Energy News Today

Energy Transfer Reports First Quarter 2021 Results


DALLAS–(BUSINESS WIRE)–Energy Transfer LP (NYSE:ET) (“ET” or the “Partnership”) today reported record financial results for the quarter ended March 31, 2021.

ET reported net income attributable to partners for the three months ended March 31, 2021 of $3.29 billion, an increase of $4.14 billion compared to the same period the previous year. For the three months ended March 31, 2021, net income per limited partner unit (diluted) was $1.21 per unit.

Adjusted EBITDA for the three months ended March 31, 2021 was $5.04 billion compared with $2.64 billion for the three months ended March 31, 2020.

Distributable Cash Flow attributable to partners, as adjusted, for the three months ended March 31, 2021 was $3.91 billion compared to $1.42 billion for the three months ended March 31, 2020.

Results for the first quarter reflected the one-time impacts of the winter storm in February and reliable operations of ET’s flexible, well-maintained asset base, particularly its storage and transportation facilities in Texas. Prior to the storm, ET pre-deployed employees and specialized equipment to key assets, and added line pack to pipelines to serve as additional storage. During the storm, employees manned facilities 24 hours a day, ET’s transmission lines remained fully operational and the Partnership did everything within its control to keep plants running and field compression idling so that ET would be prepared to deliver natural gas to facilities throughout Texas for residential consumption and power generation. ET was able to continuously provide energy to help meet critical needs throughout the historic storm, due to years of significant capital investments, strategic planning and a dedicated workforce.

Key accomplishments and current developments:

Operational

  • During the first quarter of 2021, the Partnership commissioned its ethane export facilities at Nederland, Texas, and through April has successfully loaded three very large ethane carriers (“VLEC”) and three additional ships with ethane, bringing the total ethane loaded out of this facility to nearly three and a half million barrels.
  • The Partnership also recently completed the final drill necessary to commission its PA Access Pipeline for refined products service.
  • In April 2021, ET announced an agreement which utilizes existing pipeline assets to expand crude oil transportation opportunities from the Denver-Julesburg Basin and Cushing, Oklahoma to ET’s Nederland, Texas terminal.

Strategic

  • In February 2021, the Partnership announced the acquisition of Enable Midstream Partners, LP (“Enable”) in a $7.2 billion, all-equity transaction. Pursuant to support agreements entered into in connection with the merger agreement, the two largest Enable unitholders have delivered their written consents to approve the merger. These unitholders collectively own 79% of Enable’s outstanding common units and those consents are therefore sufficient to approve the merger. The transaction is subject to the satisfaction of customary closing conditions, including Hart-Scott-Rodino Act (“HSR”) clearance. We anticipate that the Federal Trade Commission (“FTC”) will issue requests for additional information and documentary material. We continue to believe that the FTC will grant unconditional clearance of the transaction, and we remain fully committed to closing the Enable merger under the terms of the merger agreement and we now expect to close the transaction in the second half of 2021.
  • In April 2021, the Partnership completed several internal reorganization transactions, including the merger of Energy Transfer Operating, L.P. directly into Energy Transfer LP. These internal transactions will benefit the Partnership going forward by simplifying the Partnership’s structure and reducing certain administrative costs.
  • ET continues to pursue opportunities to reduce the Partnership’s environmental footprint throughout its operations with increased use of technologies, such as the Partnership’s dual drive compressors, and by supporting electric generation projects, such as the Maplewood 2 solar project, which is the Partnership’s first-ever dedicated solar power contract.

Financial

  • During the first quarter of 2021, the Partnership used cash from operations to reduce outstanding debt by approximately $3.7 billion.
  • In April 2021, ET announced a quarterly distribution of $0.1525 per unit ($0.61 annualized) on ET common units for the quarter ended March 31, 2021.
  • As of March 31, 2021, the Partnership’s $6.00 billion revolving credit facilities had an aggregate $5.08 billion of available capacity, and the leverage ratio, as defined by the credit agreement, was 3.23x.
  • For 2021, the Partnership’s previous full-year Adjusted EBITDA guidance was $10.6 billion to $11.0 billion, which included approximately $200 million related to Winter Storm Uri. The Partnership now expects to realize a total impact of approximately $2.4 billion from the storm for 2021. As a result, ET is updating its full-year Adjusted EBITDA guidance to $12.9 billion to $13.3 billion. This represents an increase of approximately $100 million compared to ET’s previous Adjusted EBITDA guidance, excluding the full impact of Winter Storm Uri. These estimates exclude any contribution from the recently announced Enable acquisition.
  • For the three months ended March 31, 2021, the Partnership spent approximately $360 million on growth capital expenditures. The Partnership now expects to spend approximately $1.6 billion on growth capital expenditures for the full year of 2021.

