Energy Transfer Reports Record Financial and Operational Successes in Q4 2023
2024-03-05
Energy Transfer, a prominent midstream energy company, conducted its fourth quarter 2023 earnings call on February 14, 2024, with Tom Long, the Co-Chief Executive Officer and Chief Financial Officer of Energy Transfer, serving as the key speaker. The call offered a comprehensive overview of the company's financial performance and operational accomplishments.
In the financial realm, Energy Transfer reported generating adjusted EBITDA of $13.7 billion for the full year 2023, marking a 5% increase from the previous year and setting a partnership record. Additionally, the distributable cash flow (DCF) attributable to the partners of Energy Transfer, as adjusted, amounted to $2 billion for the entirety of 2023.
Operational successes were also highlighted during the call, with Energy Transfer achieving record volumes across all segments. Noteworthy achievements included record volumes on legacy assets and record NGL exports from the Nederland and Marcus Hook terminals. Strong performances were observed in NGL pipelines, fractionators, crude oil, and midstream segments.
In the fourth quarter of 2023, Energy Transfer saw a rise in adjusted EBITDA to $3.6 billion, up from $3.4 billion in the same period in 2022. The company's leverage ratios target range, as mentioned during the call, stood between 4% and 4.5%.
Liquidity was a point of discussion, with approximately $3.56 billion available under the revolving credit facilities as of December 31, 2023.
The NGL and refined products segment experienced an increase in adjusted EBITDA in the fourth quarter of 2023, primarily attributed to robust performances in transportation, storage, terminal, and fractionation operations, coupled with lower operating expenses. Factors contributing to the rise in NGL transportation volumes included higher volumes from the Permian region and on NGL pipelines delivering into the Nederland Terminal. Total NGL export volumes exhibited growth of 13% over the fourth quarter of 2022 and 18% over the full year of 2022.
The Interstate segment also witnessed an uptick in adjusted EBITDA, mainly due to placing the Gulf Run pipeline into service in December 2022 and higher contracted volumes on various wholly owned and joint venture pipelines. Volumes in the Interstate segment increased by 5% compared to the same period the previous year.
The call addressed the recent acquisition of Crestwood Equity Partners, expected to yield approximately $80 million of annual cost synergies by 2026, with $65 million anticipated in 2024.
Energy Transfer is actively engaged in multiple growth projects, including expanding NGL export capacity at Nederland, constructing new refrigerated storage at Nederland, and acquiring two pipelines from Mont Belvieu to the Nederland terminal. Efforts are also underway to expand processing capacity, build ethane refrigeration and storage capacity at the Marcus Hook terminal, and participate in projects like Blue Marlin offshore and the Lake Charles LNG project.
The company's financial strategy involves prioritizing capital allocation, pursuing new growth opportunities, reducing leverage, maintaining distribution growth, and enhancing equity returns to unitholders. The aim is to strike a balance between pursuing new growth avenues, reducing leverage further, and sustaining the targeted distribution growth rate.
In terms of acquisitions, Energy Transfer adopts a disciplined approach, ensuring that acquisitions are accretive and contribute to deleveraging. The company underscores the significance of fit and compatibility when evaluating potential acquisitions.
The fourth quarter 2023 earnings call by Energy Transfer provided valuable insights into the company's financial performance, operational achievements, growth initiatives, and future strategies.