Energy Transfer LP

Overview

Our ability to satisfy obligations and pay distributions to unitholders will depend on our future performance, which will be subject to prevailing economic, financial, business and weather conditions, and other factors, many of which are beyond management’s control. We believe that we have sufficient liquidity and sources of funding to meet our cash requirements over the near term and for the longer term.

We currently expect capital expenditures in 2026 to be approximately as follows (including capitalized interest and overhead and only our proportionate share for joint ventures, but excluding capital expenditures related to our investments in Sunoco LP and USAC):

The assets used in our natural gas and liquids operations, including pipelines, gathering systems and related facilities, are generally long-lived assets and do not require significant maintenance capital expenditures. Accordingly, we do not have any significant financial commitments for maintenance capital expenditures in our businesses. From time to time we experience increases in pipe costs due to a number of reasons, including but not limited to, delays from steel mills, limited selection of mills capable of producing large diameter pipe timely, higher steel prices, including as a result of the recent governmental action on tariffs, and other factors beyond our control. However, we have included these factors in our anticipated growth capital expenditures for each year.

We generally fund capital expenditures and distributions with cash flows from operating activities.

Sunoco LP currently expects to spend between $400 million and $450 million in maintenance capital expenditures and at least $600 million in growth capital for the full year 2026.

USAC currently plans to invest between $60 million and $70 million in maintenance capital expenditures and between $230 million and $250 million in expansion capital expenditures for the full year 2026.

Cash Flows

Our cash flows may change in the future due to a number of factors, some of which we cannot control. These include regulatory changes, the price for our products and services, the demand for such products and services, margin requirements resulting from significant changes in commodity prices, operational risks, the successful integration of our acquisitions and other factors.

Operating Activities

Changes in cash flows from operating activities between periods primarily result from changes in earnings (as discussed in “Results of Operations”), excluding the impacts of non-cash items and changes in operating assets and liabilities. Non-cash items include recurring non-cash expenses, such as depreciation, depletion and amortization expense and non-cash compensation expense. The increase in depreciation, depletion and amortization expense during the periods presented primarily resulted from construction and acquisition of assets, while changes in non-cash compensation expense resulted from changes in the number of units granted and changes in the grant date fair value estimated for such grants. Cash flows from operating activities also differ from earnings as a result of non-cash charges that may not be recurring, such as impairment charges and allowance for equity funds used during construction. The allowance for equity funds used during construction increases in periods when we have a significant amount of interstate pipeline construction in progress. Changes in operating assets and liabilities between periods result from factors such as the changes in the value of price risk management assets and liabilities, the timing of accounts receivable collection, the timing of payments on accounts payable, the timing of purchase and sales of inventories and the timing of advances and deposits received from customers.

Six months ended June 30, 2026 compared to six months ended June 30, 2025. Cash provided by operating activities during 2026 was $7.65 billion compared to $5.68 billion for 2025, and net income was $4.51 billion for 2026 and $3.18 billion for 2025. The difference between net income and net cash provided by operating activities for the six months ended June 30, 2026 primarily consisted of net changes in operating assets and liabilities (net of effects of acquisitions) of $228 million and other items totaling $2.82 billion, which includes non-cash items and items related to investing and financing activities that are included in net income.

The non-cash activity in 2026 and 2025 consisted primarily of depreciation, depletion and amortization of $3.16 billion and $2.75 billion, respectively, deferred income tax expense of $167 million and $7 million, respectively, favorable inventory valuation adjustments of $426 million and $21 million, respectively, and non-cash compensation expense of $88 million and $70 million, respectively. For 2026 and 2025, net income also included equity in earnings of unconsolidated affiliates of $218 million and $197 million, respectively, losses on extinguishments of debt of $7 million and $19 million, respectively, and in 2025, impairment losses of $7 million.

Cash provided by operating activities includes cash distributions received from unconsolidated affiliates that are deemed to be paid from cumulative earnings, which distributions were $125 million in 2026 and $165 million in 2025.

Cash paid for interest, net of interest capitalized, was $1.74 billion and $1.56 billion for the six months ended June 30, 2026 and 2025, respectively. Interest capitalized was $120 million and $55 million for the six months ended June 30, 2026 and 2025, respectively.

Investing Activities

Cash flows from investing activities primarily consist of cash amounts paid for acquisitions, capital expenditures, cash contributions to our joint ventures and cash proceeds from sales or contributions of assets or businesses. In addition, distributions from equity investees are included in cash flows from investing activities if the distributions are deemed to be a return of the Partnership’s investment. Changes in capital expenditures between periods primarily result from increases or decreases in our growth capital expenditures to fund our construction and expansion projects.

Six months ended June 30, 2026 compared to six months ended June 30, 2025. Cash used in investing activities during 2026 was $4.13 billion compared to $2.90 billion for 2025. Total capital expenditures (excluding the allowance for equity funds used during construction and net of contributions in aid of construction costs) for 2026 were $3.45 billion compared to $2.86 billion for 2025. Additional detail related to our capital expenditures is provided in the table below.

In 2026, USAC paid $445 million, net of cash acquired, for the acquisition of J-W Energy Company and Sunoco LP paid $194 million, net of cash acquired, for the TanQuid acquisition and $75 million, net of cash acquired, for the Delta acquisition. Additionally, in 2026, Sunoco LP paid $72 million in cash for other acquisitions and in 2025, Sunoco LP paid $104 million in cash for acquisitions of fuel equipment, motor fuel inventory and supply agreements.