ET benefits from a portfolio of assets with exceptional product and geographic diversity. The Partnership’s multiple segments generate high-quality, balanced earnings with no single segment contributing more than 30% of the Partnership’s consolidated Adjusted EBITDA (excluding the impacts of the February 2021 winter storm) for the three months ended March 31, 2021. The vast majority of the Partnership’s segment margins are fee-based and therefore have limited commodity price sensitivity.

Conference Call information:

The Partnership has scheduled a conference call for 4:00 p.m. Central Time, Thursday, May 6, 2021 to discuss its first quarter 2021 results and provide a partnership update. The conference call will be broadcast live via an internet webcast, which can be accessed through www.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.

Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins. ET is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, NGL and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets. ET also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco LP (NYSE: SUN), and the general partner interests and 46.1 million common units of USA Compression Partners, LP (NYSE: USAC). For more information, visit the Energy Transfer LP website at www.energytransfer.com.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states, as well as refined product transportation and terminalling assets. SUN’s general partner is owned by Energy Transfer LP (NYSE: ET). For more information, visit the Sunoco LP website at www.sunocolp.com.

USA Compression Partners, LP (NYSE: USAC) is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of compression services in terms of total compression fleet horsepower. USAC partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USAC focuses on providing compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. For more information, visit the USAC website at www.usacompression.com.

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnership’s Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission, including the Partnership’s Quarterly Report on Form 10-Q to be filed for the current period. In addition to the risks and uncertainties previously disclosed, the Partnership has also been, or may in the future be, impacted by new or heightened risks related to the COVID-19 pandemic, and we cannot predict the length and ultimate impact of those risks. The Partnership has also been, and may in the future be, impacted by the winter storm in February 2021 and the resolution of related contingencies, including credit losses, disputed purchases and sales, litigation and/or potential legislative action. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.energytransfer.com.

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(unaudited)

 

 

March 31,

2021

 

December 31,

2020

ASSETS

 

 

 

Current assets

$

7,820

 

 

$

6,317

 

 

 

 

 

Property, plant and equipment, net

74,804

 

 

75,107

 

 

 

 

 

Investments in unconsolidated affiliates

3,009

 

 

3,060

 

Lease right-of-use assets, net

857

 

 

866

 

Other non-current assets, net

1,680

 

 

1,657

 

Intangible assets, net

5,657

 

 

5,746

 

Goodwill

2,391

 

 

2,391

 

Total assets

$

96,218

 

 

$

95,144

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities

$

7,779

 

 

$

5,923

 

 

 

 

 

Long-term debt, less current maturities

47,712

 

 

51,417

 

Non-current derivative liabilities

136

 

 

237

 

Non-current operating lease liabilities

820

 

 

837

 

Deferred income taxes

3,550

 

 

3,428

 

Other non-current liabilities

1,198

 

 

1,152

 

 

 

 

 

Commitments and contingencies

 

 

 

Redeemable noncontrolling interests

769

 

 

762

 

 

 

 

 

Equity:

 

 

 

Total partners’ capital

21,431

 

 

18,529

 

Noncontrolling interests

12,823

 

 

12,859

 

Total equity

34,254

 

 

31,388

 

Total liabilities and equity

$

96,218

 

 

$

95,144

 

ENERGY TRANSFER LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per unit data)

(unaudited)

 

 

Three Months Ended

March 31,

 

2021

 

2020

REVENUES

$

16,995

 

 

$

11,627

 

COSTS AND EXPENSES:

 

 

 

Cost of products sold

10,948

 

 

8,291

 

Operating expenses

820

 

 

879

 

Depreciation, depletion and amortization

954

 

 

867

 

Selling, general and administrative

201

 

 

204

 

Impairment losses

3

 

 

1,325

 

Total costs and expenses

12,926

 

 

11,566

 

OPERATING INCOME

4,069

 

 

61

 

OTHER INCOME (EXPENSE):

 

 

 

Interest expense, net of interest capitalized

(589

)

 

(602

)

Equity in earnings (losses) of unconsolidated affiliates

55

 

 

(7

)

Losses on extinguishments of debt

(7

)

 

(62

)

Gains (losses) on interest rate derivatives

194

 

 

(329

)

Other, net

(6

)

