$15.82
$38.82
bear $15.82
base $30.12
bull $38.82
margin of safety $18.00
market price* $20.26
WHAT THE BUSINESS IS Energy Transfer owns one of the largest energy pipeline networks in the United States: interstate natural gas pipelines (Panhandle Eastern, Transwestern, Florida Gas and others), a large Texas intrastate gas system, gathering and processing plants in the Permian and other basins, natural gas liquids pipelines, fractionation at Mont Belvieu and export docks at Nederland, Texas, and crude oil pipelines including its share of the Bakken system. It also controls, but only partly owns, Sunoco LP (fuel distribution, now including Parkland, acquired in October 2025, with a refinery in Burnaby, British Columbia and Canadian fuel retail) and USA Compression. Most income comes from fees for moving, storing and processing volumes; a smaller part depends on commodity prices and marketing spreads. At the end of 2025 the partnership had $33.6 billion of contracted future revenue, with $7.9 billion due in 2026, $6.4 billion in 2027 and $4.8 billion in 2028, so a growing share must be renewed in the years ahead. WHAT CHANGED SINCE OUR SEPTEMBER 22 ESTIMATE Our earlier estimate valued the cash left after interest over a limited life. In effect, that assumed the partnership's roughly $52 billion of its own borrowings would never have to be repaid. We now value the business first, before its lenders and preferred holders are paid, and then subtract what it owes. This is the main reason every case is lower. Two smaller changes go the other way: the Army Corps of Engineers' final environmental review has since recommended reissuing the Dakota Access easement, so we no longer assume a shutdown in the downside case; and the 2026 upkeep budget for Energy Transfer's own assets ($1.15 billion) points to a smaller rise in upkeep than we had assumed. HOW WE MEASURED EARNING POWER We started from operating cash flow, removed working-capital swings, charged unit-based pay as a real cost, and deducted the spending needed to keep the existing system running, using the company's audited split between maintenance and growth spending (maintenance was $1.3 billion in 2025). We use that split because reported revenue swings with the crude and liquids prices the partnership passes through, not with the size of the system. We then subtracted the cash paid to the outside owners of Sunoco LP, USA Compression and the pipeline joint ventures. On that basis earnings to common unitholders were about $2.45 a unit in 2022, $2.14 in 2023, $2.37 in 2024 and $2.50 in 2025. To value the business before its lenders, we added back the cash interest Energy Transfer pays on its own debt and the payments on its preferred units. That gives about $3.19 a unit in 2022, $2.90 in 2023, $3.20 in 2024 and $3.30 in 2025. Sunoco LP and USA Compression carry their own debt ($13.3 billion and $2.9 billion at June 30, 2026), which Energy Transfer does not guarantee and which their outside owners share. We keep their cash in our figures only after their own interest and after what they pay their outside owners, and we leave their debt out of what Energy Transfer owes. Counting it in full would charge Energy Transfer for borrowings that mostly fall on other investors. Because some cash those two businesses keep belongs to their other owners, we trim about $0.05 a unit. We use the middle of 2022 to 2025, about $3.14 a unit (roughly $10.9 billion a year), as the starting level. We start in 2022 because the December 2021 Enable Midstream merger enlarged the partnership. We leave out 2021 because of the one-time windfall from the February 2021 winter storm. The first half of 2026 was much stronger than a year earlier: operating income was $6.56 billion against $4.80 billion and operating cash flow $7.65 billion against $5.68 billion. Part of that is Parkland, most of whose profit goes to Sunoco LP's other owners. We could not fully explain the second-quarter jump from the filings, so we have not raised the starting level. A full year of similar results would justify revisiting it. THE CASES (6% discount rate) Base case, about $30.10 a unit. In 2025 the business's cash flow per unit grew about 3%. For the year ahead we assume about $3.21, slightly below 2025, because we start from the four-year middle. About $9.5 billion of growth projects, paid for in 2025 and 2026 and still being built, are assumed to earn about 9% a year