ET Energy Transfer Equity 10-Q 2026-09-30 section summaries

Energy Transfer LP — Q3 and nine months ended September 30, 2026

Consolidated results

Dollar amounts in millions, except per-unit data.

Revenue growth was driven largely by higher product sales, especially refined products, as well as crude and NGL sales; cost of products sold rose substantially alongside revenue. Adjusted EBITDA increased 31.1% in Q3 and 27.4% for 9M, helped by the Sunoco LP segment. Higher noncontrolling-interest income limited the portion of net income attributable to partners. Q3 diluted weighted-average units were 3.4667 billion versus 3.4561 billion; 9M counts were 3.4659 billion versus 3.4561 billion. A $14 million loss on preferred-unit redemption affected Q3.

Segment revenue and Adjusted EBITDA

Revenue includes intersegment revenue. Amounts in millions; 9M values are included where the year-to-date growth trend differed materially from the quarter’s.

Cash flow, investment and balance sheet

Operating cash flow benefited from a $784 million working-capital source, versus a $483 million use in 9M 2025, and a $445 million inventory valuation adjustment versus $31 million. Investing used $6,011 million and financing used $6,006 million, including $3,611 million of partner distributions and $1,658 million to noncontrolling interests. Cash declined $346 million, from $1,272 million to $926 million.

Tangible equity, calculated as equity less goodwill and intangible assets, was $36,920 million. Total equity included $15,209 million of noncontrolling interests. Debt’s estimated fair value was $66,040 million at September 30, 2026, versus a $68,850 million carrying amount.

Business developments, funding and earnings quality

Energy Transfer issued $3.00 billion of senior notes in January, primarily to refinance borrowings, and $1.75 billion of junior subordinated notes in July, partly to redeem Series H preferred units and repay credit-facility borrowings. At quarter-end, the Partnership’s revolving facility had $565 million outstanding, including $441 million of commercial paper, and $4.41 billion available; its leverage ratio was 2.83x and it was covenant-compliant. Common units increased from 3.4400 billion to 3.4439 billion; none were repurchased, and $880 million remained authorized. The quarterly common-unit distribution rose from $0.3350 to $0.3425.

Sunoco LP completed the TanQuid acquisition for $239 million plus assumed debt with a $346 million fair value, and acquired Delta for approximately $81 million. USAC acquired J-W Power for approximately $912 million of consideration, including cash and newly issued units; the transaction added about 0.8 million active horsepower. After quarter-end, Energy Transfer agreed to acquire Vaquero for approximately $2.63 billion, comprising $1.95 billion cash and approximately 33.3 million new units. Sunoco completed its approximately $600 million all-cash Offen Petroleum acquisition on October 27.

Commodity-derivative losses recognized in cost of products sold were $315 million in Q3 and $466 million in 9M, versus gains of $10 million and $114 million in the prior-year periods. Derivative and trading activity can create material earnings volatility. Favorable inventory valuation adjustments increased 9M income by $445 million; Sunoco’s Q1 LIFO liquidation contributed $102 million of pretax income. At September 30, LIFO fuel replacement cost exceeded carrying value by approximately $395 million.

Commitments and material risks

Contract assets were $591 million versus $480 million at year-end, and customer-contract receivables were $3.743 billion versus $1.757 billion. Remaining performance obligations totaled $37.586 billion: $2.381 billion expected in the rest of 2026, $7.556 billion in 2027, $6.136 billion in 2028, and $21.513 billion thereafter.

Accrued probable and estimable contingent obligations rose to approximately $536 million from $324 million, with up to approximately $76 million of additional reasonably estimable losses. Environmental liabilities were $500 million, up from $416 million; 9M cleanup expenditures were $19 million versus $26 million. Other material exposures include pipeline, antitrust, groundwater, tax and environmental proceedings. Rover’s proposed $20 million Stoneman House FERC penalty proceeding was terminated in October 2026. Dakota Access continues operating, but the Lake Oahe easement and related litigation remain regulatory risks; the easement had not issued by quarter-end. A PHMSA corrective-action order following a reported Michigan crude-oil release could require broad pipeline investigation and repair work, with costs not quantified. Favorable verdicts totaling approximately $795 million were unrecorded at quarter-end while appealable; in October, the Partnership recorded the $393 million CPS Energy judgment after its appeal period lapsed.

