Energy Transfer - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered Adjusted EBITDA of $4.10B (+5.6% YoY), Distributable Cash Flow (as adjusted) of $2.31B, and diluted EPS of $0.36; revenue was $21.02B. Strength was driven by Midstream (including a nonrecurring $160M Winter Storm Uri recognition), Interstate record volumes and strong NGL exports, while Crude saw timing-related optimization losses expected to partially reverse in Q2.
• Guidance maintained: 2025 Adjusted EBITDA $16.1–$16.5B and ~$5B growth capex; management reiterated confidence in fee-based cash flows and project pipeline ramping into 2026–2027.
• Distribution raised to $0.3275 per unit ($1.31 annualized) for Q1 2025, up >3% YoY, reinforcing capital return momentum.
• Strategic catalysts: HOA with MidOcean Energy for 30% of Lake Charles LNG and SPA with Kyushu Electric up to 1.0 mtpa, plus CloudBurst AI data center gas supply agreement; all build commercialization and demand-pull optionality.
• Liquidity strong: $4.37B available under the revolver as of 3/31/25; diversified segment mix with no single segment >1/3 of Adjusted EBITDA.

What Went Well and What Went Wrong

What Went Well

• Midstream outperformed: Adjusted EBITDA rose to $925M (from $696M), aided by Permian volume growth and a nonrecurring $160M recognition tied to Winter Storm Uri; “we saw strong volumes… in addition, we saw strong NGL exports”.
• Interstate gas set records: Adjusted EBITDA increased to $512M (from $483M), driven by Panhandle, Trunkline, Gulf Run utilization and higher rates; management highlighted record throughput and rate improvements.
• NGL export capacity ramp: Flexport nearing completion with ethane service in May and propane in July; “over 90% sold out under 3–5-year agreements starting Jan 1, 2026” and management sees minimal impact from tariffs on ethane/LPG demand.

What Went Wrong

• Crude segment pressured: Adjusted EBITDA declined to $742M (from $848M) on lower transportation and timing of optimization losses; ~$30M hedge inventory losses are expected to reverse in Q2.
• Intrastate EBITDA fell to $344M (from $438M) as lower gas price volatility reduced pipeline optimization, offsetting storage optimization gains.
• Cost inflation: NGL and Midstream operating expenses rose (utilities, employee and project costs), while fractionation/refinery services margins softened; NGL Adjusted EBITDA declined to $978M (from $989M).

Transcript

Operator (participant)

Noted today's event is being recorded. I would now like to turn the conference over to Tom Long. Please go ahead.

Tom Long (Co- CEO)

Thank you, Operator. Good afternoon, everyone, and welcome to the Energy Transfer first quarter 2025 earnings call. 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 a reminder, our earnings release contains a thorough MD&A that goes through the segment results in detail, and we encourage everyone to look at the release, as well as the slides posted to our website, to gain a full understanding of the quarter and our growth opportunities. As a reminder, we will be making forward-looking statements within the meaning of Section 21E of the Securities 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-Q for the quarter ended March 31st, 2025, which we expect to file this Thursday, May 8th. I'll also refer to adjusted EBITDA and Distributable Cash Flow, or DCF, both of which are non-GAAP financial measures. You'll find a reconciliation of our non-GAAP measures on our website. Let's start with our financial results today. For the first quarter of 2025, we generated adjusted EBITDA of $4.1 billion compared to $3.9 billion for the first quarter of 2024. We saw strong volumes through our midstream gathering, crude gathering, natural gas interstate, and NGL Pipelines, as well as through our NGL Fractionators. In addition, we saw strong NGL exports during the quarter.

DCF, attributable to the partners of Energy Transfer as adjusted, was $2.3 billion. For the first three months of 2025, we spent approximately $955 million on organic growth capital, primarily in the interstate, midstream, and NGL and refined product segments, excluding SUN and USA Compression CapEx. Now turning to our results by segment for the first quarter, let's start with NGL and refined products. Adjusted EBITDA was $978 million compared to $989 million for the first quarter of 2024. This was primarily due to higher throughput across the NGL export terminals and across our Permian and Mariner East pipeline operations, which were offset by higher operating expenses and lower blending margins compared to the first quarter of 2024. For midstream, adjusted EBITDA was $925 million compared to $696 million for the first quarter of 2024.

