Energy Transfer (NYSEAMERICAN:ET) reported third-quarter 2026 results marked by higher adjusted EBITDA, stronger distributable cash flow and an increased full-year outlook, as volume growth, new infrastructure and favorable market conditions lifted performance across its business segments.
Chief Executive Officer Tom Long said adjusted EBITDA totaled approximately $5 billion in the third quarter, compared with approximately $3.8 billion in the prior-year period. Distributable cash flow attributable to partners, as adjusted, rose to about $2.5 billion from roughly $1.9 billion a year earlier.
The partnership raised its full-year 2026 adjusted EBITDA guidance to a range of $19.7 billion to $19.9 billion. The midpoint represents an approximately $850 million increase from the range issued during the prior quarterly call. The revised outlook includes base-business outperformance and approximately $285 million related to previously disputed natural gas purchases with a downstream customer that will be recognized in the fourth quarter, Long said.
The guidance does not include any benefit from Energy Transfer’s pending acquisition of Vaquero Midstream, which is expected to close during the middle of the fourth quarter, subject to regulatory approval and customary closing conditions.
Segment results and market volatility
Energy Transfer said each of its major businesses contributed to the year-over-year improvement. NGL and refined-products adjusted EBITDA increased to approximately $1.2 billion from about $1.1 billion, supported by higher exports from the Nederland and Marcus Hook terminals and greater throughput at Mont Belvieu fractionators.
The segment also benefited from about $177 million in increased marketing margin tied to favorable conditions, including higher premiums on domestic and export NGL sales and increased volatility. Long said approximately $100 million of that gain is expected to be offset during the next two quarters as derivative losses are realized.
Midstream adjusted EBITDA rose to approximately $864 million from $751 million, driven primarily by record Permian Basin volumes. Permian volumes increased about 8% as new plants entered service and utilization improved. Higher NGL and natural gas prices also added approximately $70 million compared with the prior year.
Crude oil adjusted EBITDA climbed to approximately $871 million from $746 million, reflecting volume growth across pipelines and gathering systems, along with stronger spreads and volatility. Energy Transfer expects approximately $100 million of favorable crude-market gains to be offset in the fourth quarter as derivative losses are realized.
Meanwhile, interstate natural gas adjusted EBITDA increased to approximately $500 million from $431 million, supported by higher contracted volumes and utilization on Transwestern, Rover, Panhandle Eastern and Florida Gas Transmission. Intrastate natural gas adjusted EBITDA rose to about $346 million from $230 million, largely due to an approximately $82 million increase in gross margin as volumes ramped on Phase I of the Hugh Brinson Pipeline.
Group CFO Dylan Bramhall said optimization opportunities across the partnership could total about $1.5 billion in 2026, compared with a typical planning assumption of $200 million to $400 million. He said the benefit has come from a combination of commodity prices, spreads, market volatility and increased volumes across the asset base.
Capital plans and growth projects
Energy Transfer expects 2026 organic growth capital expenditures of $5.4 billion to $5.6 billion, excluding capital spending by Sunoco and USA Compression. The company currently expects 2027 growth capital expenditures of approximately $7 billion and plans to provide formal guidance during its next earnings call.
Bramhall said 2027 appears likely to be one of the partnership’s larger capital-spending years, although spending could remain above $5 billion for several years given its project backlog. Management said most of the growth projects are backed by long-term commitments and are expected to generate mid-teen returns.
Phase I of the Hugh Brinson Pipeline, with capacity of 1.5 billion cubic feet per day, is now in service. Phase II, which adds downstream compression and is expected to enter service in the first quarter of 2027, is projected to increase capacity to more than 2.3 billion cubic feet per day. The full project remains expected to come in under budget.
Energy Transfer also reached positive final investment decision on the South Mississippi Pipeline Project, a proposed 215-mile, 36-inch pipeline connecting near the Perryville Hub to Florida Gas Transmission in southern Mississippi. The project has expected capacity of approximately 1.2 billion cubic feet per day, estimated cost of about $1.6 billion and anticipated in-service date in 2030.
The partnership said it has secured 20-year demand-based firm transportation agreements to support construction. Energy Transfer expects to own 51% and operate the project, while shippers or their affiliates would own the remaining interest. Co-CEO Mackie McCrea said the pipeline would connect the company’s infrastructure near Perryville with Florida Gas Transmission and provide shippers access to supplies from the Permian, Haynesville and Marcellus/Utica basins.
- Energy Transfer placed the Mustang Draw II processing plant into service in October.
- The company reached FID on Bear II, a 200,000 Mcf-per-day cryogenic plant in the Delaware Basin expected to cost about $225 million and enter service in the third quarter of 2027.
- It reached FID on Frac X, its 10th Mont Belvieu fractionator, with 200,000 barrels-per-day capacity and expected service in the first half of 2029.
- The Nederland ethane export expansion was increased to approximately 300,000 barrels per day, along with 55,000 barrels per day of additional LPG capacity and two new NGL ship docks.
Vaquero acquisition and demand opportunities
Energy Transfer’s planned Vaquero Midstream acquisition is valued at approximately $2.625 billion in cash and ET common units. The transaction includes about 300 miles of pipeline in Loving, Reeves, Ward and Winkler counties and three gas-processing plants with combined capacity of approximately 675 MMcf per day.
The company expects the transaction to be immediately accretive to distributable cash flow per common unit. Management said the deal represents an approximately 8.5-times multiple of estimated 2027 EBITDA, declining to below seven times by 2029 as existing processing capacity is further utilized.
Adam Arthur, executive vice president of liquids business, said Vaquero is closely connected to Energy Transfer’s existing network and is expected to support further volume growth and downstream projects, including Frac X. Bramhall added that the company’s stated acquisition multiples are based on the processing business and do not include downstream synergies.
Management also highlighted growing demand from power plants, data centers and hyperscalers. Energy Transfer said it has executed more than 9.5 million MMBtu per day of agreements with demand-pull customers since the start of 2025. Those agreements span Texas, Oklahoma, Arkansas, Louisiana, Ohio, Illinois and other states connected to its pipeline network.
McCrea said the company’s pipeline footprint positions it to make relatively low-capital connections to new power loads while also moving gas between supply basins and demand markets. Bramhall said Energy Transfer applies a “robust credit process” to data-center-related projects, generally seeking investment-grade counterparties, parental guarantees or other forms of credit support.
In closing remarks, McCrea said Long is set to become sole CEO in January and described Energy Transfer’s employees, integrated infrastructure and ability to benefit from volatility as core strengths. “The future is so great for Energy Transfer,” McCrea said. “The best is yet to come.”
About Energy Transfer (NYSEAMERICAN:ET)
Energy Transfer LP is a diversified energy infrastructure company headquartered in Dallas, Texas. The partnership owns and operates a broad network of pipelines, processing facilities, storage assets and terminals that support the movement of natural gas, natural gas liquids, crude oil and refined products across the United States.
The company’s operations include gathering and processing natural gas, transporting and storing natural gas and NGLs, fractionating NGLs into component products, and transporting crude oil and refined products.