 

3

 

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

3,716

 

 

(936

)

Income tax expense

75

 

 

28

 

NET INCOME (LOSS)

3,641

 

 

(964

)

Less: Net income (loss) attributable to noncontrolling interests

341

 

 

(121

)

Less: Net income attributable to redeemable noncontrolling interests

12

 

 

12

 

NET INCOME (LOSS) ATTRIBUTABLE TO PARTNERS

3,288

 

 

(855

)

General Partner’s interest in net income (loss)

3

 

 

(1

)

Limited Partners’ interest in net income (loss)

$

3,285

 

 

$

(854

)

NET INCOME (LOSS) PER LIMITED PARTNER UNIT:

 

 

 

Basic

$

1.22

 

 

$

(0.32

)

Diluted

$

1.21

 

 

$

(0.32

)

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:

 

 

 

Basic

2,702.8

 

 

2,691.7

 

Diluted

2,708.6

 

 

2,691.7

 

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

(Dollars and units in millions)

(unaudited)

 

Three Months Ended

March 31,

 

2021(a)

 

2020

Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow(b):

 

 

 

Net income (loss)

$

3,641

 

 

$

(964

)

Interest expense, net of interest capitalized

589

 

 

602

 

Impairment losses

3

 

 

1,325

 

Income tax expense

75

 

 

28

 

Depreciation, depletion and amortization

954

 

 

867

 

Non-cash compensation expense

28

 

 

22

 

(Gains) losses on interest rate derivatives

(194

)

 

329

 

Unrealized gains on commodity risk management activities

(46

)

 

(51

)

Losses on extinguishments of debt

7

 

 

62

 

Inventory valuation adjustments (Sunoco LP)

(100

)

 

227

 

Equity in (earnings) losses of unconsolidated affiliates

(55

)

 

7

 

Adjusted EBITDA related to unconsolidated affiliates

123

 

 

154

 

Other, net

15

 

 

27

 

Adjusted EBITDA (consolidated)

5,040

 

 

2,635

 

Adjusted EBITDA related to unconsolidated affiliates

(123

)

 

(154

)

Distributable cash flow from unconsolidated affiliates

76

 

 

113

 

Interest expense, net of interest capitalized

(589

)

 

(602

)

Preferred unitholders’ distributions

(96

)

 

(89

)

Current income tax (expense) benefit

(9

)

 

14

 

Maintenance capital expenditures

(76

)

 

(103

)

Other, net

19

 

 

22

 

Distributable Cash Flow (consolidated)

4,242

 

 

1,836

 

Distributable Cash Flow attributable to Sunoco LP (100%)

(108

)

 

(159

)

Distributions from Sunoco LP

41

 

 

41

 

Distributable Cash Flow attributable to USAC (100%)

(53

)

 

(55

)

Distributions from USAC

24

 

 

24

 

Distributable Cash Flow attributable to noncontrolling interests in other non-wholly-owned consolidated subsidiaries

(251

)

 

(290

)

Distributable Cash Flow attributable to the partners of ET

3,895

 

 

1,397

 

Transaction-related adjustments

19

 

 

20

 

Distributable Cash Flow attributable to the partners of ET, as adjusted

$

3,914

 

 

$

1,417

 

Distributions to partners:

 

 

 

Limited Partners

$

412

 

 

$

822

 

General Partner

 

 

1

 

Total distributions to be paid to partners

$

412

 

 

$

823

 

Common Units outstanding – end of period

2,703.5

 

 

2,694.2

 

Distribution coverage ratio

9.50x

 

1.72x

(a)

Winter Storm Uri, which occurred in February 2021, resulted in one-time impacts to the Partnership’s consolidated net income, Adjusted EBITDA and Distributable Cash Flow. Please see additional discussion of these impacts, as well as the potential impacts to future periods, included in the “Summary Analysis of Quarterly Results by Segment” below.

 

(b)

Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio are non-GAAP financial measures used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of ET’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities or other GAAP measures.

There are material limitations to using measures such as Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio, including the difficulty associated with using any such measure as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company’s net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as operating income, net income and cash flow from operating activities.

Definition of Adjusted EBITDA

We define Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent only the changes in lower of cost or market reserves on inventory that is carried at last-in, first-out (“LIFO”). These amounts are unrealized valuation adjustments applied to Sunoco LP’s fuel volumes remaining in inventory at the end of the period.

Adjusted EBITDA reflects amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly.

Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.