once running. These include new Texas gas pipeline capacity, Permian processing plants, export-dock work and the Transwestern expansion due by the end of 2029. That adds about $0.25 a unit by 2029, plus a little from higher Sunoco LP distributions after Parkland, less slightly higher upkeep, for about $3.41. The 9% reflects the record. Business cash flow rose about $1.5 billion from 2022 to 2025 while the partnership spent roughly $13 billion on growth projects and made several acquisitions, and per-unit results barely moved. We credit no projects beyond those already under way. After year ten the interstate gas pipelines, some of which have run for more than 60 years, keep earning, while crude and gathering volumes tied to particular basins wear out. So cash flow fades 1.5% a year for thirty years and then stops. The business is worth about $47.00 a unit (about $163 billion). It owes about $16.85 a unit: roughly $52.2 billion of its own borrowings at June 30, 2026, $3.4 billion of preferred units and about $2.8 billion left to spend in 2026 on the projects we credit. That leaves about $30.10. Bear case, about $15.80. Cash flow starts from the 2023 low, about $2.85 a unit. New federal pipeline-safety rules raise upkeep by about $200 million a year. The new projects earn only about 3%. Lower rates on renewal of the contracts that roll off through 2028, and narrower Permian gas price spreads as competing pipelines come online, take about $0.10 a unit. Cash flow then slides 1% a year to about $2.60 by year ten and falls 3% a year for twenty more years. Debt maturing between 2026 and 2030, about $31 billion across the group, is refinanced at around 6.5% instead of today's roughly 5.5%, which adds about $1.5 billion to what is owed. The business is worth about $33.10 a unit and owes about $17.25, leaving about $15.80. Even here, cash flow before interest stays about three times the interest bill. As in 2020, when it cut its distribution in half to pay down debt, the partnership would more likely cut payouts than fail to pay lenders. Bull case, about $38.80. Starting from the 2025 level, the new projects earn about 13%, close to the returns the company aims for. Parkland lifts Sunoco LP distributions, and inflation-linked rate increases on regulated liquids pipelines add about 1% a year, for about $3.88 by year ten. After that the network keeps earning for forty more years with a 1% yearly fade. The business is worth about $55.45 a unit. It owes about $16.65, slightly less than face because much of its long-dated debt carries fixed rates below 6%. That leaves about $38.80. DEBT Energy Transfer's own borrowings have grown to about $52 billion, partly to redeem preferred units. Its own cash interest per unit rose from about $0.60 in 2022 to $0.73 in 2025, much faster than business cash flow per unit, which rose about 3.5%. At the end of 2025 the credit agreement's leverage ratio was 3.21 times, against a 5.0 times limit. Debt traded close to its face value. About $4.3 billion carries floating rates. Group maturities are $3.5 billion in 2026, $5.3 billion in 2027, $4.5 billion in 2028, $11.6 billion in 2029 and $6.2 billion in 2030. The 2029 total is the one to watch. LEFT OUT The suspended Lake Charles LNG export project gets no value. The court judgement won against Greenpeace in 2025 is not counted, because collection is uncertain. We assume no growth projects beyond those under way, and we do not count the roughly $1 billion of cash on hand, which the business needs to operate. WHAT WOULD MAKE THIS WRONG The value depends on reported maintenance spending being enough to keep the system running; each extra $500 million a year of true upkeep takes roughly $2 off the base value. It depends on the current growth program earning close to 9% before interest. The 2022 to 2025 record of heavy spending with little per-unit gain is the main reason to doubt that. If the strength of early 2026 holds for a full year, the starting level is too low and the base value would rise. MARGIN-OF-SAFETY PRICE The margin-of-safety price is about $18 a unit, roughly 40% below the base case and a little above the bear case. That margin reflects the debt, partial commodity exposure, the modest per-unit payoff from growth spending so far, a complex structure with partly owned subsidiaries and preferred units, and a history of putting the balance sheet ahead of distributions when times are hard.