumes increased 5% to 23 million <unk> per day compared to $19 4 million Btu per day for the same period last year.

Thomas E. Long: For the crude oil segment, adjusted EBITDA was $775 million compared.

Thomas E. Long: Compared to $571 million for the fourth quarter of 2022.

Thomas E. Long: This was primarily due to higher volumes of several of our pipelines higher terminal throughput as well as the acquisitions of the Lotus and Crestwood assets in May and November of last year.

Thomas E. Long: Crude oil transportation volumes increased 39% to a record $5 9 million barrels per day compared to $4 3 million barrels per day for the same period last year. This was a result of higher volumes on our Texas pipeline systems, and the Bakken and Bayou Bridge pipelines increased crude oil.

Thomas E. Long: Gathering volumes as well as the acquisitions of Lotus and Crestwood.

Without the additions of Lotus and Crestwood, adjusted EBITDA and crude oil transportation volumes would still have increased 16% and 8% respectively compared to the fourth quarter of 2022.

Thomas E. Long: Now turning to our growth projects and starting with our Niederland and Marcus Export Terminals. Our NGL terminals continue to benefit from increased demand from both in the U.S. as well as from international customers. To address this demand, construction is underway on our expansion to the NGL export capacity at Nederun, and we expect to be finished driving piles by the end of the month. This expansion is expected to give us the flexibility to load various products based upon customer demand. We continue to expect the project to be in service in mid-2025.

Thomas E. Long: In our Interstate segment, adjusted EBITDA was $541 million compared to $494 million for the fourth quarter of 2022. This increase was primarily due to placing the Gulf run pipeline into service in December of 2022, as well as higher contracted volumes or several of our wholly owned.

Thomas E. Long: And joint venture pipelines.

Thomas E. Long: Volumes increased 5% over the same period last year due to the Gulf run pipeline being placed into service as well as higher utilization on many of our interstate pipelines, including Trans Western Rover and trunk line.

Thomas E. Long: We continue to fully utilize zone, one capacity on Gulf run and we're also maximizing deliveries into our trunk line pipeline from some too.

Thomas E. Long: In addition, we are building new refrigerated storage at Nederland, which will increase our butane storage capacity by 33% and will double our propane storage capacity. This will further increase our ability to keep customers' ships loaded on time. Also, we recently closed on the acquisition of two pipelines, one from Montbellevue to our Needlin terminal and one from Montbellevue to the ship channel. We expect to have term transportation commitments on the Montbellevue to Needlin pipeline in the near future, which will have the ability to flow at least 70,000 barrels per day. This will provide much-needed capacity for several products in high demand, both international and domestic. And we are in discussions to provide transportation for potentially multiple products on the pipeline that extends from Mott Bellevue to Houston. And at our Marcus Hook terminal, we have commenced construction on the first phase of an optimization project that would add incremental ethane refrigeration and storage capacity. In addition, we have begun expanding our processing capacity at several of our existing 200 million cubic feet per day cryogenic processing plants.

Thomas E. Long: Our team continues to work on the next phase of a potential capacity expansion to facilitate the transportation of natural gas from northern Louisiana to the Gulf Coast based upon customer demand.

Thomas E. Long: And for our intrastate segment, adjusted EBITDA was $242 million compared to $433 million for the fourth quarter of last year.

Thomas E. Long: <unk> from new contracts in several of our Texas pipelines as well as lower operating expenses were more than offset by decreases from lower optimization opportunities.

Thomas E. Long: Now turning to our acquisition of Crestwood equity partners, which we completed in November of 2023.

Integration of the combined operations has been going very well the combination of these complementary assets will allow us to continue to provide flexibility reliable and competitive services for our customers as we pursue additional commercial opportunities utilizing our improved connectivity and.

Thomas E. Long: Ended footprint.

Thomas E. Long: We now expect to generate approximately $80 million.

Thomas E. Long: Of annual cost synergies by 2026 with $65 million in 2024.

Thomas E. Long: This is before any additional anticipated benefits from financial or commercial synergies.

Thomas E. Long: We are in the process of identifying and evaluating a number of commercial and operational synergies that are expected to enhance the operational capabilities of our systems by improving efficiencies and increasing the utilization and profitability of our combined assets.

