Energy Transfer LP

RESULTS OF OPERATIONS

We report Segment Adjusted EBITDA and consolidated Adjusted EBITDA as measures of segment performance. We define Segment Adjusted EBITDA and consolidated Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items, as well as certain non-recurring gains and losses. Inventory valuation adjustments that are excluded from the calculation of Adjusted EBITDA represent only the changes in lower of cost or market reserves on inventory that is carried at LIFO. These amounts are unrealized valuation adjustments applied to Sunoco LP’s fuel volumes remaining in inventory at the end of the period.

Segment Adjusted EBITDA and consolidated Adjusted EBITDA reflect amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Segment Adjusted EBITDA and consolidated Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Segment Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly.

Segment Adjusted EBITDA, as reported for each segment in the following table, is analyzed for each segment in the section titled “Segment Operating Results.” Adjusted EBITDA is a non-GAAP measure used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of the Partnership’s fundamental business activities and should not be considered in isolation or as a substitution for net income, income from operations, cash flows from operating activities or other GAAP measures.

Consolidated Results

Net Income. For the three months ended March 31, 2024 compared to the same period last year, net income increased $245 million, or approximately 17%. Operating income increased $318 million, which reflected higher segment margin from our crude oil transportation and services segment, as well as improved results from multiple other segments, as discussed in more detail in “Segment Operating Results.” These increases were partially offset by increases in depreciation, depletion and amortization and interest expense.

Adjusted EBITDA (consolidated). For the three months ended March 31, 2024 compared to the same period last year, Adjusted EBITDA increased $447 million. This increase included a $322 million increase from our crude oil transportation and services segment, primarily driven by recently acquired assets and higher volumes. The increase in Adjusted EBITDA also reflected increases from our other segments, partially offset by a decrease in our interstate transportation and storage segment.

Additional discussion on the changes impacting net income and Adjusted EBITDA for the three months ended March 31, 2024 compared to the same period last year is available below and in “Segment Operating Results.”

Depreciation, Depletion and Amortization. Depreciation, depletion and amortization increased for the three months ended March 31, 2024 compared to the same period last year primarily due to additional depreciation and amortization from assets recently placed in service and recent acquisitions.

Interest Expense, Net of Interest Capitalized. Interest expense, net of interest capitalized, increased for the three months ended March 31, 2024 compared to the same period last year primarily due to higher aggregate debt balances as a result of the Crestwood acquisition as well as higher interest rates on floating rate and recently refinanced debt.

Income Tax Expense. For the three months ended March 31, 2024 compared to the same period last year, income tax expense increased due to higher earnings from the Partnership’s consolidated corporate subsidiaries.

Impairment Losses. For the three months ended March 31, 2023, impairment losses included a total of $1 million recognized by USAC related to its compression equipment.

Gains (Losses) on Interest Rate Derivatives. Gains and losses on interest rate derivatives resulted from changes in forward interest rates, which caused our forward-starting swaps to change in value.

Unrealized Losses on Commodity Risk Management Activities. The unrealized gains and losses on our commodity risk management activities include changes in fair value of commodity derivatives and the hedged inventory included in designated fair value hedging relationships. Information on the unrealized gains and losses within each segment are included in “Segment Operating Results,” and additional information on the commodity-related derivatives, including notional volumes, maturities and fair values, is available in “Item 3. Quantitative and Qualitative Disclosures About Market Risk” and in Note 12 to our consolidated financial statements included in “Item 1. Financial Statements.”

Inventory Valuation Adjustments. Inventory valuation adjustments represent changes in lower of cost or market reserves using the last-in, first-out method on Sunoco LP’s inventory. These amounts are unrealized valuation adjustments applied to fuel volumes remaining in inventory at the end of the period. For the three months ended March 31, 2024 and March 31, 2023, increases in fuel prices caused the lower of cost or market reserve requirements to decrease by $130 million and $29 million, respectively, which increased net income.

Loss on Extinguishment of Debt. For the three months ended March 31, 2024, the loss on extinguishment of debt was related to USAC’s redemption of its $725 million aggregate principal amount of 6.875% senior notes.

Adjusted EBITDA Related to Unconsolidated Affiliatesand Equity in Earnings of Unconsolidated Affiliates. See additional information in “Supplemental Information on Unconsolidated Affiliates” and “Segment Operating Results.”

Other, net. Other, net primarily includes the amortization of regulatory assets and other income and expense amounts.

Supplemental Information on Unconsolidated Affiliates

The following table presents financial information related to unconsolidated affiliates:

(1)These amounts represent our proportionate share of the Adjusted EBITDA of our unconsolidated affiliates and are based on our equity in earnings or losses of our unconsolidated affiliates adjusted for our proportionate share of the unconsolidated affiliates’ interest, depreciation, depletion, amortization, non-cash items and taxes.

Segment Operating Results

We evaluate segment performance based on Segment Adjusted EBITDA, which we believe is an important performance measure of the core profitability of our operations. This measure represents the basis of our internal financial reporting and is one of the performance measures used by senior management in deciding how to allocate capital resources among business segments.