Definition of Distributable Cash Flow

We define Distributable Cash Flow as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership’s proportionate share of the investee’s distributable cash flow.

Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.

On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of ET’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among our subsidiaries, the Distributable Cash Flow generated by our subsidiaries may not be available to be distributed to our partners. In order to reflect the cash flows available for distributions to our partners, we have reported Distributable Cash Flow attributable to partners, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:

  • For subsidiaries with publicly traded equity interests, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to our partners includes distributions to be received by the parent company with respect to the periods presented.
  • For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiaries, but Distributable Cash Flow attributable to partners reflects only the amount of Distributable Cash Flow of such subsidiaries that is attributable to our ownership interest.

For Distributable Cash Flow attributable to partners, as adjusted, certain transaction-related adjustments and non-recurring expenses that are included in net income are excluded.

Definition of Distribution Coverage Ratio

Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by distributions expected to be paid to the partners of ET in respect of such period.

ENERGY TRANSFER LP AND SUBSIDIARIES

SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT

(Tabular dollar amounts in millions)

(unaudited)

 

 

Three Months Ended

March 31,

 

2021

 

2020

Segment Adjusted EBITDA:

 

 

 

Intrastate transportation and storage

$

2,813

 

 

$

240

 

Interstate transportation and storage

453

 

 

404

 

Midstream

288

 

 

383

 

NGL and refined products transportation and services

647

 

 

663

 

Crude oil transportation and services

510

 

 

591

 

Investment in Sunoco LP

157

 

 

209

 

Investment in USAC

100

 

 

106

 

All other

72

 

 

39

 

Total Segment Adjusted EBITDA

$

5,040

 

 

$

2,635

 

In the following analysis of segment operating results, a measure of segment margin is reported for segments with sales revenues. Segment margin is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA. Segment margin is similar to the GAAP measure of gross margin, except that segment margin excludes charges for depreciation, depletion and amortization. Among the GAAP measures reported by the Partnership, the most directly comparable measure to segment margin is Segment Adjusted EBITDA; a reconciliation of segment margin to Segment Adjusted EBITDA is included in the following tables for each segment where segment margin is presented.

In addition, for certain segments, the sections below include information on the components of segment margin by sales type, which components are included in order to provide additional disaggregated information to facilitate the analysis of segment margin and Segment Adjusted EBITDA. For example, these components include transportation margin, storage margin and other margin. These components of segment margin are calculated consistent with the calculation of segment margin; therefore, these components also exclude charges for depreciation, depletion and amortization.

Winter Storm Uri, which occurred in February 2021, resulted in one-time impacts to the Partnership’s Adjusted EBITDA and also affected the results of operations in certain segments, as discussed in segment analysis below. The recognition of the impacts of Winter Storm Uri during the three months ended March 31, 2021 required management to make certain estimates and assumptions, including estimates of expected credit losses and assumptions related to the resolution of disputes with counterparties with respect to certain purchases and sales of natural gas. The ultimate realization of credit losses and the resolution of disputed purchases and sales of natural gas could impact the Partnership’s financial condition and results of operations in future periods.

Intrastate Transportation and Storage

 

Three Months Ended

March 31,

 

2021

 

2020

Natural gas transported (BBtu/d)

11,851

 

 

13,135

 

Withdrawals from storage natural gas inventory (BBtu)

19,045

 

 

6,975

 

Revenues

$

4,900

 

 

$

593

 

Cost of products sold

1,994

 

 

303

 

Segment margin

2,906

 

 

290

 

Unrealized gains on commodity risk management activities

(12

)

 

(6

)

Operating expenses, excluding non-cash compensation expense

(80

)

 

(41

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(8

)

 

(9

)

Adjusted EBITDA related to unconsolidated affiliates

6

 

 

6

 

Other

1

 

 

 

Segment Adjusted EBITDA

$

2,813

 

 

$

240

 

Transported volumes decreased primarily due to the bankruptcy filing of a transportation customer, a contract step-down, and impacts of Winter Storm Uri.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our intrastate transportation segment increased due to the net effects of the following:

  • an increase of $1.52 billion in realized storage margin due to higher physical storage margin from withdrawals during Winter Storm Uri;
  • an increase of $983 million in realized natural gas sales and other primarily due to natural gas sales at prevailing market prices during Winter Storm Uri;
  • an increase of $84 million in retained fuel revenues primarily due to natural gas prices during Winter Storm Uri; and
  • an increase of $19 million in transportation fees due to demand volume ramp-ups from the Permian and fees related to Winter Storm Uri, partially offset by the expiration of certain contracts on our Regency Intrastate Gas System; partially offset by
  • an increase of $39 million in operating expenses primarily due to a $29 million increase in the cost of fuel consumption during Winter Storm Uri and a $9 million increase in electricity costs.