Thomas E. Long: In total, we see opportunities to add approximately 100 to 150 million cubic feet per day of processing capacity in our West and South Texas regions at favorable capital costs when compared to building a new processing plant. In November 2023, we announced a Heads of Agreement, or HOA, with Total Energies for crude offtake from our proposed Blue Marlin offshore project. Additional customers remain very engaged and interested in our project, recognizing the value of fully loading VLCCs and the reduced execution risk that comes with repurposing existing underutilized assets. Next, an update on our Lake Charles LNG project. As most of you are aware, the Biden administration recently imposed a moratorium on the approval of LNG exports by the Department of Energy while the DOE conducts studies to determine whether LNG exports are in the public interest. The Biden administration stated that these studies would focus on the cumulative impact of LNG exports on climate change.

Thomas E. Long: These synergies include optimizing our west, Texas processing capacity, given the newly acquired Crestwood plants as well as utilizing spare NGL pipeline capacity out of the Delaware Basin and working with producers in West, Texas, and New Mexico to provide additional water gathering solutions. We're also looking at opportunities.

Thomas E. Long: To move more barrels into our Bakken pipeline system for transport to the Gulf Coast and in the northeast we are evaluating options to transition LPG products previously transported by truck into our Mariner East pipeline system.

Thomas E. Long: Now turning to our growth projects and starting with our Nederland and Marcus export terminals. Our NGL terminals continue to benefit from increased demand from both in the U S as well as from international customers.

Thomas E. Long: To address this demand construction is underway on our expansion to the NGL export capacity at.

Thomas E. Long: At Nederland, and we expect to be finished driving piles by the end of the month.

Thomas E. Long: This expansion is expected to give us the flexibility to load various products based upon customer demand.

Thomas E. Long: We continue to expect the project to be in service in mid 2025.

Thomas E. Long: U.S. natural gas prices and the impact of LNG facilities on local communities. The DOE most recently conducted similar studies in 2019, and based on the results of these studies, the DOE subsequently approved several LNG export projects. In light of the extremely low natural gas prices in the U.S. currently and the beneficial climate impacts from the use of natural gas compared to coal for power generation, it would be difficult to believe that these new studies won't continue to conclude that LNG exports are in the U.S. public interest. Lake Charles LNG applied for a new LNG export authorization in August of 2023 and requested approval by February of 2024.

Thomas E. Long: In addition, we are building new refrigerated storage at Nederland, which will increase our butane storage capacity by 33% and we will double our propane storage capacity. This will further increase our ability to keep customers ships loaded on time.

Thomas E. Long: Also we recently closed on the acquisition of two pipelines one from Mont Belvieu to our Nederland terminal and one from Mont Belvieu to the ship channel. We expect to have term transportation commitments on the Mont Belvieu to Nederland pipeline in the near future, which will have the ability to flow at least 70000 barrels per <unk>.

Thomas E. Long: Day.

Thomas E. Long: This will provide much needed capacity for several products in high demand both internationally and domestically.

Thomas E. Long: And we are in discussions to provide transportation for potentially multiple products on the pipeline that extends from Mont Belvieu to Houston.

Thomas E. Long: And at our Marcus Hook terminal, we have commenced construction on the first phase of an optimization project that would add incremental ethane refrigeration and storage capacity. In addition, we have begun expanding our processing capacity at several of our existing 200 million cubic feet per day cryogenic processing plants.

Thomas E. Long: The recently announced moratorium on approvals for LNG export creates uncertainty as to when the DOE studies will be completed and whether the criteria for approving LNG export projects will be changed. Despite these uncertainties, Lake Charles LNG continues to pursue the development of the project and is extremely thankful for the continued support of its LNG customers. And now for an update on other projects on the blue ammonia front: we are working with several companies to evaluate the feasibility of ammonia projects that would include the opportunity to supply and transport natural gas to the ammonia facility and to transport CO2 to third-party sequestration sites. We're also looking at opportunities to provide other infrastructure services, including transport and sequestration, ammonia storage, and deepwater marine loading on property near our Lake Charles and Needleland facilities.

Thomas E. Long: And we see opportunities to add approximately 100 to 150 million cubic feet per day of processing capacity, and our west and South Texas regions at favorable capital cost when compared to building a new processing plant.

Thomas E. Long: In November 2023, we announced a heads of agreement or HOA with total energies.

Thomas E. Long: For crude offtake from our proposed believes Moreland offshore project additional customers remain very engaged and interested in our project recognizing the value of fully loading vlccs and the reduced execution risk that comes with repurposing existing underutilized assets.