The increase was primarily due to higher legacy volumes in the Permian Basin, which were up 8%, as well as the addition of the WTG assets in July of 2024. In addition, results for the first quarter of 2025 were favorably impacted by the non-recurring recognition of $160 million associated with Winter Storm Yuri in 2021. This represents the remainder of the midstream segment margin from Winter Storm Yuri that had not already been recognized. Still outstanding in the interstate segment is approximately $285 million, excluding interest, that is currently in litigation, the vast majority of which is due from CPS. For the crude oil segment, adjusted EBITDA was $742 million compared to $848 million for the first quarter of 2024. During the quarter, we saw growth across our crude gathering systems, as well as contributions related to the recently formed Permian joint venture with Sunoco.

These were offset by lower transportation revenues, primarily on the Bakken Pipeline, higher expenses, as well as lower gains due to the timing of the recognition of optimization gains in Q1 of 2025 as compared to Q1 of 2024. Lower optimization gains were primarily due to lower hedge gains realized during the quarter, a write-down to hedged inventory at the end of the quarter, and the timing of the recognition of gains on certain physical crude sales. We expect approximately $30 million of losses related to the hedge inventory that were realized in the first quarter of 2025 to reverse during the second quarter of 2025. In our interstate natural gas segment, adjusted EBITDA was $512 million compared to $483 million for the first quarter of 2024. During the quarter, we achieved record volumes driven by higher throughput on Panhandle, Gulf Run, and Trunkline.

The growth on Trunkline was related to our backhaul project to support growing Gulf Coast natural gas demand. We also had increased rates on several of our pipelines in the first quarter. For the intrastate natural gas segment, adjusted EBITDA was $344 million compared to $438 million in the first quarter of last year. During the quarter, we saw increased gains related to storage optimization opportunities, which were more than offset by reduced pipeline optimization as a result of lower volatility in natural gas prices compared to the first quarter of 2024. Now let's take a look at the organic growth capital guidance. We continue to expect approximately $5 billion on organic growth capital projects in 2025. Our projects are expected to achieve mid-teen returns, with most of them also providing incremental downstream benefits.

In addition, the majority of these projects are expected online in 2025 or 2026, including our Flexport NGL export expansion, several Permian processing plant expansions, and our Hugh Brinson pipeline project. As such, we continue to expect the majority of the earnings growth from these projects to significantly ramp up in 2026 and 2027. Taking a closer look at some of our largest growth projects that are currently underway, during the first quarter, we commenced construction on phase one of the Hugh Brinson Pipeline, which we expect to be in service in the fourth quarter of 2026. We have secured the majority of the pipeline steel, which is currently being rolled in U.S. pipe mills, and as a result, do not expect any material impacts to cost of the project from tariff announcements.

Phase I is completely sold out, and we're currently in negotiations that are well in excess of phase II capacity. At our Nederland Terminal, construction of our Flexport expansion project is nearing completion. We expect to begin ethane service later this month and propane service in July, and we continue to expect to begin ethylene export service in the fourth quarter of this year. Looking at our Permian processing expansions, the Red Lake IV Processing Plant is now expected to be in service by the end of the second quarter of 2025. The Badger Processing Plant remains on schedule to be in service in mid-2025, and the Mustang Draw Plant is now expected to be in service in the second quarter of 2026. Now let's look at Lake Charles LNG. We are making substantial progress towards commercialization of the project.

In April, Lake Charles LNG and MidOcean Energy signed a heads-of agreement, which provides a non-binding framework for the joint development of the LNG project. Pursuant to the HOA, MidOcean would commit to fund 30% of the construction cost and be entitled to 30% of the LNG production. MidOcean is an LNG company formed and managed by EIG Global Energy Partners. In April, Lake Charles LNG signed a binding SPA with a Japanese utility company for up to one MTPA, with the agreement subject to the approval of the board of this company, which is expected to be received by the end of May. Also in April, we signed an HOA with a German energy company for one MTPA. Lake Charles LNG is in discussions for the remaining uncommitted LNG offtake volume and is targeting FID by year-end.

Now for a brief update around our power generation opportunities, the level of activity from demand pool customers has remained strong, and we're in advanced discussions with several other facilities in close proximity to our footprint to supply, store, and transport natural gas from gas-fired power plants, data centers, and industrial and onshore manufacturing. On our last earnings call, we were excited to announce that we have entered into a long-term agreement with Cloudburst Data Centers to provide natural gas to their flagship AI-focused data center development in Central Texas. We would expect these types of projects to require very low capital and to generate revenue relatively quickly. There is a lot of competition around these projects, but our team has done an excellent job of identifying the most likely opportunities, and we will continue to provide updates as we move forward.