Interstate Transportation and Storage

 

Three Months Ended

March 31,

 

2021

 

2020

Natural gas transported (BBtu/d)

9,654

 

 

10,630

 

Natural gas sold (BBtu/d)

21

 

 

15

 

Revenues

$

525

 

 

$

464

 

Operating expenses, excluding non-cash compensation, amortization and accretion expenses

(134

)

 

(143

)

Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses

(21

)

 

(21

)

Adjusted EBITDA related to unconsolidated affiliates

85

 

 

106

 

Other

(2

)

 

(2

)

Segment Adjusted EBITDA

$

453

 

 

$

404

 

Transported volumes decreased primarily due to foundation shipper contract expirations and a shipper bankruptcy on our ETC Tiger system, maintenance of third-party facilities, and lower crude production resulting in lower associated gas production.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our interstate transportation and storage segment increased due to the net impacts of the following:

  • an increase of $61 million in revenues primarily due to an $88 million increase in operational gas sales and a $6 million increase in reservation revenues from higher contracted volumes and increased short-term firm contracts. These increases were partially offset by a $31 million decrease due to contract expirations and a shipper bankruptcy during 2020 on our ETC Tiger system; and
  • a decrease of $9 million in operating expenses primarily due to a $5 million decrease in employee costs, a $2 million decrease in maintenance expenses and a $2 million decrease in ad valorem tax expense; partially offset by
  • a decrease of $21 million in Adjusted EBITDA related to unconsolidated affiliates primarily due to a $19 million decrease from our Fayetteville Express Pipeline joint venture as a result of the expiration of foundation shipper contracts and a $3 million decrease from our Midcontinent Express Pipeline joint venture as a result of less capacity sold and lower rates received following the expiration of foundation shipper contracts, partially offset by a $1 million increase from our Citrus joint venture resulting from higher revenues.

Midstream

 

Three Months Ended

March 31,

 

2021

 

2020

Gathered volumes (BBtu/d)

12,024

 

 

13,346

 

NGLs produced (MBbls/d)

534

 

 

610

 

Equity NGLs (MBbls/d)

30

 

 

36

 

Revenues

$

2,672

 

 

$

1,170

 

Cost of products sold

2,202

 

 

575

 

Segment margin

470

 

 

595

 

Operating expenses, excluding non-cash compensation expense

(164

)

 

(193

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(25

)

 

(26

)

Adjusted EBITDA related to unconsolidated affiliates

7

 

 

7

 

Segment Adjusted EBITDA

$

288

 

 

$

383

 

Gathered volumes and NGL production decreased compared to the same period last year primarily due to basin declines and Winter Storm Uri in the South Texas, Mid-Continent/Panhandle, Permian and North Texas regions partially offset by volume growth in the Ark-La-Tex region.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment decreased due to the net impacts of the following:

  • a decrease of $145 million in non-fee-based margin due to the impacts of Winter Storm Uri; and
  • a decrease of $32 million in fee-based margin due to lower volumes primarily in the South Texas Region as a result of basin declines and Winter Storm Uri; partially offset by
  • an increase of $52 million in non-fee-based margin due to favorable natural gas prices of $26 million and NGL prices of $26 million;
  • a decrease of $29 million in operating expenses due to cost-saving initiatives, including a decrease of $19 million in outside services, $7 million in materials and $3 million in ad valorem taxes; and
  • a decrease of $1 million in selling, general and administrative expenses due to a decrease in overhead costs resulting from corporate cost reductions.

NGL and Refined Products Transportation and Services

 

Three Months Ended

March 31,

 

2021

 

2020

NGL transportation volumes (MBbls/d)

1,502

 

 

1,398

 

Refined products transportation volumes (MBbls/d)

462

 

 

542

 

NGL and refined products terminal volumes (MBbls/d)

1,042

 

 

847

 

NGL fractionation volumes (MBbls/d)

726

 

 

804

 

Revenues

$

3,990

 

 

$

2,715

 

Cost of products sold

3,141

 

 

1,836

 

Segment margin

849

 

 

879

 

Unrealized gains on commodity risk management activities

(23

)

 

(55

)

Operating expenses, excluding non-cash compensation expense

(172

)

 

(159

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(28

)

 

(25

)

Adjusted EBITDA related to unconsolidated affiliates

21

 

 

23

 

Segment Adjusted EBITDA

$

647

 

 

$

663

 

Refined products transportation volumes decreased due to less domestic demand for jet fuel and other refined products, as well as COVID-19 related demand reductions.