In 2026 and 2025, we received cash distributions from unconsolidated affiliates in excess of cumulative earnings of $79 million and $56 million, respectively, and we paid cash contributions to unconsolidated affiliates of $30 million and $4 million, respectively.

The following is a summary of capital expenditures (including only our proportionate share for joint ventures, net of contributions in aid of construction costs) on an accrual basis for the six months ended June 30, 2026:

Financing Activities

Changes in cash flows from financing activities between periods primarily result from changes in the levels of borrowings and equity issuances, which are primarily used to fund our acquisitions and growth capital expenditures. Distributions increase between the periods based on increases in the number of common units outstanding or increases in the distribution rate.

Six months ended June 30, 2026 compared to six months ended June 30, 2025. Cash used in financing activities during 2026 was $3.77 billion compared to $2.85 billion for 2025. During 2026, we had a net decrease in our debt level of $231 million compared to a net increase of $1.02 billion for 2025. In 2026 and 2025, we paid debt issuance costs of $49 million and $53 million, respectively. In 2025, we paid $500 million in cash for the redemption of our Series F Preferred Units.

In 2026 and 2025, we paid distributions of $2.41 billion and $2.35 billion, respectively, to our partners, we paid distributions of $1.07 billion and $934 million, respectively, to noncontrolling interests, and we paid distributions of $17 million and $34 million, respectively, to redeemable noncontrolling interests.

In 2026 and 2025, we received capital contributions of $1 million and $5 million, respectively, in cash from noncontrolling interests. In 2026, we received capital contributions of $6 million in cash from redeemable noncontrolling interests.

Description of Indebtedness

Our outstanding consolidated indebtedness was as follows:

(1)As of June 30, 2026, these balances included approximately $4.40 billion aggregate principal amount due on or before June 30, 2027, which were classified as long-term as management has the intent and ability to refinance the borrowings on a long-term basis.

(2)See additional information below under “Recent Transactions.”

Recent Transactions

Energy Transfer Notes Issuances and Redemptions

In January 2026, the Partnership issued $1.00 billion aggregate principal amount of 4.55% senior notes due 2031, $1.00 billion aggregate principal amount of 5.35% senior notes due 2036 and $1.00 billion aggregate principal amount of 6.30% senior notes due 2056. The Partnership used the net proceeds to refinance existing indebtedness, including to repay commercial paper and borrowings under its Five-Year Credit Facility.

In January 2026, the Partnership redeemed its $1.00 billion aggregate principal amount of 4.75% senior notes due January 2026 using cash on hand and commercial paper borrowings.

In February 2026, the Partnership redeemed its $600 million aggregate principal amount of 5.625% senior notes due May 2027 using cash on hand and commercial paper borrowings.

In July 2026, the Partnership issued $650 million aggregate principal amount of its Series 2026A Junior Subordinated Notes due 2057 (the “Series 2026A notes”) and $1.10 billion aggregate principal amount of its Series 2026B Junior Subordinated Notes due 2057 (the “Series 2026B notes”). Initially, the Series 2026A notes will bear interest at an annual rate of 6.550% and the Series 2026B notes will bear interest at an annual rate of 6.700%. The Partnership intends to use the net proceeds to redeem the Series H Preferred Units, to repay borrowings under its Five-Year Credit Facility and for general partnership purposes.

Sunoco LP Senior Notes Issuances and Redemption

In March 2026, Sunoco LP issued $600 million aggregate principal amount of 5.375% senior notes due 2031 and $600 million aggregate principal amount of 5.625% senior notes due 2034. These notes will mature on July 15, 2031 and July 15, 2034, respectively, and interest is payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2026. Sunoco LP used a portion of the net proceeds from this private offering to redeem in full its $500 million aggregate principal amount of 6.000% senior notes due 2026 and its $600 million aggregate principal amount of 6.000% senior notes due 2027.

In March 2026, Sunoco LP redeemed Parkland’s remaining senior notes.

In June 2026, Sunoco LP redeemed all of its outstanding 3.875% CAD senior notes due 2026.

Credit Facilities and Commercial Paper

Five-Year Credit Facility

As of June 30, 2026, the Five-Year Credit Facility had $1.21 billion of outstanding borrowings, $1.12 billion of which consisted of commercial paper. The amount available for future borrowings was $3.76 billion, after accounting for outstanding letters of credit in the amount of $24 million. The weighted average interest rate on the total amount outstanding as of June 30, 2026 was 4.00%.

Sunoco LP Credit Facility

As of June 30, 2026, Sunoco LP’s credit facility, which matures in June 2030, had no outstanding borrowings and $183 million in standby letters of credit. The unused availability on Sunoco LP’s revolving credit facility as of June 30, 2026 was $2.32 billion. The weighted average interest rate on the total amount outstanding as of June 30, 2026 was 5.46%.

Sunoco LP Receivables Financing Agreement

Upon the closing of Sunoco LP’s acquisition of NuStar, the commitments under NuStar’s receivables financing agreement were reduced to zero during a suspension period, for which the period end has not been determined. As of June 30, 2026, this facility had no outstanding borrowings.

USAC Credit Facility

As of June 30, 2026, USAC’s credit facility, which matures in August 2030, had $1.21 billion of outstanding borrowings and $2 million outstanding letters of credit. As of June 30, 2026, USAC’s credit facility had $537 million of remaining unused availability. The weighted average interest rate on the total amount outstanding as of June 30, 2026 was 5.59%.

Compliance with our Covenants

We and our subsidiaries were in compliance with all requirements, tests, limitations and covenants related to our debt agreements as of June 30, 2026.