Lastly, construction of 18 MW natural gas-fired electric generation facilities continues. The first facility was placed into service in the first quarter, and we expect the next one to be in service by the end of the second quarter, with the remainder expected to be in service throughout 2025 and 2026. Now turning to our guidance, we continue to expect our 2025 adjusted EBITDA to be between $16.1 billion and $16.5 billion. We benefit from an integrated business model that is well diversified by products and geography. Our cash flows are highly fee-based with limited commodity price exposure, and financially, our balance sheet is in the strongest position in our history. We also have a high percentage of take-or-pay contracts, helping to reduce impacts from market volatility.

We are executing on a solid backlog of well-contracted growth projects with strong counterparties, which are expected to generate strong returns, enhance our integrated value chain, and promote strong growth. We will start to see contributions from some of these projects this year, with additional benefits really ramping up next year as we quickly convert CapEx into cash flow. Given Energy Transfer's extensive natural gas infrastructure, we are excited to see the growing demand in and around our franchise to support power plant, data center, and LNG growth. With our diverse integrated asset base and strong financial position, we believe we are well positioned to manage volatility while we continue to grow. Before we close, we'd like to take a moment to mention Sunoco's recently announced plans to acquire Parkland Corporation. We are excited for Sun as they work to bring these assets into the family of partnerships.

This combination is expected to create the largest independent field distributor in the Americas. This concludes our prepared remarks. Operator, please open the lineup for our first question.

Operator (participant)

Thank you, sir. As a reminder to ask a question, please press star then one on your telephone keypad. To remove yourself from queue, please press star then two. Our first question today comes from Theresa Chen at Barclays. Please go ahead.

Theresa Chen (Senior Analyst)

Good afternoon. I'd like to first ask on the Lake Charles progress. Looking to your year-end target FID, can you talk about additional steps from here, either from a commercialization, financing, or permitting regulatory perspective? More broadly, how do you think U.S. LNG is situated given increasing competitive dynamics domestically, as well as increasing demand abroad, with the EU Commission proposing to phase out imports of all Russian gas and LNG?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Hello, Theresa. This is Mackie.

We continue to gain momentum and be excited about getting the FID. We've worked many, many years on this project. We've got teams over as we speak. In fact, even on this call moments ago, we got a text where we signed up another million tons from a large international energy company. We are very excited. However, we still got work to do. We now passed 10.4 million tons. We're targeting about 15 million tons. As Tom just said in his opening statements, we have a big partner in this now. We're looking for other partners. At the end of the day, we want about 75%-80% equity and/or infrastructure partners. Still have that box to check. We're finalizing our EPC cost over these next couple of months. Everything's looking good.

Like I said, we've got a lot of work to do, but we're very excited about where we're at. We're also very excited about the new administration that will not hold up. In fact, will promote these types of projects to not only benefit our country, our partnership, but also our friends around the world that desperately need the LNG. We're excited about it. A lot of work to do, and certainly hope we reach FID by the end of the year. As far as the second question you had, kind of hard to address that. We feel pretty good where our prices are. We know there's a lot of competition out there. Some are already at FID. Some aren't. We're successful in continuing to price our capacity in a manner that works for our returns.

We kind of do not worry and think much about what others are doing. We focus on what we have got, and we are excited and are hopeful to get there by the end of the year.

Theresa Chen (Senior Analyst)

Thank you. With one of your portfolio companies getting a C corp currency soon, potentially, how does that parlay into the potential for Energy Transfer to also have a C corp presence? What are your thoughts on that topic at this point?

Tom Long (Co- CEO)

Hey, Theresa. This is Tom. We have always had that on the options list, if you will. We continue to evaluate it and see what makes sense from an Energy Transfer standpoint. Obviously, very excited to see Sun be able to first execute on one, and we will evaluate that carefully.

As we sit here right now, it's really not any more plans than probably we had before this transaction as far as Energy Transfer goes. It's an option, and we're going to continue to look at it, and we'll stay tuned.

Theresa Chen (Senior Analyst)

Thank you.

Operator (participant)

Thank you. Our next question today comes from Jeremy Tonnet with JPMorgan. Please go ahead.

Jeremy Tonet (Research Analyst and Managing Director)

Hi. Good afternoon.

Tom Long (Co- CEO)

Hey, Jeremy.

