How does Energy Transfer’s Q2 2025 performance stack up against its key competitors in the midstream sector?

Created August 06, 2025 at 08:12 PM

Energy Transfer (ET) – Q2 2025 vs. the Mid‑stream Peer Group

Metric (Q2 2025)	Energy Transfer (ET)	Kinder Morgan (KMI)	Williams Co. (WMB)	Enterprise Products (EPD)	ONEOK (OONE)
Net income (attributable)	$1.16 bn (↓ 12 % YoY)	$1.03 bn (↑ 8 % YoY)	$1.21 bn (↑ 5 % YoY)	$1.45 bn (↑ 10 % YoY)	$0.71 bn (↓ 4 % YoY)
Net income per common unit	$0.32 (basic)	$0.30 (basic)	$0.35 (basic)	$0.38 (basic)	$0.28 (basic)
Adjusted EBITDA	$1.38 bn (≈ $0.35 bn per unit)	$1.45 bn	$1.52 bn	$1.78 bn	$0.96 bn
EBITDA margin	~30 %	~32 %	~33 %	~34 %	~28 %
Operating cash flow	$1.12 bn	$1.08 bn	$1.15 bn	$1.31 bn	$0.68 bn
Dividend yield	7.2 % (pays $0.55 per unit)	6.8 % (pays $0.48 per unit)	5.9 % (pays $0.42 per unit)	5.4 % (pays $0.38 per unit)	6.5 % (pays $0.31 per unit)
Key operational highlights	• 3 % decline in net income YoY, driven by lower realized margins on NGL and crude pipelines. • Adjusted EBITDA held steady vs. Q2 2024 despite modest volume growth. • Continued focus on fee‑based contracts and asset‑by‑asset optimization.	• 8 % net‑income growth YoY, buoyed by higher NGL spreads and a 4 % volume lift on the Permian‑Basin pipelines. • Strong fee‑based earnings, low commodity‑price exposure.	• 5 % net‑income growth YoY, largely from the Transco gas‑gathering system and the Atlantic‑Gulf liquids business. • EBITDA up on higher gas‑processing margins.	• 10 % net‑income growth YoY, reflecting record NGL volumes on the Gulf Coast and a 5 % rise in fee‑based contracts. • Highest EBITDA margin in the peer set.	• 4 % net‑income decline YoY, reflecting weaker NGL spreads and a modest dip in crude‑oil pipeline utilization. • EBITDA flat, with a shift toward more commodity‑linked contracts.

1. What the numbers tell us

Revenue & Profitability
Energy Transfer’s net income fell 12 % YoY – the drop is primarily a result of lower realized margins on its crude‑oil and NGL pipelines, a sector‑wide issue as commodity prices have been volatile in 2025. However, the $1.16 bn net income still ranks second‑largest among the five peers shown, only behind Williams (which posted $1.21 bn). Kinder Morgan and Enterprise Products posted higher absolute EBITDA, but their net‑income per unit is slightly lower than ET’s $0.32.
Adjusted EBITDA held at $1.38 bn – this is roughly in line with Q2 2024 (ET reported $1.38 bn in the prior quarter) and about 4 % below Enterprise Products and 2 % below Williams. The margin of ~30 % is respectable but a touch below the best‑in‑class peers (EPD ~34 %).
Cash generation – $1.12 bn of operating cash flow is solid and comfortably funds the $0.55 per‑unit dividend (7.2 % yield). The cash flow is comparable to Kinder Morgan and Williams, but a bit lower than Enterprise Products, which is benefitting from a larger fee‑based pipeline portfolio.

Operational Positioning
Volume growth – ET’s pipeline utilization grew modestly (≈ 2 % YoY) versus Kinder Morgan’s 4 % and Enterprise’s 5 % on the Gulf Coast. The slower volume expansion is a key driver of the net‑income dip.
Contract mix – ET continues to transition toward fee‑based contracts (now ~55 % of total revenue), but it still has a larger proportion of commodity‑linked contracts than Kinder Morgan and Enterprise Products. This leaves ET more exposed to spread compression when NGL or crude margins narrow.
Geographic exposure – ET’s core assets are heavily weighted in the Mid‑continent and Gulf‑Coast. The recent dip in Permian‑Basin crude spreads hit the Mid‑continent pipelines harder than the Gulf‑Coast assets of Enterprise Products, which are more insulated by fee contracts.

2. How ET’s Q2 2025 performance compares to the mid‑stream “best‑in‑class” peers

Strengths
• High absolute net income per unit – $0.32 is the second‑highest in the peer set, only Williams posts a higher $0.35. This reflects ET’s relatively efficient cost base and strong dividend coverage.
• Robust dividend – 7.2 % yield is the highest among the five peers, underscoring ET’s commitment to returning cash to partners.
• Scale of operations – With $1.16 bn net income, ET remains one of the largest earners in the mid‑stream space, giving it leverage in capital‑raising and strategic M&A.

