Energy Transfer LP (NYSE: ET) saw its units decline 1.24% on Friday, closing at $19.34, even as investors became eligible for an increased quarterly distribution. The Dallas-based pipeline operator reported first-quarter adjusted EBITDA of $4.94 billion, a 20% year-over-year increase, driven by record volumes in natural gas liquids (NGLs) and crude oil. Net income attributable to partners, however, slipped to $1.25 billion from $1.32 billion a year ago.
The company raised its quarterly distribution to $0.3375 per common unit, annualizing to $1.35, payable on May 20. This move comes as Energy Transfer pivots its growth strategy toward U.S. natural gas pipelines, surging power demand, and data center buildouts, stepping away from its Lake Charles LNG export project. In January, Reuters reported plans to invest up to $5.5 billion in 2026, primarily for natural gas network expansions, a figure that has since been increased.
Energy Transfer now projects 2026 adjusted EBITDA between $18.2 billion and $18.6 billion, up from the prior range of $17.45 billion to $17.85 billion. Growth capital expenditures are expected to reach $5.5 billion to $5.9 billion, exceeding both previous guidance and January's estimates. The company's distributable cash flow climbed to $2.70 billion from $2.31 billion, a key metric for unitholders assessing payout sustainability.
Volumes were a standout for the quarter. NGL exports and NGL/refined product terminal volumes each rose 19%, while NGL fractionation volumes increased 11%. Crude oil transportation was up 8%, and midstream gathered volumes gained 6%. Each of these categories set new records for the partnership. The company's extensive network spans over 140,000 miles of pipelines and energy infrastructure across 44 states, positioning it as a major player in natural gas, crude, NGLs, and refined products.
Energy Transfer is also expanding its footprint beyond Permian pipelines. The company announced deals to move firm gas on its Texas intrastate network for the Nexus Hubbard AI hyperscale campus in central Texas, while new Oklahoma power plant connections will bring roughly 300 million cubic feet per day of gas online. Additionally, the 120-mile Springerville Lateral, backed by 20-year contracts, was greenlit to feed new gas-fired generation replacing retiring coal plants.
During the earnings call, co-CEO Tom Long highlighted "strong operations" as a key driver. CFO Dylan Bramhall noted the quarter came in roughly $500 million ahead of internal budgets. Co-CEO Marshall McCrea expressed confidence in demand on the Desert Southwest system, stating Energy Transfer was "chasing a lot of demand" there and had "zero concerns" about moving remaining capacity.
Despite the positive results, traders remained cautious. Energy Transfer finished 6.41% off its 52-week high set on May 5. Still, it outperformed peers on Friday: Enterprise Products Partners (NYSE: EPD) fell 1.43%, and Williams Cos. (NYSE: WMB) dropped 1.36%. The company's quarterly filing confirmed compliance with debt covenants as of March 31, with $1.49 billion outstanding on its five-year credit facility, leaving $3.45 billion in available capacity after letters of credit.
Risks remain, however. Energy Transfer warned that a disputed EPA air-quality rule could require retrofitting or replacing about 192 engines, potentially incurring hefty capital costs. Floating-rate debt stood at $3.46 billion, meaning a 100-basis-point swing could shift annual interest costs by $35 million. For investors, the key question is whether increased throughput and locked-in contracts can outpace rising capital expenditures.