The following tables identify the components of Segment Adjusted EBITDA, which is calculated as follows:

•Segment margin, operating expensesand selling, general and administrative expenses. These amounts represent the amounts included in our consolidated financial statements that are attributable to each segment.

•Unrealized gains or losses on commodity risk management activities and inventory valuation adjustments. These are the unrealized amounts that are included in cost of products sold to calculate segment margin. These amounts are not included in Segment Adjusted EBITDA; therefore, the unrealized losses are added back and the unrealized gains are subtracted to calculate the segment measure.

•Non-cash compensation expense. These amounts represent the total non-cash compensation recorded in operating expenses and selling, general and administrative expenses. This expense is not included in Segment Adjusted EBITDA and therefore is added back to calculate the segment measure.

•Adjusted EBITDA related to unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Segment Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates.

The following analysis of segment operating results includes a measure of segment margin. Segment margin is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA. Segment margin is similar to the GAAP measure of gross margin, except that segment margin excludes charges for depreciation, depletion and amortization. Among the GAAP measures reported by the Partnership, the most directly comparable measure to segment margin is Segment Adjusted EBITDA; a reconciliation of segment margin to Segment Adjusted EBITDA is included in the following tables for each segment where segment margin is presented.

In addition, for certain segments, the following sections include information on the components of segment margin by sales type, which components are included in order to provide additional disaggregated information to facilitate the analysis of segment margin and Segment Adjusted EBITDA. For example, these components include transportation margin, storage margin and other margin. These components of segment margin are calculated consistent with the calculation of segment margin; therefore, these components also exclude charges for depreciation, depletion and amortization.

Intrastate Transportation and Storage

Volumes. For the three months ended March 31, 2024 compared to the same period last year, transported volumes decreased primarily due to decreased production from our Haynesville assets.

Segment Margin. The components of our intrastate transportation and storage segment margin were as follows:

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our intrastate transportation and storage segment increased due to the net impact of the following:

•an increase of $75 million in realized natural gas sales and other primarily due to higher pipeline optimization from physical sales and settled derivatives;

•a decrease of $9 million in operating expenses primarily due to a change related to fuel consumption that is offset in cost of goods sold in 2024; and

•an increase of $6 million in transportation fees primarily due to increased demand volumes and new contracts on our Texas system; partially offset by

•a decrease of $58 million in storage margin primarily due to lower storage optimization from settled derivatives; and

•a decrease of $7 million in retained fuel margin primarily due to a change related to fuel consumption that is offset in operating expenses in 2024.

Interstate Transportation and Storage

Volumes. For the three months ended March 31, 2024 compared to the same period last year, transported volumes increased primarily due to more capacity sold and higher utilization on our Transwestern, Tiger, Trunkline and Gulf Run systems due to increased demand.

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our interstate transportation and storage segment decreased due to the net impact of the following:

•a decrease of $31 million in segment margin primarily due to a $20 million decrease in operational gas sales resulting from lower prices, an $18 million decrease due to the realization in the prior period of certain amounts related to a shipper bankruptcy and a $6 million decrease in parking revenue. These decreases were partially offset by a $12 million increase in transportation revenue from several of our interstate pipeline systems due to higher contracted volumes at higher rates;

•an increase of $17 million in operating expenses primarily due to a $14 million increase in unplanned maintenance project costs and a $5 million increase in employee costs, partially offset by a $2 million decrease in electricity costs;

•an increase of $2 million in selling, general and administrative expenses primarily due to an increase in professional fees and employee-related costs; and

•a decrease of $3 million in Adjusted EBITDA related to unconsolidated affiliates primarily due to a decrease of $8 million from our Midcontinent Express Pipeline joint venture due to capacity sold at lower rates, partially offset by an increase of $4 million from our Southeast Supply Header joint venture due to capacity sold at higher rates and a $2 million increase from our Citrus joint venture due to revenues from new projects.

Midstream

Volumes. For the three months ended March 31, 2024 compared to the same period last year, gathered volumes and NGL production increased primarily due to recently acquired assets and higher volumes from existing customers.

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment increased due to the net impact of the following:

•an increase of $84 million due to recently acquired assets and higher volumes in the Permian region;

•a decrease of $6 million in selling, general and administrative expenses due to a $5 million decrease in workers’ compensation reserve and a $2 million decrease in legal expenses; and

•an increase of $1 million in Adjusted EBITDA related to unconsolidated affiliates due to recently acquired assets; partially offset by

•an increase of $35 million in operating expenses primarily due to a $27 million increase from both recently acquired assets and assets placed in service as well as an $8 million increase in employee costs; and

•a decrease of $2 million due to lower natural gas prices of $5 million, partially offset by higher NGL prices of $3 million.

NGL and Refined Products Transportation and Services

Volumes. For the three months ended March 31, 2024 compared to the same period last year, NGL transportation volumes increased primarily due to higher volumes from the Permian region, on our Mariner East pipeline system and on our Gulf Coast export pipelines.

