Energy Transfer LP — FY 2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report, not a standalone fourth-quarter report; comparisons below are with FY 2021 unless noted. Energy Transfer is a diversified U.S. energy partnership operating natural gas, NGL, crude oil and refined-products infrastructure, and consolidating Sunoco LP and USAC.
Financial performance
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $89.876 billion | $67.417 billion |
| Operating income | $7.738 billion | $8.792 billion |
| Net income | $5.868 billion | $6.687 billion |
| Net income attributable to common unitholders | $4.330 billion; $1.40 per unit | $5.179 billion; $1.89 per unit |
| Adjusted EBITDA (non-GAAP) | $13.093 billion | $13.046 billion |
| Cash from operating activities | $9.051 billion | $11.162 billion |
| Capital expenditures (cash-flow statement) | $3.381 billion | $2.822 billion |
| Consolidated debt | $48.262 billion | $49.702 billion |
Revenue rose 33%, largely reflecting higher commodity prices and sales values that also increased cost of products sold. Operating income fell about 12% and net income about 12%; Energy Transfer cited higher depreciation and impairment losses. Adjusted EBITDA was nearly unchanged: midstream growth was largely offset by the prior-year benefit from Winter Storm Uri, especially in intrastate transportation and storage. The filing does not present a single consolidated operating-margin figure; reported operating income was 8.6% of revenue in 2022 versus 13.0% in 2021, calculated from the filing’s figures.
Operating cash flow declined about 19%, with a $1.502 billion net use from changes in operating assets and liabilities in 2022, compared with a $515 million source in 2021. Cash and cash equivalents were $257 million at year-end. The parent revolving facility had $4.18 billion available. The partnership reported a 3.32x credit-agreement leverage ratio and compliance with debt covenants. Approximately $3.16 billion of debt bore variable rates; a 100-basis-point increase would raise annual interest expense by an estimated maximum of $32 million.
Common-unit distributions increased during 2022, from $0.175 per unit for the quarter ended December 2021 to $0.305 for the quarter ended December 2022 (declared for payment in February 2023). Total distributions declared to Energy Transfer partners for FY 2022 were $3.092 billion. Distributions are not guaranteed and depend on available cash and the general partner’s reserves.
Material changes and business developments
- Midstream Adjusted EBITDA rose $1.342 billion to $3.210 billion, reflecting stronger natural gas and NGL prices, higher production and acquisitions, including Enable-related assets.
- Intrastate transportation and storage Adjusted EBITDA fell $2.087 billion to $1.396 billion, principally because FY 2021 included exceptional Winter Storm Uri storage and gas-sale margins.
- Interstate transportation and storage Adjusted EBITDA increased $238 million to $1.753 billion, supported by acquired assets, higher contracted volumes and rates.
- NGL/refined-products and crude-oil transportation and services Adjusted EBITDA increased $197 million and $164 million, respectively. Sunoco LP increased $165 million to $919 million; USAC increased $28 million to $426 million.
- Acquisitions included Woodford Express for approximately $485 million plus working capital and Spindletop for approximately $325 million. Energy Transfer sold its 51% interest in Energy Transfer Canada for $302 million cash proceeds.
- Energy Transfer recorded $386 million of impairment losses and other, including a $300 million Energy Transfer Canada asset write-down and an $85 million loss on deconsolidation upon sale.
Outlook, risks and contingencies
Management described the outlook as strong, citing production improvements, market conditions, greater utilization of existing infrastructure, and domestic and international demand. It expects disciplined growth spending and says it has ample near-term liquidity, while cautioning that market, commodity and inflation effects remain uncertain. No consolidated Adjusted EBITDA or earnings guidance is provided in the supplied filing text.
For 2023, Energy Transfer forecast growth capital expenditures of $1.575–$1.800 billion and maintenance capital expenditures of $725–$775 million, excluding Sunoco LP and USAC. Separately, Sunoco LP expected at least $60 million of growth and about $150 million of maintenance spending; USAC budgeted $260–$270 million of expansion and about $26 million of maintenance spending.
- Lake Charles LNG: Six offtake agreements covered nearly 8 million tonnes per annum, including a 20-year agreement with Shell NA LNG LLC. The liquefaction project remains under development and depends on financing, costs, additional arrangements and approvals; management has not stated a final investment decision in the supplied text.
- Legal matters: A Delaware court entered a roughly $601 million judgment for Williams, plus 3.5% post-judgment interest; Energy Transfer appealed. The Cline class-action judgment was paid (about $161 million) while appeals continued.
- Regulatory and pipeline matters: The EPA issued a proposed debarment notice concerning entities associated with Pennsylvania pipeline cases. The notice restricts pursuit or renewal of federal contracts and financial assistance while pending; the named entities had none at the time. Dakota Access remained operating while the Army Corps of Engineers prepared an environmental impact statement, then expected in spring 2023.
- Environmental exposure: Environmental liabilities accrued were $282 million at year-end, including $219 million related to ETC Sunoco remediation activities. The filing says future costs are uncertain and reserves may change.
- Other risks: High debt and interest-rate exposure, commodity and volume volatility, customer concentration, pipeline safety and integrity costs, environmental and climate regulation, extreme weather, litigation, and partnership governance and distribution risks.
Most important facts for investors to verify
- Whether Adjusted EBITDA and operating cash flow sustain their levels after the unusually strong 2021 storm-related comparison and 2022 commodity-price effects.
- Debt maturities, refinancing costs, facility availability and leverage, including the status of Sunoco LP’s facility that matured in July 2023.
- Cash available to support the higher common-unit distribution after capital spending, debt service and legal or environmental payments.
- Updates on the Williams appeal, Cline appeal, proposed EPA debarment, Dakota Access environmental review and other material contingencies.
- Lake Charles LNG project financing, final approvals, construction costs and binding offtake commitments, alongside actual 2023 capital spending.