Jeremy Tonet (Research Analyst and Managing Director)

Hey. I was just curious, given the volatility we have seen in commodity prices, and we're starting to see some rigs being dropped even in the Permian. Just wondering, I guess, with your latest producer-customer conversations, what your outlook is for production, if that has changed meaningfully, or how do you expect it to impact Energy Transfer?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Okay. This is Mackie again. Typically, I'll make a brief statement at the end.

Sometimes I'll make a brief statement real quick, and I think it's important for this question and also for other questions that might come up. We were talking a couple of weeks ago, and a lot of us have been in this business for 35 years, 40 years, some like Tom longer than that. Anyway, we've seen a lot of cycles. It's a very cyclical business. We've seen gas at $1.50. We've seen gas at $8 or $9. We've seen oil at less than $10. We've seen oil at $120. We've had quarters where we were panicked about what the spread is between Waha and Katy because we were a natural gas pipeline company. Fortunately, where we are today with Kelcy's leadership and guidance is we're the most diversified, kind of unparalleled midstream pipeline company in the United States. Just quickly, a few comments on that.

In addition to kind of our segments, we've got our USA Compression run by Clint, who's doing a great job of not only maintaining what they have, but look for growth over the coming years. We got Joe Kim and his team with Sunoco. He's done an incredible job with the assets they purchased. Now they've just made a huge announcement that we see a lot of upside for them. Of course, that also provides additional distributions, which don't hurt our feelings at all. You look at our segment. You look at our crude segment run by Adam and his team. We move about 20% of the barrels out of West Texas. About 30% of the barrels that are produced in the United States go through our pipes. Over 50% in the Bakken. We're one of the largest deliverers of barrels to the refineries around Port Arthur.

Of course, Bayou Bridge to Lake Charles and St. James, and then on and so forth up the mid-continent. You jump over to the NGLs and the massive pipelines we have built with Mariner. We are the company to go to with any ethane propane growth out of the Northeast through our Marcus Hook Terminal. Of course, our incredible expansion at Nederland that we are also completing, our next 250,000 in our NGL world, where we move a lot of barrels, over a million barrels a day go into that. Very excited about that. Of course, midstream, we have a big presence in the Permian and a lot of other places.

You look at what's going on in the pipeline business, our intrastate, our interstate, and how well we've built all those out from all the major basins delivering to all the major markets, whether it's LNG or whether it's power plants or the utilities or cities or whatever. We just have positioned ourselves in such a good way to where if one segment slows down or whatever, the other picks it back up. All that saying, going to your question, yes, we are seeing a slowdown a little bit over the last few weeks. We actually have been in conversations, Tom and I have with some of the majors. They really haven't indicated at these kind of mid to upper $50 a barrel pricing that they're necessarily going to slow down.

We have seen even the last day, yesterday and today, there's been some statements on slowdown. We are well positioned to manage that. This is what happens in this industry. It will slow down, and then it will come back as a barn burner. We certainly anticipate that happening with oil, but even tenfold on gas. Any kind of slowdown on gas, if you look over the next three or four years, five to seven BCF of growth in the LNG market, who knows where the AI data center and power plants are going to go on a high side or even a medium side on that. I mean, it's just a wonderful outlook for our pipeline business, both intra and interstate. Yes, if there are areas where drilling has slowed down, it will slow down some parts of that.

As a whole, we think some of the other areas of our well-balanced partnership will kind of even things out. We just stay very positive and bullish on the future, especially around NGLs and natural gas transportation.

Jeremy Tonet (Research Analyst and Managing Director)

Gotcha. Makes sense. Yeah. No, certainly important to have a diversified platform there. Seems like a slowdown in oil could help the gas supply demand dynamics and could help you out there as well. Maybe just building on gas a bit more, I guess, the opportunity set as you see it to service growing power demand and data centers even. Thinking particularly to the west of Texas, just wondering how you see, I guess, the opportunity set to feed more power in Texas or data centers and also further west in Arizona as well.

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Yeah.

I tell you, this is one of those areas where we feel like we're sitting on a gold mine. As I just mentioned, we built a lot of assets, bought a lot of pipeline assets, moving molecules from production basins to markets. We wake up here in the last 6 months to 12 months and find ourselves in an incredible position. Adam and his team are—he's got a really good team he's put together to chase deals all over Texas. There's 150 approximate data centers that we're looking at just in Texas alone. We would love to elaborate and talk about some significant progress we make. We do believe in the next four to six weeks, we'll be able to make some significant announcements.