NGL and refined products terminal volumes increased primarily due to higher volumes from our Mariner East system. In addition, loaded vessels at our Nederland Terminal increased due to the additional supply from the initiation of service on our propane and ethane export pipelines in the fourth quarter of 2020. These increases were partially offset by lower domestic demand for jet fuel and other refined products at our refined product terminals due primarily to COVID-19 related demand reductions.

Average fractionated volumes at our Mont Belvieu, Texas fractionation facility decreased primarily due to lower NGL volumes feeding our Mont Belvieu fractionation facility as a result of production interruptions, primarily in the Permian region, due to Winter Storm Uri during the first quarter of 2021.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our NGL and refined products transportation and services segment decreased due to the net impacts of the following:

  • a decrease of $34 million in fractionators and refinery services margin primarily due to a $28 million decrease resulting from downtime on our various fractionators due to the previously mentioned weather-driven and COVID-19 related volume reductions in the first quarter of 2021 and a $17 million decrease relating to a cavern withdrawal in the first quarter of 2021, the impact of which was partially offset in our transportation margin. These decreases were partially offset by an $8 million increase due to a more favorable pricing environment impacting our refinery services business;
  • an increase of $13 million in operating expenses primarily due to a $14 million increase in power costs; and
  • a decrease of $10 million in terminal services margin primarily due to a $32 million decrease resulting from an expiration of a third-party contract at our Nederland Terminal in the second quarter of 2020. This decrease was partially offset by increases of $13 million in loading fees due to higher LPG export volumes at our Nederland Terminal, $7 million due to the startup of our ethane export facilities at our Nederland Terminal in the first quarter of 2021, and $1 million due to higher throughput at our Marcus Hook Terminal; partially offset by
  • an increase of $26 million in marketing margin primarily due to a $45 million increase resulting from higher optimization gains and from the sale of NGL component products at our Mont Belvieu facility, a $14 million increase from our optimization and blending operations from our northeast NGL and refined products marketing operations, and a $7 million increase due to inventory write-downs taken on various products during 2020 as a result of market price declines. These increases were partially offset by intrasegment charges of $24 million in the first quarter of 2021 which were fully offset within our transportation margin, as well as a $15 million decrease in butane blending margin due to less favorable prices; and
  • an increase of $16 million in transportation margin primarily due to intrasegment revenues of $24 million in the first quarter of 2021, which are fully offset by a charge reflected in our marketing margin, a $20 million increase due to higher export volumes feeding into our Nederland Terminal resulting from the initiation of service on our propane and ethane export pipelines in the fourth quarter of 2020, a $19 million increase from higher throughput on our Mariner East pipeline system and an $11 million gain relating to a cavern withdrawal in the first quarter of 2021 that is partially offset on our fractionators margin. These increases were partially offset by a $58 million decrease resulting from lower throughput across the various regions in Texas due to Winter Storm Uri related production outages.

Crude Oil Transportation and Services

 

Three Months Ended

March 31,

 

2021

 

2020

Crude transportation volumes (MBbls/d)

3,491

 

 

4,424

 

Crude terminals volumes (MBbls/d)

2,327

 

 

2,996

 

Revenues

$

3,500

 

 

$

4,213

 

Cost of products sold

2,838

 

 

3,458

 

Segment margin

662

 

 

755

 

Unrealized (gains) losses on commodity risk management activities

(5

)

 

10

 

Operating expenses, excluding non-cash compensation expense

(122

)

 

(158

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(30

)

 

(28

)

Adjusted EBITDA related to unconsolidated affiliates

5

 

 

12

 

Segment Adjusted EBITDA

$

510

 

 

$

591

 

Crude transportation volumes were lower on our Texas pipeline system and Bakken pipeline, driven by COVID-19 related demand reductions impacting both regions, as well as lower crude oil production along our Texas systems due to Winter Storm Uri during the first quarter of 2021. These volume reductions also resulted in lower terminal volumes compared to the prior period.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our crude oil transportation and services segment decreased due to the net impacts of the following:

  • a decrease of $108 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $111 million decrease from our Texas crude pipeline system due to lower volumes transported and lower average tariff rates realized, a $55 million decrease due to lower volumes on our Bakken Pipeline resulting from lower Bakken crude oil production, a $26 million decrease in crude terminal margin primarily driven by lower Permian and Bakken pipeline volumes, reduced Gulf Coast refinery utilization from adverse weather, and decreased export demand, a $5 million decrease due to lower volumes on our Bayou Bridge pipeline, and a $3 million decrease in Mid-Continent gathering volumes due to lower production. These decreases were partially offset by a $92 million increase (excluding a net change of $15 million in unrealized gains and losses on commodity risk management activities) from our crude oil acquisition and marketing business primarily due to losses realized in the first quarter of 2020 on the write down of crude inventory due to significant market price declines;
  • an increase of $2 million in selling, general and administrative expenses primarily due to higher insurance premiums and allocated overhead costs; and
  • a decrease of $7 million in Adjusted EBITDA related to unconsolidated affiliates due to lower volumes on White Cliffs Pipeline due to lower crude oil production in the DJ basin, partly offset by higher margin from jet fuel sales by our joint ventures, partially offset by
  • a decrease of $36 million in operating expenses primarily due to lower volume-driven expenses and corporate cost reduction initiatives.

Investment in Sunoco LP

 

Three Months Ended

March 31,

 

2021

 

2020

Revenues

$

3,471

 

 

$

3,272

 

Cost of products sold

3,120

 

 

3,164

 

Segment margin

351

 

 

108

 

Unrealized (gains) losses on commodity risk management activities

(5

)

 

6

 

Operating expenses, excluding non-cash compensation expense

(76

)

 

(109

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(20

)

 

(30

)

Adjusted EBITDA related to unconsolidated affiliates

2

 

 

2

 

Inventory valuation adjustments

(100

)

 

227

 

Other

5

 

 

5

 

Segment Adjusted EBITDA

$

157

 

 

$

209

 

The Investment in Sunoco LP segment reflects the consolidated results of Sunoco LP.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our investment in Sunoco LP segment decreased due to the net impacts of the following:

  • a decrease in the gross profit on motor fuel sales of $78 million primarily due to a 20.7% decrease in gross profit per gallon sold and a 7.5% decrease in gallons sold; and
  • a decrease in non-motor fuel sales and lease gross profit of $17 million primarily due to reduced credit card transactions; partially offset by
  • a decrease in operating expenses and selling, general and administrative expenses of $43 million primarily due to lower expected credit losses, employee costs, professional fees, credit card processing fees, insurance and maintenance.

Investment in USAC

 

Three Months Ended

March 31,

 

2021

 

2020

Revenues

$

158

 

 

$

179

 

Cost of products sold

21

 

 

24

 

Segment margin

137

 

 

155

 

Operating expenses, excluding non-cash compensation expense

(28

)

 

(35

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(9

)

 

(14

)

Segment Adjusted EBITDA

$

100

 

 

$

106

 

The Investment in USAC segment reflects the consolidated results of USAC.

Segment Adjusted EBITDA. For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our investment in USAC segment decreased due to the net impacts of the following:

  • a decrease of $18 million in segment margin primarily due to a decrease in demand for compression services driven by decreased U.S. crude oil and natural gas activity compared to the prior period, partially offset by
  • a decrease of $7 million in operating expenses is primarily driven by the decrease in average revenue generating horsepower and reduced headcount in the current period; and
  • a decrease of $5 million in selling, general and administrative expenses primarily due to changes in the allowance for expected credit losses and lower employee-related expenses.

All Other

 

Three Months Ended

March 31,

 

2021

 

2020

Revenues

$

1,512

 

 

$

513

 

Cost of products sold

1,342

 

 

415

 

Segment margin

170

 

 

98

 

Unrealized gains on commodity risk management activities

(1

)

 

(5

)

Operating expenses, excluding non-cash compensation expense

(51

)

 

(38

)

Selling, general and administrative expenses, excluding non-cash compensation expense

(39

)

 

(35

)

Adjusted EBITDA related to unconsolidated affiliates

(1

)

 

 

Other and eliminations

(6

)

 

19

 

Segment Adjusted EBITDA

$

72

 

 

$

39

 

For the three months ended March 31, 2021 compared to the same period last year, Segment Adjusted EBITDA related to our all other segment increased due to the net impacts of the following:

  • an increase of $52 million from power trading activities primarily due to short-term, favorable market conditions created by Winter Storm Uri in February 2021;
  • an increase of $17 million primarily due to revenues earned under the Electric Reliability Council of Texas (“ERCOT”) responsive reserve program during the Winter Storm Uri, and
  • an increase of $5 million primarily due to increased gains from sales of storage natural gas; partially offset by
  • a decrease of $22 million primarily due to insurance proceeds received in the prior period on settled claims related to our MTBE litigation; and
  • a decrease of $10 million due to higher utility expense related to freezing temperatures.

