Energy Transfer posts quarterly loss on lower US gas, crude transportation volumes

Houston — Energy Transfer swung to a loss in the third quarter versus a year-ago profit on sharply lower revenue due in part to declines in volumes across its natural gas and crude transportation segments, the energy infrastructure company said Nov. 4.

The drop in activity, amid ongoing demand impacts from the coronavirus pandemic, were partially offset by increases in volumes in Energy Transfer's NGL segment.

The operator of the Rover gas pipeline, Dakota Access crude pipeline and Marine East NGL pipeline, as well as developer of the proposed Lake Charles LNG export project in Louisiana, said it was again reducing its spending plans on growth projects for 2020.

It now expects to invest less than $3.3 billion for 2020, which is more than $100 million below previous estimates. Significant reductions in growth spending in future years are planned.

"Our evaluation process for new projects continues to be very stringent," Chief Financial Officer Thomas Long said during a conference call with analysts to discuss the financial results.

Energy Transfer expects the next phase of Mariner East, Orbit and other NGL export projects to be placed in service by year-end.

For the three months ended Sept. 30, Energy Transfer reported a net loss attributable to partners of $782 million, or 29 cents a share, compared with a profit of $858 million, or 33 cents/share, in the same period a year earlier. Third-quarter revenue dropped 26% to $9.96 billion from $13.5 billion in the July-September quarter of 2019.

In its intrastate natural gas transportation and storage segment, volumes decreased due partly to the bankruptcy of a customer. It suffered lower natural gas sales due to lower realized gains from pipeline optimization activity.

Transported volumes in its interstate gas pipeline and storage segment also decreased, primarily due to lower crude production resulting in lower associated gas production and a decrease in demand for LNG exports.

In its midstream segment, Energy Transfer reported lower gathered volumes, primarily due to decreases in the South Texas and Northeast Texas regions, partially offset by the impact of the SemGroup acquisition in the Mid-Continent/Panhandle region and volume growth in the Permian region.

Balancing out some of the declines, Energy Transfer recorded record high transportation and fractionation volumes in its NGL segment.

Refined products transportation volumes decreased due to the closure of a third-party refinery. Crude transportation and terminal volumes were lower on Energy Transfer's Texas pipeline system and Bakken pipeline, primarily driven by lower production in these regions and refinery utilization due to virus-related demand decreases, partly offset by contributions from assets acquired in 2019.

Energy Transfer continues to move forward with development of the Lake Charles LNG export project, after Shell pulled out as a joint venture partner in March.

Election impact

Going forward, the company believes its existing footprint will not be negatively impacted if Democratic nominee Joe Biden is declared the winner of the US presidential election that culminated Nov. 3, with votes still being counted in key states.

"There would be very little to no impact on Energy Transfer to exposure to federal lands or reduction or removal of fracking from those lands," president and Chief Commercial Officer Mackie McCrea said during the investor call.

McCrea and Long will become co-CEOs of the company effective Jan. 1. Co-founder Kelcy Warren will remain board chairman.