Next on an update for our Lake Charles LNG project as.

Thomas E. Long: As most of you are aware the Biden administration recently imposed a moratorium on the approval of LNG exports by the department of energy, while the board conducts studies to determine whether LNG exports are in the public interest.

Thomas E. Long: Additionally, we're working on carbon capture and sequestration projects at our processing plants and treating facilities in North Louisiana, South Texas, and West Texas, and we are evaluating other CO2 pipeline projects that would connect CO2 emitters to CO2 sequestration. Before moving to discuss our 2024 guidance, we wanted to quickly address another topic. Our practice is not to comment on pending litigation, but given that we have received a number of questions about the Louisiana Pipeline matter, we would like to provide some important content. Recently, several third parties approached Energy Transfer about crossing various pipes we own and operate in Louisiana, including three of our common carrier pipelines, gathering systems, and other lines. These three parties proposed between 140 and 160 crossings, as well as seeking to secure long segments of proposed parallel pipe within our existing rights-of-way and workspaces.

Thomas E. Long: The <unk> administration's stated that these studies would focus on the cumulative impact of LNG exports on climate change U S natural gas prices and the impact of LNG facilities on our local communities.

Thomas E. Long: Most recently conducted similar studies in 2019 and based on the results of those studies the dose subsequently approved several LNG export projects.

Thomas E. Long: In light of the extremely low natural gas prices in the U S. Currently and the beneficial climate impacts from the use of natural gas compared to coal for power generation. It would be difficult to believe that these new studies wont continue to conclude that LNG exports are in the U S public interest law.

Thomas E. Long: Charles LNG applied for a new LNG export authorization in August of 2023 and requested approval by February of 2024.

Thomas E. Long: The recently announced moratorium on approvals of LNG export creates uncertainty as to when the dose studies will be completed and whether the criteria for approving LNG export projects will be changed.

Thomas E. Long: Despite these uncertainties Lake Charles LNG continues to pursue the development of the project and is extremely thankful for the continued support of its LNG customers.

Thomas E. Long: And now for an update on other projects on the Blue ammonia front, we are working with several companies to evaluate the feasibility of ammonia projects that would include the opportunity to supply and transport natural gas to the ammonia facility and to transport <unk> third part a sequestration.

Thomas E. Long: As a consequence, we requested certain technical information from these parties regarding these crossings to allow us to evaluate their technical feasibility and potential issues between these new proposed pipes and our existing operations. The parties making these requests, which were largely rejected or ignored, are very reasonable requests. Instead, on at least two occasions, they told us they would begin construction on these new pipes whether we agreed to the crossings or not. At that point... We had no choice but to enforce our property rights by filing legal actions to prevent these crossings, pending our ability to evaluate the technical details of the cross.

Thomas E. Long: <unk> sites. We're also looking at opportunities to provide other infrastructure services, including transport and sequestration.

Thomas E. Long: <unk> storage and deepwater marine loading.

Thomas E. Long: Property near our Lake Charles and <unk> facilities.

Thomas E. Long: Additionally, we are working on carbon capture and sequestration projects to our processing plants and treating facilities in north, Louisiana, South, Texas and West Texas.

We are evaluating other <unk>.

Thomas E. Long: Two pipeline projects that would connect <unk>, two emitters to seal to sequestration site.

Speaker Change: Before moving to discuss our 2024 guidance, we wanted to quickly address another topic.

Thomas E. Long: In the process of enforcing our property rights, one of the requesting parties has alleged that Energy Transfer is using unfair or anti-competitive practices to block all pipeline crossing requests in Louisiana in an effort to stifle competition and monopolize the pipeline capacity, moving gas from the Haynesville. These practices are threatening the expansion of pipeline infrastructure in Louisiana. These statements are unfounded and false.

Speaker Change: Our practice is not to comment on pending litigation. However, given that we have received a number of questions about the Louisiana pipeline matter, we would like to provide some important context recently several third parties approached energy transfer about crossing various pipes, we own and operate in Louisiana, including three of our common carrier.

Speaker Change: <unk> gathering systems and other lines.

Speaker Change: These three parties proposed between 140, and 160 crossings as well as seeking to secured loan segments have proposed parallel pipe within our existing rights of way and Workspaces as a consequence, we requested certain technical information from these parties regarding these crossings too.