What's really cool about our assets, and we've said this before, is that if we were going to go out and develop, and we're kind of doing this to a certain degree to help some of the hyperscalers and try to place some of these data centers, we'd place them almost right on top of our pipes. In fact, like we said last time, Cloudburst location, our pipeline actually runs through that acreage. We're so well positioned from an electrical transmission standpoint. A lot of the major electric lines running through Texas parallel or very close to our pipelines. A lot of the low-latency fiber optics runs in the same corridors as our pipelines. We're very optimistic. We'd love to elaborate.

Yes, even outside of Texas, we see Arizona as a very significant growth area for data centers, really growth area for natural gas demand in addition to data centers. Elsewhere in other states, a couple of other states, we expect to make some significant announcements over the next four to eight weeks. It is a little premature, but very excited about where that's going to take us. I could not feel better about our situation on where our pipelines sit, our ability to move large volumes through these large diameter systems, and the storage we have to back up that. We just could not be more excited about these opportunities we are chasing.

Jeremy Tonet (Research Analyst and Managing Director)

Got it. We will be listening in the coming weeks to that announcement. Thank you.

Operator (participant)

Thank you. Our next question today comes from Jean Ann Salisbury with Bank of America. Please go ahead. Hi.

Jean Ann Salisbury (Senior Research Analyst of Integrated Oil Midstream and Natural Gas)

Thank you for the update on the timing of the ethane and propane in service for the Nederland Flexport expansion that starts in the next few months. Can you speak to how you're viewing the speed of the ramp for that project and if you expect it to mainly be shipping propane or ethane in the medium term?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Yeah. This is Mackie again. I believe we're coming on the end of this month, early next month with ethane. Regardless of what everybody's hearing about all the negativity around what's going on in China and other areas, we're not having a problem finding a home for our product, our ethane or LPG. In fact, we did a deal this morning for another ethane spot cargo to China. With those tariffs apparently being lifted around ethane and possibly LPG, we feel very good about it.

July or August, we'll be ramping up the propane portion of that. By the end of this year, ethylene. All of that, we expect on a spot basis and/or some of it's turned up to stay very full for the second half of this year. On this new Flexport expansion, we're over 90% sold out under three- to five year agreements starting January 1st, 2026. We're very excited about that. It needs to come online for the international demand around the world. We're excited to finally, for all that hundreds of millions of dollars we've spent, we're excited about the revenue that we're about to bring in the door.

Jean Ann Salisbury (Senior Research Analyst of Integrated Oil Midstream and Natural Gas)

Oh, great. That's super helpful. Thank you. You kind of touched on this, but my follow-up was just real-time what you're seeing in the LPG export market.

Is there basically enough rerouting, I guess, going on to avoid the China tariff on U.S. LPG? How do you think that plays out in the next few months?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Yeah. With all these questions and a lot of uncertainty about what's going on in the industry, we have very little concern, even talking to our team today. As I just said, there's a lot of international demand, not just China, all over the world for ethane, propane, and butane. We really don't expect to see any major challenges, if any challenge at all, selling out our terminal every month the rest of this year.

Jean Ann Salisbury (Senior Research Analyst of Integrated Oil Midstream and Natural Gas)

Great. I'll leave it there. Thank you.

Operator (participant)

Thank you. Our next question today comes from Spiro Dounis with Citi. Please go ahead.

Spiro Dounis (Midstream Analyst)

Thanks, Effron. Afternoon, team. Maybe just to go to you,Hugh Brinson.

Tom, you pointed out that negotiations now are well in excess of that phase two capacity. Multi-part question here. One, what does that mean for the timing of phase two? Is there an ability to accelerate that now? Does this actually create some bottlenecks, maybe even downstream of Hugh Brinson, where that could precipitate more expansions? Lastly, what kind of customers are you dealing with here? Is this largely data center-driven demand?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Yeah. This is Mackie again, Spiro. I tell you, it's funny. We've been trying to get a 42-inch across Texas to FID for, I don't even know, four or five years. We finally got that done. It couldn't have been better timing, especially part of your last question was related to data centers. However, getting that to FID had nothing to do with data centers.

Not one data center supported that project to get it off the ground. As we've said, we have sold out now phase one. We are in negotiations with, I wouldn't say twice as much, but significantly more volume request than we have capacity available to take it from 1.5 BCF - 2.2 BCF. As I was just alluding to, what an incredible time to announce a new 42-inch, 2.2 BCF pipeline out of the most prolific basin in the United States that connects to multiple 42 and 36-inch pipes of ours that feeds markets throughout the state of Texas and then also, of course, accesses Carthage and Texo to feed the Southeast, LNG, everything else. We are very excited about that. As far as data centers, we call it kind of the gold rush.

