ET finished 2018 strong

Midstream major Energy Transfer (ET) released its fourth-quarter and full-year 2018 earnings last week. The company reported adjusted EBITDA of $2.67 billion in Q4 2018, an increase of ~29% YoY. ET posted adjusted EBITDA of $2.58 billion in Q3 2018.

All of ET’s segments continued their sturdy performance in the fourth quarter. Energy Transfer’s distributable cash flow came in at $1.52 billion in Q4 2018, a rise of 29% compared to Q4 2017, while the distributable coverage ratio was 1.90x, up from 1.66x in Q4 2017.

What Drove Energy Transfer’s Q4 2018 Earnings?

Segment-wise performance

Energy Transfer’s Intrastate Transportation and Storage segment reported adjusted EBITDA of $306 million, reflecting an increase of 109% YoY. The increase was mainly attributed to higher volumes and contributions from Regency Gas Intrastate limited partnership. ET fully acquired Regency in April 2018.

Interstate Transportation and Storage reported adjusted EBITDA of $479 million in Q4 2018 against $342 million in Q4 2017. Natural gas transport volumes increased 54% YoY mainly due to service initiation on the Rover Pipeline.

Energy Transfer’s biggest segment, Crude Oil Transportation, reported adjusted EBITDA of $636 million compared to $544 million in the fourth quarter in 2017, an increase of 17% YoY. Increased production in West Texas improved the throughput volumes, which boosted the segment’s performance.

The Midstream segment posted lower earnings growth. Its adjusted EBITDA came in at $402 million in Q4 2018 compared to $393 million in the year-ago period.

Sunoco’s (SUN) adjusted EBITDA came in at $180 million, 14% higher than in Q4 2017. USA Compression Partners (USAC), which was acquired by ET in April last year, earned $104 million in Q4. Energy Transfer maintained its 2019 adjusted EBITDA guidance range of $10.6 billion to $10.8 billion. ET’s EBITDA grew 56% in 2018 YoY.

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