Thomas E. Long: In our opinion, these parties are skirting state and federal regulations and regulatory oversight by seeking to quickly build large-diameter pipe, high-pressure pipelines across state lines and calling them gatherings. To this end, we encourage you to read the submission we filed in docket number 84356 in the 42nd Judicial District Court in DeSoto Parish, Louisiana, which sets forth our positions on the facts and on the law. We do not want to litigate the matter on this earnings.

Speaker Change: Allow us to evaluate their technical feasibility and potential issues between these new proposed pipes and our existing operations.

Speaker Change: The parties, making these requests largely rejected or ignored are very reasonable request instead on at least two occasions. They told us. They would began construction on these new pipes, whether we agreed to the crossings are not.

Speaker Change: At that point.

Speaker Change: We had no choice, but to enforce our property rights by filing legal actions to prevent these crossings pending our ability to evaluate the technical details of the crossing.

Thomas E. Long: However, we want to underscore that Energy Transfer takes very seriously its obligations to operate its assets safely and reliably. Energy Transfer is simply seeking to protect its legal property rights under Louisiana law. Indeed, not a single court has found that ET somehow acted in bad faith in defending its lawful property rights.

Speaker Change: In the process of enforcing our property rights one of their requesting parties has alleged that energy transfer is using unfair or anti competitive practices to block all pipeline crossings request in Louisiana and in an effort to stifle competition and monopolize the pipeline capacity moving.

Thomas E. Long: Nonetheless, any pipeline that is unable to agree to terms on pipeline crossing is free to exercise rights of condemnation or expropriation, as applicable, to accomplish the crossing as it seeks to do so under state or federal law. Energy Transfer has never taken the position that others cannot cross us ever, just that they must satisfy us that they will not adversely affect our existing lines, create additional costs for us, put us at risk under our existing FERC certificate, and unjustifiably piggyback on our efforts to build pipelines in compliance with state and federal rules, including, in some cases, significant environmental reviews. We appreciate that long-distance transmission lines have become increasingly difficult to build, particularly given entrenched environmental opposition.

Speaker Change: Gas from the Haynesville and.

Speaker Change: These practices are threatening the expansion of pipeline infrastructure in Louisiana.

Speaker Change: These statements are unfounded and falls in our opinion. These parties are skirting state and federal regulations and regulatory oversight by seeking to quickly build large diameter pipe high pressure pipelines across state lines and calling them gathering.

Speaker Change: To this end we encourage you to read the submission we filed and docket number 84356 in the 42nd Judicial District Court in Desoto parish, Louisiana.

Speaker Change: Which set forth our positions on the facts and the law.

Speaker Change: We do not want to litigate the matter on this earnings call.

Speaker Change: However, we want to underscore that energy transfer it takes very seriously its obligations to operated assets safely and reliably energy transfer is simply seeking to protect its legal property rights under Louisiana law. Indeed, not a single court has found that ETE somehow.

Thomas E. Long: No one knows that better than energy transfer. As we have been clear, energy transfer embraces markets and vigorous competition, but this also means respecting property rights and playing by the rules.

Speaker Change: Acted in bad faith and defending its lawful property rights.

Thomas E. Long: Now looking ahead at our 2024 Organic Growth Capital Guidance, we expect growth capital expenditures to be between $2.4 and $2.6 billion in 2024, inclusive of the $300 million deferral from 2023, which will be spent primarily in the NGL and refined products and midstream segments. This capital is made up of expansions to our export facilities and storage tanks at Needlin, optimization work at Marcus Hook, and new pumping stations to increase our NGL takeaway capacity from the Permian, new crude oil pipeline connections, and new storage capacity in Haynesville. In addition, this capital includes a large number of blocking and tackling projects, including processing plant capacity additions, compression, and laterals to existing pipeline systems. Additional Gathering and Compression Buildout, as well as Improved Efficiencies and Emissions Reduction Work

Speaker Change: Nonetheless, any pipeline that is unable to agree to terms on pipeline crossing is free to exercise rights of condemnation or expropriation as applicable.

Speaker Change: To accomplish the crossings as it seeks to do so under state or federal law energy transfer has never taken the position that others cannot process ever just that they must satisfy us that they will not adversely affect our existing lines create additional cost for us.

Speaker Change: US at risk under our existing FERC certificate, and then justifiably piggyback.

Speaker Change: All of our efforts to build pipelines and compliance with state and federal rules, including in some cases significant environmental reviews.