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION ON LIQUIDITY

(In millions)

(unaudited)

 

The following table is a summary of our revolving credit facilities. We also have other consolidated subsidiaries with revolving credit facilities which are not included in this table.

 

 

Facility Size

 

Funds Available at

March 31, 2021

 

Maturity Date

Five-Year Revolving Credit Facility

$

5,000

 

 

$

4,079

 

 

December 1, 2023

364-Day Revolving Credit Facility

1,000

 

 

1,000

 

 

November 26, 2021

 

$

6,000

 

 

$

5,079

 

 

 

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES

(In millions)

(unaudited)

 

The table below provides information on an aggregated basis for our unconsolidated affiliates, which are accounted for as equity method investments in the Partnership’s financial statements for the periods presented.

 

 

Three Months Ended

March 31,

 

2021

 

2020

Equity in earnings (losses) of unconsolidated affiliates:

 

 

 

Citrus

$

37

 

 

$

35

 

FEP

 

 

(70

)

MEP

(3

)

 

 

White Cliffs

 

 

8

 

Other

21

 

 

20

 

Total equity in earnings (losses) of unconsolidated affiliates

$

55

 

 

$

(7

)

 

 

 

 

Adjusted EBITDA related to unconsolidated affiliates:

 

 

 

Citrus

$

79

 

 

$

79

 

FEP

 

 

19

 

MEP

5

 

 

8

 

White Cliffs

5

 

 

14

 

Other

34

 

 

34

 

Total Adjusted EBITDA related to unconsolidated affiliates

$

123

 

 

$

154

 

 

 

 

 

Distributions received from unconsolidated affiliates:

 

 

 

Citrus

$

56

 

 

$

49

 

FEP

4

 

 

18

 

MEP

4

 

 

11

 

White Cliffs

15

 

 

13

 

Other

21

 

 

19

 

Total distributions received from unconsolidated affiliates

$

100

 

 

$

110

 

ENERGY TRANSFER LP AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION ON NON-WHOLLY-OWNED JOINT VENTURE SUBSIDIARIES

(Dollars in millions)

(unaudited)

 

The table below provides information on an aggregated basis for our non-wholly-owned joint venture subsidiaries, which are reflected on a consolidated basis in our financial statements. The table below excludes Sunoco LP and USAC, our non-wholly-owned subsidiaries that are publicly traded.

 

Three Months Ended

March 31,

 

2021

 

2020

Adjusted EBITDA of non-wholly-owned subsidiaries (100%) (a)

$

540

 

 

$

646

 

Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries (b)

275

 

 

335

 

 

 

 

 

Distributable Cash Flow of non-wholly-owned subsidiaries (100%) (c)

$

504

 

 

$

608

 

Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries (d)

253

 

 

318

 

Below is our current ownership percentage of certain non-wholly-owned subsidiaries:

 

Non-wholly-owned subsidiary:

ET Percentage Ownership (e)

Bakken Pipeline

36.4%

Bayou Bridge

60.0%

Maurepas

51.0%

Ohio River System

75.0%

Permian Express Partners

87.7%

Red Bluff Express

70.0%

Rover

32.6%

SemCAMS

51.0%

Others

various

(a)

Adjusted EBITDA of non-wholly-owned subsidiaries reflects the total Adjusted EBITDA of our non-wholly-owned subsidiaries on an aggregated basis. This is the amount of Adjusted EBITDA included in our consolidated non-GAAP measure of Adjusted EBITDA.

 

(b)

Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries reflects the amount of Adjusted EBITDA of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest.

 

(c)

Distributable Cash Flow of non-wholly-owned subsidiaries reflects the total Distributable Cash Flow of our non-wholly-owned subsidiaries on an aggregated basis.

 

(d)

Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries reflects the amount of Distributable Cash Flow of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. This is the amount of Distributable Cash Flow included in our consolidated non-GAAP measure of Distributable Cash Flow attributable to the partners of ET.

 

(e)

Our ownership reflects the total economic interest held by us and our subsidiaries. In some cases, this percentage comprises ownership interests held in (or by) multiple entities.

 



Read More: Energy Transfer Reports First Quarter 2021 Results

2021-05-06 15:15:00

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