Energy Transfer — Q3 and nine months ended September 30, 2026

Consolidated results

Adjusted EBITDA grew 31.1% in Q3 and 27.4% for 9M. Growth reflected higher volumes and margins, the Hugh Brinson Pipeline ramp-up, and acquisitions. Higher operating and SG&A costs, depreciation, and interest expense partly offset the gains. Net interest expense was $944M versus $890M in Q3 and $2.825B versus $2.564B for 9M, primarily reflecting higher debt following Parkland and the refinancing of preferred units with long-term debt. Depreciation, depletion and amortization was $1.599B versus $1.440B in Q3 and $4.757B versus $4.191B for 9M. Income tax expense was $187M versus $87M in Q3 and $516M versus $207M for 9M, largely due to acquired foreign earnings, higher foreign tax rates, and nondeductible foreign-exchange losses.

Unrealized commodity-hedging losses were $379M in Q3, compared with a $1M gain a year earlier, and $519M for 9M, versus a $32M gain. These noncash effects are excluded from Adjusted EBITDA. Affiliate-related Adjusted EBITDA was $196M versus $193M in Q3 and $588M versus $542M for 9M; affiliate distributions received were $109M versus $92M and $313M versus $313M, respectively.

Segment results

Intrastate growth benefited from new contracts, Hugh Brinson ramp-up volumes, and wider basis differentials. Midstream gains reflected higher volumes and operating efficiencies, new and upgraded Permian capacity, and higher NGL prices; 9M results also faced a $160M prior-year Winter Storm Uri benefit that did not recur. NGL and refined-products results benefited from marketing and terminal margins for 9M, but Q3 margin was pressured by a $276M loss from commodity-risk-management activity versus a $4M gain a year earlier. Crude results benefited from stronger marketing conditions. Management expects $100M of realized derivative losses in future periods to partly offset current NGL and crude marketing gains.

Sunoco LP’s acquisition-driven growth also brought higher operating expenses and SG&A. USAC’s improvement reflected the J-W Power acquisition and legacy-business growth, partly offset by a $72M increase in operating and SG&A expenses. Interstate results benefited from contracted volumes, utilization, affiliate results, and lower operating expenses, including a $43M reduction tied to the 2025 resolution of a Rover ad valorem tax obligation.

Operating metrics

Cash flow, investment and liquidity

Operating cash flow included $784M from net changes in operating assets and liabilities. Cash interest paid, net of capitalized interest, increased to $2.45B from $2.05B. Accrual-basis capital expenditures, including ET’s proportionate joint-venture share and net of contributions in aid of construction, were $5.529B: $4.432B for growth and $1.097B for maintenance. For 2026, ET expected $5.500B of growth and $1.150B of maintenance capital expenditures, excluding Sunoco LP and USAC investments. Steel prices, tariffs, and pipe-supply constraints could affect project costs. Cash used in financing was $6.01B versus $562M; distributions included $3.61B to ET partners versus $3.50B and $1.66B to noncontrolling interests versus $1.31B. Net debt increased $231M in 9M 2026, compared with a $3.41B increase in 9M 2025.

Acquisitions, debt and distributions

ET agreed on October 6, 2026 to acquire Vaquero’s Delaware Basin gas gathering, processing, and transportation assets for approximately $2.63B—$1.95B cash plus approximately 33.3 million newly issued ET common units—with closing expected in Q4, subject to customary conditions and regulatory approvals. Sunoco completed its TanQuid acquisition for €206M ($239M) and assumed debt with a €298M ($346M) fair value; it also acquired Delta for approximately $81M and, after quarter-end, announced its approximately $600M all-cash acquisition of Offen Petroleum. USAC acquired J-W Energy/J-W Power for approximately $912M, comprising $455M cash and 18.2 million newly issued USAC units valued at approximately $457M; the deal added about 0.8 million active horsepower.

Total debt was $68.850B at September 30, 2026, versus $68.333B at December 31, 2025. Approximately $4.35B of aggregate principal due by September 30, 2027 was classified as long-term based on management’s intent and ability to refinance. ET issued $3.00B of senior notes and $1.75B of junior subordinated notes during 2026; Sunoco LP issued $1.20B of notes, and USAC issued $600M of 6.750% notes due 2035. ET’s five-year facility had $565M outstanding and $4.41B available; Sunoco LP had $111M outstanding and $2.30B available; USAC had $684M outstanding and $1.06B available. All were in covenant compliance. ET redeemed $900M of Series H preferred units.