The increase in transportation volumes and the commissioning of our eighth fractionator in August 2023 also led to higher fractionated volumes at our Mont Belvieu NGL Complex.

Segment Margin. The components of our NGL and refined products transportation and services segment margin were as follows:

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our NGL and refined products transportation and services segment increased due to the net impact of the following:

•an increase of $53 million in transportation margin primarily due to a $20 million increase resulting from higher throughput and contractual rate escalations on our Mariner East pipeline system, a $15 million increase resulting from higher throughput and contractual rate escalations on our Texas y-grade pipeline system, a $15 million increase from higher throughput and contractual rate escalations on our refined product pipelines and a $9 million increase from higher throughput and contractual rate escalations on our Mariner West pipeline. These increases were partially offset by intrasegment charges of $6 million which were fully offset within our marketing margin;

•an increase of $23 million in fractionators and refinery services margin primarily due to a $19 million increase resulting from higher throughput and contractual rate escalations at our Mont Belvieu fractionators and a $4 million increase from our refinery services business; and

•an increase of $9 million in terminal services margin primarily due to a $4 million increase due to higher throughput from our refined product marketing terminals, a $3 million increase from higher export volumes loaded at our Nederland

Terminal and a $2 million increase from our Marcus Hook Terminal due to higher throughput and contractual rate escalations; partially offset by

•a decrease of $26 million in marketing margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to lower gains from the optimization of hedged NGL and refined product inventories. This decrease was partially offset by intrasegment margin of $6 million which was fully offset within our transportation margin;

•an increase of $7 million in operating expenses primarily from recently acquired assets; and

•an increase of $4 million in selling, general and administrative expenses primarily due to a $2 million increase in employee costs and a $2 million increase in overhead expenses.

Crude Oil Transportation and Services

Volumes. For the three months ended March 31, 2024 compared to the same period last year, crude oil transportation volumes were higher across all regions. Texas pipeline system volumes were higher due to continued growth on our gathering systems and contributions from recently acquired assets. Bakken Pipeline volumes were also higher due to lower impacts on basin production from winter weather compared to the prior year. Midcontinent systems were higher, driven by contributions from recently acquired assets. Bakken gathering volumes increased, driven by higher production in the basin as well as contributions from recently acquired assets. Volumes on our Bayou Bridge Pipeline were also slightly higher. Crude terminal volumes were higher due to growth in Permian and Bakken production, stronger Gulf Coast refinery utilization and contributions from recently acquired assets.

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our crude oil transportation and services segment increased primarily due to the net impact of the following:

•an increase of $355 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $168 million increase from recently acquired assets, a $122 million increase from higher throughput volumes on our crude pipelines, a $60 million increase from our crude oil acquisition and marketing business primarily due to higher volumes and more favorable optimization conditions and a $4 million increase from our Gulf Coast terminals due to higher throughput and exports; and

•an increase of $8 million in Adjusted EBITDA related to unconsolidated affiliates due to recently acquired assets and higher volumes on our White Cliffs crude pipeline; partially offset by

•an increase of $5 million in selling, general and administrative expenses primarily due to recently acquired assets; and

•an increase of $35 million in operating expenses primarily due to a $33 million increase from recently acquired assets.

Investment in Sunoco LP

The Investment in Sunoco LP segment reflects the consolidated results of Sunoco LP.

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our investment in Sunoco LP segment increased primarily due to the net impact of the following:

•an increase in the profit on motor fuel sales of $25 million primarily due to a 9% increase in gallons sold, partially offset by a decrease in profit per gallon; and

•an increase in non-motor fuel sales and lease profit of $11 million primarily due to increased throughput and storage margin from recent acquisitions and increased rental income; partially offset by

•an increase in operating costs of $15 million, including other operating expense, general and administrative expense and lease expense, primarily due to recent acquisitions of refined product terminals and the transmix processing and terminal facility.

Investment in USAC

The Investment in USAC segment reflects the consolidated results of USAC.

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our investment in USAC segment increased primarily due to the net impact of the following:

•an increase of $30 million in segment margin primarily due to higher revenue-generating horsepower as a result of increased demand for compression services, higher market-based rates on newly deployed and redeployed compression units and higher average rates on existing customer contracts; partially offset by

•an increase of $7 million in operating expenses primarily due to higher employee costs associated with increased revenue-generating horsepower.

All Other

Amounts reflected in our all other segment primarily include:

•our natural gas marketing operations;

•our wholly-owned natural gas compression operations; and

•our investment in coal handling facilities.

Segment Adjusted EBITDA. For the three months ended March 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our all other segment increased primarily due to the net impact of the following:

•an increase of $8 million in our natural gas marketing business from the sale of stored natural gas; and

•an increase of $2 million due to improved power trading market conditions; partially offset by

•a decrease of $3 million in our dual drive compression business due to lower margin resulting from lower natural gas prices; and

•a decrease of $2 million due to lower sales in our compressor business.