Speaker Change: We appreciate that long distance transmission lines and become increasingly difficult to build particularly given entrenched environmental opposition no one knows that better than energy transfer.

Speaker Change: As we have been clear energy transfer embraces markets and vigorous competition.

Speaker Change: But this also means respecting property rights and playing by the rules.

Speaker Change: And looking ahead at our 2020 for organic growth capital guidance, we expect growth capital expenditures to be between two four and $2 6 billion for 2020 inclusive of the $300 million.

Thomas E. Long: We also continue to evaluate a number of other potential growth projects that we hope to bring to FID. However, as we look at our potential backlog of high-returning growth projects, we continue to expect our long-term annual growth capital run rate to be approximately $2 to $3 billion. Now turning to our 2024 Adjusted EBITDA guidance, given the ability of our business to provide stable cash flows and operate through various market cycles, as well as our market outlook, we expect our adjusted EBITDA to be between $14.5 billion and $14.8 billion.

Speaker Change: Deferral from 2023, which will be spent primarily in the NGL and refined products and midstream segments.

Speaker Change: This capital is made up of expansions to our export facilities and storage tanks at Nederland optimization work at Marcus Hook, and new pumping station to increase our NGL takeaway capacity from the Permian, New crude oil pipeline connections and new trading capacity in the Haynesville. In addition, this capital includes.

Speaker Change: A large number of blocking and tackling projects, including processing plant capacity additions compression and laterals to existing pipeline systems additional gathering and compression build out as well as improved efficiencies and emissions reductions work.

Thomas E. Long: In 2024, we expect utilization of assets within our core segments to remain strong, and that recently acquired assets will provide growth and synergy opportunities. Worldwide demand for crude oil and natural gas, natural gas liquids, and refined products continues to grow, and we will continue to position ourselves to meet this demand by strategically targeting optimization and expansion projects that enhance our existing asset base, generate attractive returns, and meet this growing demand for our price and services. As a result of our continued emphasis on strengthening our balance sheet, we are in the strongest financial position in energy transfer history, and this will allow us the flexibility to balance pursuing new growth opportunities with further leveraged reduction, maintaining our targeted distribution growth rate, and increasing equity returns to our unit holders. This concludes our prepared remarks. Operator, please open the line up for the first question. We will now begin the question and answer session. To ask a question, you may press the star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: We also continue to evaluate a number of other potential growth projects that we hope to bring to <unk>.

Speaker Change: However, as we look at our potential backlog of high returning growth projects. We continue to expect our long term annual growth capital run rate to be approximately $2 billion to $3 billion.

Now turning to our 2024 adjusted EBITDA guidance, given the ability of our business to provide stable cash flows and operate through various market cycles as.

Speaker Change: As well as our market outlook, we expect our adjusted EBITDA to be between $14 5 million and $14 8 billion.

Speaker Change: In 2024, we expect utilization of assets within our core segments to remain strong and that recently acquired assets will provide growth and synergy opportunities.

Speaker Change: Worldwide demand for crude oil and natural gas natural gas liquids and refined products continues to grow and we will continue to position ourselves to meet this demand by strategically targeting optimization and expansion projects that enhance our existing asset base generate attractive returns and meet this.

Speaker Change: Growing demand for our products and services.

Speaker Change: As a result of our continued emphasis on strengthening our balance sheet. We are in the strongest financial position energy transfer history, and this will allow us the flexibility to balance pursuing new growth opportunities with further leverage reduction maintaining our targeted distribution growth rate and increasing <unk>.

Speaker Change: <unk> returns to our unit holders. This concludes our prepared remarks operator. Please open the lineup for the first question.

Jeremy Bryan Tonet: To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Jeremy Tonet with J.P. Morgan. Please go ahead. Hi, good afternoon. Hey, Jeremy.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: You are using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

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

Marshall S. McCrea: Just want to start off, if I could, you know, maybe some of the drivers that feed into the guidance here. We've seen a bit of volatility in commodity prices and the environment overall, and just wondering, I guess, the latest expectation for producer activity in the Haynesville, what you have, how that factored in, or any other key drivers you'd call out for the upside versus the low side of the guidance. Hey, everyone. This is Macky.

Speaker Change: The first question comes from Jeremy Tonet with JP Morgan. Please go ahead.

Jeremy Bryan Tonet: Hi, good afternoon.

Jeremy Bryan Tonet: Hey, Jeremy.

Jeremy Bryan Tonet: Just wanted to start off if I could.