ET’s Q3 common-unit distribution was $0.3425 per unit, or $1.37 annualized. SunocoCorp and Sunoco LP distributions rose from $0.9317 per unit for Q4 2025 to $1.0148 for Q3 2026, an increase of about 8.9%; USAC’s remained $0.525 per unit. Subsidiary distributions to ET depend on subsidiary results, cash flows, and financial condition.

Regulatory and other risks

FERC liquids-pipeline index changes and pending appeals create uncertainty around rates and potential collections: the index was PPI-FG + 0.78% through June 30, 2026, and PPI-FG − 0.55% for July 2026–June 2031. FERC’s remedial-relief order and subsequent clarification allow eligible pipelines to seek certain amounts associated with the prior lower index, potentially with interest. Pipeline tax allowances, Panhandle rate proceedings and refunds, permitting, and environmental requirements are also subject to regulatory uncertainty. If not stayed or delayed, EPA’s Good Neighbor Plan could require retrofits or replacement of approximately 192 engines, with uncertain compliance costs amid litigation and reconsideration. More broadly, cash flows remain exposed to commodity prices, demand, weather, operating and project-execution risks, counterparty performance, capital-market conditions, and acquisition integration.

Market risk (as of September 30, 2026)

The Partnership reported no material change since December 31, 2025 in its primary market-risk exposures or how it manages them.

Commodity price risk

The table shows derivative positions and fair values, together with the estimated effect of a hypothetical instantaneous 10% commodity-price change.

Sensitivities represent potential gains or losses in net income or OCI and exclude offsetting physical exposures. Actual derivative-value changes may differ because of settlement timing, location and basis differences, and relationships between prompt-month and forward prices.

Interest-rate risk

At September 30, 2026, the Partnership and its subsidiaries had $1.96 billion of floating-rate debt. A 100-basis-point rate change would result in a maximum estimated annual interest-expense change of $20 million; interest-rate floors may reduce the actual effect. The Partnership uses swaps, including forward-starting swaps, to manage exposure.

Sunoco LP had a $216 million (€191 million) swap acquired in its 2026 TanQuid acquisition. The swap matures in December 2030, pays an average fixed rate of 2.5095%, and receives a floating rate based on EURIBOR. It was not designated as an accounting hedge.

Foreign-currency risk

Foreign-currency revenues, expenses, investments and subsidiaries expose reported earnings, cash flows, assets, liabilities and AOCI to exchange-rate movements. The Partnership may use forwards and other hedging strategies; it had no material outstanding foreign-currency derivatives at September 30, 2026.

Item 4 — Controls and Procedures

ET’s Co-CEOs and CFO concluded that disclosure controls and procedures were effective as of September 30, 2026. During the three months ended September 30, 2026, no changes materially affected, or were reasonably likely to materially affect, internal control over financial reporting. This section reports no financial results or operating developments.

Governance risk

Although ET’s common units and Series I Preferred Units are listed on the TXSE, its publicly traded partnership status exempts it from certain exchange governance requirements. The TXSE does not require a majority-independent general partner board or compensation and nominating/governance committees for ET, and limited partnerships are excluded from other requirements that apply to some entities. As a result, ET unitholders may have fewer governance protections than stockholders of corporations subject to the full TXSE requirements.

Environmental and Legal Proceedings

The company is subject to environmental proceedings, including notices of violations and potential fines under federal, state, and local environmental laws. It believes that adverse outcomes would not materially affect its financial position, results of operations, or cash flows. The monetary-sanctions threshold for reportable proceedings increased from $0.3 million to amounts reasonably expected to exceed $1 million.

Sunoco LP and its affiliates face climate-related lawsuits in Hawaii, Maine, and Vermont. The plaintiffs allege deceptive marketing and concealment regarding greenhouse-gas impacts, and violations of consumer-protection and unfair-trade-practices laws. They seek equitable relief, statutory and civil penalties, punitive damages, disgorgement, and attorneys’ fees.

In May 2026, a Hawaii state court denied defendants’ request to pause the City and County of Honolulu case pending the U.S. Supreme Court’s decision in Suncor Energy Inc. v. Board of County Commissioners of Boulder County. The Supreme Court heard argument on October 5, 2026, on whether federal law preempts these types of state-law claims. Sunoco LP cannot estimate a possible loss, or range of loss, in excess of amounts accrued and intends to vigorously defend the claims. Other legal-proceeding details are referenced in the 2026 Form 10-K and Q3 2026 Form 10-Q, Note 10.