It's something where not only are we working with customers that will end up probably utilizing some of the remainder capacity we have available, we also have customers that want diversification of receipt points, meaning they may want some from Waha, some from Katy, some from Carthage. We are able to accommodate that with this massive system we have built. We are in such a good situation, very excited about it. As I keep saying, we cannot express our excitement enough. One kind of exclamation point on this, tying in all these, and it is not just data centers. That is one thing that we probably need to elaborate on. We are negotiating with as many power plants unassociated with data centers that we think are more likely to happen just because of the need, especially here in Texas, to meet the growing demand from population, etc.

Kind of the exclamation point is there's not a lot of capital of this. As I mentioned earlier, a lot of these areas where these data centers are proposed are right on top of us. We're talking about moving 250,000, 300,000, 400,000, 500,000 from different directions with some good healthy margins, and yet we're laying 1 mi - 5 mi of pipe. I said exciting enough times. I'll say it again. We're thrilled with this new opportunity for our pipeline assets and very excited where that's going to take revenues for those assets in the future.

Spiro Dounis (Midstream Analyst)

Good. No, it's great to hear, Mackie. Second question, maybe this one for you as well. Kind of want to go back to Jeremy's original question, ask it a different way and hopefully not make you repeat yourself. Your point's well taken.

I think over longer-term periods, you've proven to be pretty durable and resilient through these cycles. I guess if we narrow the focus a little bit, obviously, a lot of projects coming online this year, $5 billion of CapEx in the hopper here. I think last time we caught up, it did suggest you'd be sort of at the higher end of your sort of 3%-5% growth rate this year and maybe next year. I guess I'm curious, given everything we've seen, I realize a lot of uncertainty, still crude in the $50s. Does it still feel like that $5 billion of CapEx has got enough hardwired growth inside of it to still drive 5% growth, or maybe does some of that come off a bit?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

That's a good question.

Certainly, we're always looking at everything, every impact we might have on our system. With some of the statements that have come out even recently, one thing we were joking about before this call is every time we bring on a plant, we just brought on Lenora I here not too long ago. Within days, certainly within weeks, it's full. When we bring on Lenora II here in the next 30 days-45 days, we don't know how full it's going to be. Our expectations are it's going to fill up pretty fast. We do have the luxury of kind of watching what happens over the next quarter, maybe quarter and a half, two quarters. If we really do see a slowdown, we will have the ability to defer some of these costs.

We can delay Mustang Draw, certainly not talking about, think about that or anything right now on that. It is certainly a tool and something that we can look at as well as other projects that we have. If we see a huge downturn and it is extended for some period of time, we will be able to push some of that $5 billion into 2026. Way premature to any kind of that type of, I would not say panic, but any of that type of moves where we remain bullish. Yes, we see some softening. Yes, we see some potential challenges over the next quarter or two. Gosh, a year, two years, through 10 years, we are extremely bullish on our industry and on the need for all the products that we transport.

We'll just see how the next quarter plays out before we make some of those decisions.

Spiro Dounis (Midstream Analyst)

Got it. It's great color, Mackie. Appreciate it. Thanks, everyone.

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Thank you.

Operator (participant)

Thank you. Our next question today comes from Keith Stanley, Wolf Research. Please go ahead.

Keith Stanley (Director)

Hi. Good afternoon. Two follow-ups on that. On the CapEx conversation, Tom, is there a figure that you have just roughly if we're talking $5 billion of growth CapEx this year, what would that look like based on just sanctioned projects right now for 2026? Does that number come down a lot, or how are you looking at that and flexibility for 2026 spend?

Tom Long (Co- CEO)

Yeah. Thank you, Keith. That's actually a very good question. Of course, we generally don't give our guidance for the current year until the end of the year.

When you really look out and you probably look at a lot of these projects that we're talking about coming on right now, we don't have that same size number currently filled up. We do have, as always, a big backlog of projects to look at. I don't really have an answer for you on how to guide, but I'd probably take it to less than half of that is probably where I would take it with you, Keith. Let's see how the year continues to develop. As we sit here right now, that's probably a good marker without it being guidance, though.

Keith Stanley (Director)

Okay. Less than half of $5 billion is sanctioned today. Obviously, that can change over time.

Tom Long (Co- CEO)

That's correct.

Keith Stanley (Director)

Okay. That's very helpful. The second follow-up, I just wanted to check on the contracting position just across NGL exports.