Jeremy Bryan Tonet: Maybe some of the drivers that feed into the guidance here, we've seen a bit of volatility in commodity prices and the environment overall and just wondering I guess.

Jeremy Bryan Tonet: Latest expectation for producer activity in the Haynesville, what have you how that factored in or any other key drivers did callout for the upside versus the low side of the guidance.

Jeremy Bryan Tonet: Hey, Julien this is Mac yet in start up.

Marshall S. McCrea: I can start. Yeah, with the lower gas prices in North Louisiana, certainly, if they get any lower, we probably will see a slowdown. But right now, we haven't seen it.

Jeremy Bryan Tonet: Yes.

Mac: Lower gas prices in North, Louisiana certainly.

Mac: Getting lower we probably will see a slowdown but right now we haven't seen it out in the Permian basin, where we have a tremendous amount of assets.

Thomas E. Long: Out in the Permian Basin, where we have a tremendous amount of assets, we see growth even in the lower gas prices. In an environment with higher oil prices, we continue to see growth, and we are projecting modest, if not, fairly significant growth out of the Permian Basin. Other areas, it varies, mid-continent, relatively flat, and other areas where our assets are. And Jeremy, this is Tom, I think, in addition to the pricing that you brought up in your question just then. We've used a forward curve in this, so this is the latest forecast we have. We always stay kind of down the middle of the road with the range that we put out at the beginning of the year.

Mac: We see growth even in a lower gas price environment with the higher oil prices, we continues to see growth and we are projecting.

Mac: Modest if not.

Mac: Fairly significant growth out of the Permian basin.

Mac: Are there areas of Berry's mid continent.

Mac: Relatively flat and other areas.

Mac: Where our assets are pretty stable.

Mac: And Jeremy this is Tom.

Mac: In addition.

Jeremy Bryan Tonet: The pricing that you brought up.

Jeremy Bryan Tonet: On your question just then.

Thomas E. Long: We've used the forward curve and this so this is the latest.

The latest forecast, we have we always take them down the middle of the middle of the road with the range that we put out at the beginning of the year. So.

Thomas E. Long: Saying that we have that.

Thomas E. Long: So anything that we've seen, even here in the first quarter, et cetera, this would be our latest forecast, everything included. So feel good about it and look forward to another great year.

Thomas E. Long: That we've seen.

Even here in the first quarter et cetera.

Thomas E. Long: <unk> latest forecast everything included so.

Thomas E. Long: So good about it and.

We look forward to another great year so.

Thomas E. Long: Okay, so it sounds like kind of a conservative outlook and producer activity given where the strip is. Maybe pivoting a little bit towards capital allocation, even with the capital program that you guys laid out as it is, it seems like there's going to be a significant amount of surplus cash flow. And now you've kind of hit stronger credit metrics, getting to BBB. Just wondering how you think about this surplus cash flow, what's the, I guess... Priority Ranking for Capital Allocation at that point. Well, it's probably pretty consistent with where we've been. The main difference is that we have got to the lower side of our four to four and a half.

Speaker Change: Got it okay. So it sounds like kind of a conservative outlook in producer activity, given given where the strip is there.

Maybe maybe pivoting a little bit towards capital allocation, even with the capital program that you guys laid out as it is it seems like there's going to be a significant amount of surplus cash flow and now you've kind of.

Speaker Change: <unk> credit metrics getting to Triple B, just wondering how you think about.

Speaker Change: This.

Speaker Change: Surplus cash flow, what's the I guess.

Speaker Change: Priority ranking for the capital allocation at that point.

Speaker Change: Well it's.

Speaker Change: Its probably pretty consistent to where we've been.

Speaker Change: The main differences is that we have got to the lower side of our forward four five and like we said before it wouldn't even hurt.

Thomas E. Long: And like we said before, it wouldn't even hurt to go, you know, a little bit lower if it gave us a little bit more dry powder to be able to continue to look at, you know, growth opportunities, etc. So if you kind of move through that, you go into the growth capital that we've talked about, obviously, very disciplined in our projects and how we approve them and get them to FIDs. So we're going to continue to focus on that. And then we're going to look at, of course, the distribution growth also that we put out there, the 3% to 5%, which is the equity side of the equation, you know, based upon the CapEx spend and what we're seeing out there.

Speaker Change: To go a little.

