Energy Transfer LP

7. REDEEMABLE NONCONTROLLING INTERESTS:

Certain redeemable noncontrolling interests in the Partnership’s subsidiaries are reflected as mezzanine equity on the consolidated balance sheet. As of December 31, 2024 and 2023, redeemable noncontrolling interests included $169 million and $476 million, respectively, related to the USAC Preferred Units, described below, $23 million and $22 million, respectively, related to noncontrolling interest holders in one of the Partnership’s consolidated subsidiaries that have the option to sell their interests to the Partnership, and $225 million and $280 million, respectively, related to the Niobrara Preferred Units described below.

USAC Series A Preferred Units

On January 12, 2024, the holders of the USAC Preferred Units elected to convert 40,000 USAC Preferred Units into 1,998,850 USAC common units. These preferred units were converted into common units and, for USAC’s fourth-quarter 2023 distribution, the holders received the common unit distribution of $0.525 on the 1,998,850 common units in lieu of the preferred unit distribution of $24.375 on the converted 40,000 preferred units.

On April 1, 2024, the holders of USAC preferred units elected to convert 280,000 preferred units into 13,991,954 common units. These preferred units were converted into common units and, for USAC’s first-quarter 2024 distribution, the holders received the common unit distribution of $0.525 on the 13,991,954 common units in lieu of the preferred unit distribution of $24.375 on the converted 280,000 preferred units.

Niobrara Preferred Units

Crestwood Niobrara LLC (“Crestwood Niobrara”), a subsidiary acquired in the Crestwood acquisition in November 2023, has outstanding two series of preferred units (collectively, the “Niobrara Preferred Units”) held by a third-party. The Niobrara Preferred Units are redeemable by the Partnership or the preferred interest holder and are also convertible by the preferred interest holder into Crestwood Niobrara common units. The preferred interest holder also has the option to contribute additional capital to Crestwood Niobrara to increase their common ownership percentage in Crestwood Niobrara to 50% upon the conversion.

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On February 23, 2024, the Partnership paid approximately $37 million in cash to redeem a portion of the outstanding Crestwood Niobrara LLC preferred units.