I think, Mackie, you said you expect to fully sell out on a spot basis all of your available export capacity. You also said Flexport's 90% contracted for three to five years. Just looking holistically at your NGL export portfolio, is there a percentage of capacity that you would point to as being under fixed fee contracts going forward, including Flexport?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

Yeah, Keith. Our spot prices, they're fixed when we negotiate them each month. Our term prices, they are fixed. Whether it's a three-year, a four-year, or a five-year term, it's a fixed fee for us to load ethane, propane, or butane onto these ships. Does that answer your question?

Keith Stanley (Director)

I guess I was trying to get at what percentage the mix. What percentage is term contracts versus kind of month-to-month?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

The Flexport project that we're bringing on ethane and propane and then ethylene throughout the remainder of this year, fully contracted, fixed price on average three to five years for the Flexport capacity that we're putting in service this year.

Keith Stanley (Director)

Got it. Thank you.

Operator (participant)

Thank you. Our next question today comes from Michael Blum with Wells Fargo. Please go ahead.

Michael Blum (Managing Director)

Thanks. Good afternoon, everyone. I had a follow-up question on Hugh Brinson. It sounds like you have more demand than your phase two expansion. I guess the question is, could you expand it further with compression, or do you have another option? Would you somehow need to add another pipeline? The other question related to that is, does this give you more pricing power and the ability to charge higher rates, or could you see a higher return on a project like that?

Tom Long (Co- CEO)

Let me just say our prices are always fair and competitive. We may have some markets on the phone, but no, anything like that, of course, we can always loop pipe. We can always add compression. We actually now are looking at making Hugh Brinson fully bidirectional. That is at a relatively inexpensive price to make that work. I guess to kind of round out the answer, we feel really good about the value of the capacity that we have yet to sell on Hugh Brinson and the amount of revenues that is going to create for our partnership, both from a west to east route as well as from an east to west route across Texas.

As I mentioned, we're very well positioned, and we think we're going to do very well on adding significant value with all these, not only data centers, but with all the power plant opportunities that we have, not only in Texas but in a number of other states.

Michael Blum (Managing Director)

Got it. Thanks. That's all I had today.

Operator (participant)

Thank you. Our next question comes from Manav Gupta with UBS. Please go ahead.

Manav Gupta (Executive Director)

Good afternoon. I wanted to ask you, it's been about six months since you have had a new president and a new government. Have things actually changed on the ground? Are you seeing more supportive permitting process? In general, are you seeing more support for oil and gas industry from the new administration?

Tom Long (Co- CEO)

Yeah, absolutely.

We didn't expect it to be this big of an impact on things yet, but long term, we think the decisions that this administration will be very good for our country and very good for our industry and very good for our partnership. In regards to permitting, it goes without saying that the pause around LNG, whatever pause there was left, has been lifted. The Energy Dominance Council under the Department of Interior is doing everything they can to learn about projects and to help projects get to the finish line where they make sense. As far as any extensions, for example, around our LNG project with PERC extensions or DOE extensions, we feel very good about getting those. A general overall statement is things are much more positive.

We think it will become much easier to build infrastructure with a lot more certainty for ourselves and for our customers and for the country. As we talked about for the last four years, we are very excited about this new administration and where it's going to take this country and how our partnership will benefit from it.

Manav Gupta (Executive Director)

Perfect. My quick and easy follow-up here is your guidance still remains for 2025, $16.1 billion-$16.5 billion. And those of us who really like ET hope it's $16.5 billion. Help us understand, despite some of the small slowdowns that we are seeing, what could still get you closer to $16.5 billion versus the midpoint of the guidance. Thank you.

Dylan Bramhall (Group CFO)

Yeah, this is Dylan here. When we think about that guidance range, one thing I do want to point out for a start here, we put out this range.

We put out this range of $400 million, and that's on a midpoint of $16.3 billion. If you think about that, from the midpoint to the high and the low end, we're only going less than 1.25% each way. That's a pretty tight range. There are a lot of drivers in there. We feel really good about this plan when we put it out, and we still feel really good about it right now. It's the usual things: commodity price movements, spreads. Those make up about 10% of our business there. There is a little bit of volume exposure as well within primarily the midstream segment. That's fairly muted as well. Those are really the drivers that can move us within that 2.5% range, top to bottom end.

Manav Gupta (Executive Director)

Thank you so much.

Operator (participant)

Thank you. Our next question today comes from John Mackay with Goldman Sachs.Please go ahead.