Speaker Change: A bit lower if it gave us a little bit more dry powder to be able to continue to look at look at growth opportunities et cetera. So if you kind of move through that you'll go into the growth capital.

Speaker Change: We've talked about obviously.

Speaker Change: Very disciplined on our projects.

Speaker Change: And how we approve them and get them to AFI days. So we're going to we're going to continue to focus on that likewise and then we're going to we're going to look at the desk of course, the distribution growth also that we've put out there three 5%, which is the equity side of the equation.

Speaker Change: Based upon the Capex spend and what we're seeing out there and remember we're always looking at this long term.

Thomas E. Long: And remember, we're always looking at this long-term. We're not just looking at, you know, the numbers that we're reporting for the quarter. But what we will continue to evaluate is, of course, unit buybacks, along with distribution growth. So let's see how everything continues to play out. We couldn't agree with you more that a lot of free cash flow is when you do the math on the guidance we've given out there and with, you know, and with the other capital allocation topics that we've talked about here. So, very good question. Thank you. I got it. So buybacks are not off the table at this point is how to think about it. Oh no, that's exactly right.

Speaker Change: We're not just looking at <unk>.

Number that we're reporting for the quarter, but.

Speaker Change: Where we are.

Speaker Change: We'll continue to evaluate as course unit buybacks.

Speaker Change: Along with the distribution growth so, let's let's see how everything continues to play out we couldn't agree with you more.

Speaker Change: A lot of free cash flow is.

Speaker Change: When you do the math on the on the guidance, we've given out there and with.

Speaker Change: And with the the other capital allocation topics that we've talked about here. So good very good question. Thank you got it so buybacks are not off the table at this point and just how to think about it.

Speaker Change: Oh, no that's exactly right.

Speaker Change: Absolutely.

Thomas E. Long: Absolutely. They definitely are on the table. Thank you. Our next question comes from Jean Ann Salisbury with Bernstein. Please go ahead. Hi.

Speaker Change: They definitely around the diamond.

Speaker Change: Thank you.

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

Speaker Change: Hi would it be possible to get more detail on the projects in the Capex budget for this year I think I'm good on the NGL export projects.

Jean Ann Salisbury: Would it be possible to get a dash more detail on the projects in the CapEx budget for this year? I think I'm good on the NGL export projects, but could you talk a little more about the new NGL pumping capacity that you described, and the processing plans, like how many and where? Apologies if I missed it during the prepared remarks. This is Mackie.

Speaker Change: Could you talk a little more about the new NGL pumping capacity.

Speaker Change: Brad the processing plants, like how many and where.

Speaker Change: Apologies if I missed it during the prepared remarks.

Speaker Change: Hey, Jamie this is Mac I think I'll cover that question.

Marshall S. McCrea: I think I can cover that question. If you're looking at, if you're talking about our upgrade on some of our 200,000-day cryos out in West Texas into the Delaware, we can, very optimally, and at a low cost compared to adding a new processing plant, add 20,000 to 40,000 MCF per cryo. So we are looking at that. We can move quicker on that. It's just adding compression in some cases, treating or de-hives.

Mac: Youre looking at.

Mac: If youre talking about or upgrade some of our.

To add 200000 day cryo out in West Texas.

Mac: Elsewhere.

Mac: Very optimally and at a low cost compared to adding a new processing plant at $20 to 40000 Mcf per.

Mac: So we are looking at that.

Mac: We can move quicker on that is just adding compression in some cases.

Mac: <unk>.

Marshall S. McCrea: We also have already done that in the Eagle Perk. We've already added about $50,000 or $60,000 a day at a very low cost. And then if you're on some of the other CapEx, if you're looking at an... are. Expansion at Niederland.

Mac: Has.

Mac: We also.

Mac: Have already done that in the in the Eagle Ford, We've already added about 50 or 60000 a day.

Mac: Very low cost.

Mac: And then on some of the other Capex if youre looking at.

Mac: Our.

Mac: Expansion at Nederland.

Marshall S. McCrea: We're looking at the ability, as Tom said in his opening remarks, of doubling our propane capacity and increasing our butane capacity by 33 percent. So even though the market's going to be really tight for the next 18 months, we have a tremendous amount of capability. Increasing our export volumes starting about mid-2025, and not only are we excited about that, but the international market is very excited. A lot of what we're in the process of expanding has already been sold out for three to five years once those projects come online. So we're doing the best we can to be prudent within our capital and meet the needs of our customers and obligations. Thank you for that. And as a follow-up, I believe that some of the original DAPL contracts will be rolled out this year. Can you discuss if you're blending and extending those or anything you can share about that recontracting process? You bet. This is Mackie again.

