Analyst Note| Stephen Ellis |
First-quarter market conditions have generally played directly into Energy Transfer’s strengths around optimization and marketing activities during times of oil and gas price volatility. Primarily due to optimization efforts, Energy Transfer is now guiding toward a 2022 EBITDA midpoint of $12.4 billion from $12 billion previously. With first-quarter EBITDA of $3.3 billion, annualizing those results put full-year EBITDA estimates above $13 billion, and the partnership acknowledges the difference is primarily due to its conservatism around pricing and spreads. After upsizing our marketing contributions for 2022, our revised EBITDA forecast stands at $12.7 billion compared with $12 billion previously. Our revised fair value estimate is now $17.50, up from $16.50. We consider these types of earnings contributions to be temporary and expect considerable downside when oil and gas prices return to more normalized levels well below current prices.