John Mackay (VP Equity Research)

Hey, guys. Thanks for the time. I wanted to talk about WTG for a second. It's been about, I guess, three quarters since you guys closed on that. Just anything you can kind of update us on in terms of how that asset's going right now, your ability to kind of ramp it up and start to retake share in the Midland, and then anything that's coming out of it on the NGL side that's given you some confidence on the contracting piece on the TNF side. Thanks.

Mackie McCrea (Co- CEO and Chief Commercial Officer)

This is Mackie McCrea. Dylan may want to follow up, but what a great acquisition. Tremendous amount of reserves and contracts dedicated to those assets. We have discovered, as we've kind of started operating them, some issues that have come up that we continue to address.

Long term, we're excited about the growth, both from a cryogenic, from a gathering standpoint, but also from a downstream. We mentioned Hugh Brinson. Hugh Brinson will be at the tailgate of the majority of the WTG cryos. That'll be a great outlet. When there's issues, we are having issues from time to time with the existing pipeline. That'll help in a big way. As well as the NGLs, some of the NGLs are already dedicated. We do see a growth in NGLs coming from these facilities in the future for our NGL pipeline and fracking business. All in all, we're very pleased about that asset and working hard to bring it up to the full standards of Energy Transfer's other assets. It's going to be a great contributor to our partnership for many years to come.

Tom Long (Co- CEO)

Yeah. Mackie, you say that.

You say that great. I think when we look back versus our acquisition plan, as many of you recall, we had a lot of maintenance CapEx for maintenance capital in for the first two years as we recognized there was going to be some work to do. We are definitely spending that capital. On the plus side, the volumes are ahead of the plan that we had at acquisition. I think we are really pleased. The producers behind this system are great partners, and we are seeing the financial benefits of that on the revenue side. All in all, financially, this is going to turn out to be a great acquisition for us. I appreciate that.

John Mackay (VP Equity Research)

Thank you. Second, I want to be quick. Dylan, going back to Manav's question on the guidance, not to belabor the point.

Since the range is so tight, I just want to ask, the $160 million benefit in midstream this quarter, was that kind of expected inside the guide? And then how are you guys treating the remainder storm proceeds that you have not recognized yet relative to that guidance range? Thanks.

Dylan Bramhall (Group CFO)

Yeah. I would say that was not explicitly as part of the guide. Now, when we look at the guide, the one thing that somewhat offsets that is the first quarter in our guide, we have assumed internally some volatility in there that we capture in the interest rate segment. I will say this first quarter, we did not have the volatility that we have seen in past years. We were short on that mark there. This is a little bit of an offset there versus some stretch that we had put into the business in the first quarter.

Kind of consider that a wash as we go forward here.

John Mackay (VP Equity Research)

I appreciate that. Thanks for the time.

Operator (participant)

Thank you. Our next question comes from Gabe Moreen with Mizuho.Please go ahead.

Gabe Moreen (Managing Director)

Hey, good afternoon. I just had one follow-up on Lake Charles. Given, I guess, all the activity to try to get gas to the Gulf Coast for LNG exports and also the MidOcean agreement saying that they'll use Energy Transfer pipes to get gas to their portion of the facility. Can you calibrate kind of the upstream opportunities on the pipe side now that you're getting close to FID, whether it's getting gas from the Haynesville, across the border from Texas? Just kind of your latest thoughts on how big that opportunity could be?

Mackie McCrea (Co- CEO and Chief Commercial Officer)

You bet. It's Mackie again. It's a huge opportunity.

Yes, we do intend for all the molecules that come into Lake Charles will somehow move through our pipelines. We have the ability to move quite a bit of gas to that area today. We will be needing to expand where exactly that expansion will come to and what size and timing and all that. We're still working through that depending on what the customer's desires are. Probably unlike any other LNG, we will have the ability to source from the Permian Basin, from Carthage, from Oklahoma, from Perryville, from North Louisiana, from East Texas, from Katy. With our extensive pipeline interstate network, we're having the ability to provide our customers and ourselves with access to the cheapest sources of supply, wherever those may be, from all those points we just talked about. We're still fine-tuning and finalizing what additional upstream pipelines will be necessary.

Those will be also to FID by the end of this year as well, in conjunction with Lake Charles.

Gabe Moreen (Managing Director)

Thanks, Mackie.

Operator (participant)

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Tom Long for closing remarks.

Tom Long (Co- CEO)

Thank you. Thank you to all of you for joining us. We are always very, very appreciative of y'all's support, and we look forward to any follow-up questions you might have.

Operator (participant)

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.