Mac: Looking at the ability.

Mac: Tom said.

His opening remarks of doubling our propane capacity.

Mac: The increase in our butane capacity by 33%.

Mac: Even though the markets can be really tight next 18 months, we have a tremendous amount of.

Mac: Capability.

Mac: Increasing our export volumes starting about mid 2025.

Mac: Not only are we excited about that but the international market is very excited about that and a lot of that that we've already that we're in the process of expanding has already been sold out for three to five years once those projects come online so.

Mac: We're doing the best we can be prudent.

Mac: Our capital.

Mac: And meet the needs of our customers and obligations that we have.

Speaker Change: Great and thank you for that and as a follow up on I believe that's kind of the original dapple contracts roll. This year and can you discuss if you're blending and extending those or anything you can share about that re contracting process.

Speaker Change: You bet. This is mackie again as you can imagine that's a very.

Marshall S. McCrea: As you can imagine, that's a very sensitive question from the standpoint of competition, but I, As far as when contracts fall off and kind of what our approach is, but I will, I will answer. We are very confident that we will keep our pipeline full and increase the volumes through time, certainly if the volumes grow in the bucket. We're the best outlet out there at the best cost. We feed all the refineries, or many of the refineries, in the Midwest. We come down to the Gulf Coast, of course, and feed all the refineries in the Port Arthur area. And, of course, through our Bayou Bridge pipeline, we can transport oil logs all the way to St. James. So there's no other pipeline that's even close, no other options than ours we feel really good about as contracts roll off, that we'll do very well on recontracting and for selling. Great. Thanks a lot for that, Mackie. Here. Our next question comes from Steve Stanley with Wolf Research. Please go ahead. Hi, it's Keith.

Marshall S. McCrea: Sensitive quest.

Marshall S. McCrea: Question from the standpoint of competition, but.

Marshall S. McCrea: As far as when it contracts fall off and kind of what our approaches.

I will answer it. This way we are very cost that we will keep our pipeline full and increase the volumes through times certainly if the volumes grow in the Bakken or the best outlet out there we can at the best cost. We can feed all the refineries are many of the refineries in the Midwest, we come down to the Gulf Coast portion feed all the.

Marshall S. McCrea: And the Port Arthur area and of course through our Bayou Bridge pipeline, we can well volumes all over to St. James. So there is no other pipeline, that's even close the other options and hires we feel real good about.

Marshall S. McCrea: As contracts roll off that will do very well on re contracting or selling on a spot basis.

Speaker Change: Great. Thanks, a lot for that market.

Speaker Change: Sure.

Speaker Change: Our next question comes from Steve Stanley with Wolfe Research. Please go ahead.

Keith: It's Keith.

Keith T. Stanley: First question. You made some progress on repaying some of the preferred equity, and you mentioned another series to take out in May. How are you viewing the preferred stock right now over the next few years, and how do you kind of weigh using excess cash to repay that versus other years? Yeah, listen. That's, uh... We're actually, you know, very, very, very excited. The fact that we're able to start bringing some of that back, you know, back in as far as Perpetual Prefers. I think you're going to see us continue to look at those, and you'll see. As we look at even cash flow and where our cost of debt is, it makes a lot of sense for us to continue to bring those back in. So I think that's how you'll see us kind of prioritize when you look at our.

Keith T. Stanley: First question.

Keith: You made some progress on repaying some of the preferred equity and you mentioned and other series to take out in May.

Keith T. Stanley: How are you viewing the preferred stock right now over the next few years and how do you kind of way using excess cash to repay that versus other uses.

Keith T. Stanley: Yes listen that SaaS.

Keith T. Stanley: We're actually.

Keith T. Stanley: Barry.

Keith T. Stanley: I'm very excited and the fact that we're able to start bringing bringing some of that back back in as far as the.

Keith T. Stanley: Perpetual preferreds, I think youre going to see us to continue to look at those.

Keith T. Stanley: And youre going to.

Keith T. Stanley: As we look at as we look at even the cash flow and where our cost of that is it makes a lot of sense for us to continue to.

Keith T. Stanley: <unk>.

To bring those back in so I think thats, how youll see us.

Keith T. Stanley: And prioritize when you look at our.