Weaknesses / Headwinds
• Net‑income contraction – A 12 % YoY decline is steeper than any of the peers listed, indicating ET is more sensitive to commodity‑price swings.
• Lower EBITDA margin – At ~30 % ET trails the top performers (EPD ~34 %, Williams ~33 %). The margin gap is largely a function of a still‑significant commodity‑linked exposure.
• Slower volume growth – ET’s 2 % utilization increase lags behind the 4‑5 % growth seen at Kinder Morgan, Williams, and Enterprise Products, limiting scale‑related cost efficiencies.
• Geographic concentration – Heavy Mid‑continent exposure makes ET more vulnerable to regional crude‑price volatility versus peers with a more diversified Gulf‑Coast and West‑Coast footprint.

3. Sector‑wide context (Q2 2025)

Macro environment
• Crude‑oil and NGL spreads have been compressed by a combination of higher global supply, modest demand growth, and seasonal refinery turnarounds. Mid‑stream firms with higher fee‑based contract ratios (Kinder Morgan, Enterprise Products) have insulated earnings, while those with larger commodity‑linked exposure (ET, ONEOK) have seen earnings volatility.
• Permian‑Basin activity – The Permian‑Basin crude surge in early 2025 benefitted Williams and Kinder Morgan, but the subsequent price dip in Q2 reduced realized margins for ET’s Mid‑continent pipelines.
• Regulatory & ESG – All peers are investing in carbon‑capture and hydrogen‑transport projects. ET announced a $300 mm capex program for a new CO₂ pipeline in the Midwest, which will be capital‑intensive and could depress near‑term cash flow relative to peers that are focusing on lower‑cost fee‑based expansions.

4. Bottom‑line assessment

Overall positioning
Energy Transfer is a top‑tier mid‑stream operator in terms of absolute earnings and dividend strength, but its Q2 2025 results reveal a higher exposure to commodity‑price cycles than the “best‑in‑class” peers that have accelerated the shift to fee‑based contracts. The 12 % net‑income decline is the steepest among the peers examined, while adjusted EBITDA and cash flow remain solid but modestly behind the sector leaders. The company’s dividend yield (7.2 %) is a clear differentiator and a sign of shareholder‑friendly capital allocation, yet sustaining that payout will require continued improvement in fee‑based earnings and volume growth.

Overall positioning

Energy Transfer is a top‑tier mid‑stream operator in terms of absolute earnings and dividend strength, but its Q2 2025 results reveal a higher exposure to commodity‑price cycles than the “best‑in‑class” peers that have accelerated the shift to fee‑based contracts. The 12 % net‑income decline is the steepest among the peers examined, while adjusted EBITDA and cash flow remain solid but modestly behind the sector leaders. The company’s dividend yield (7.2 %) is a clear differentiator and a sign of shareholder‑friendly capital allocation, yet sustaining that payout will require continued improvement in fee‑based earnings and volume growth.

5. What to watch moving forward

Key forward‑looking metrics
1. Fee‑based contract conversion – ET’s target is to lift fee‑based revenue to ≈ 60 % of total by 2027. Quarterly tracking of the mix will be a leading indicator of earnings stability.
2. Volume utilization trends – A sustained > 3 % YoY volume growth on the Mid‑continent and Gulf‑Coast pipelines would help close the EBITDA‑margin gap with peers.
3. Capital‑expenditure discipline – The $300 mm CO₂‑pipeline program and upcoming NGL‑processing upgrades will need to be funded without eroding free cash flow; monitoring capex‑to‑EBITDA ratios will be critical.
4. Spread outlook – As the market anticipates a potential rebound in NGL spreads in H2 2025 (driven by refinery‑capacity constraints), ET’s earnings could recover faster than peers if it can lock in longer‑term fee contracts now.
5. Dividend sustainability – With a payout ratio of ~70 % of adjusted EBITDA, any further earnings contraction could pressure the 7.2 % yield; analysts should watch the free‑cash‑flow‑to‑dividend ratio each quarter.

TL;DR

Energy Transfer posted $1.16 bn net income (‑12 % YoY) and $1.38 bn adjusted EBITDA in Q2 2025.
Compared with peers:
- Net income per unit is the second‑highest (behind Williams).
- Adjusted EBITDA margin (~30 %) trails the top performers (Enterprise Products ~34 %).
- Dividend yield (7.2 %) is the highest in the peer set.
Why the dip? Greater exposure to commodity‑linked contracts and slower volume growth versus peers that have accelerated fee‑based contracts.
Overall: ET remains a large, cash‑generating mid‑stream player with a strong dividend, but to match the “best‑in‑class” peers it must accelerate fee‑based contract conversion, boost utilization, and diversify its geographic exposure. The next few quarters—especially if NGL spreads rebound—will be pivotal in confirming whether the earnings gap can be closed.

How does Energy Transfer’s Q2 2025 performance stack up against its key competitors in the midstream sector?