Energy Transfer, a midstream giant, has been on a growth trajectory with a series of strategic acquisitions and joint ventures. In the past year, the company closed two significant acquisitions – Lotus Midstream for $1.5 billion and Crestwood Equity Partners for $7.1 billion. These acquisitions, coupled with organic expansion projects and favorable market conditions, have positioned Energy Transfer to achieve earnings growth of more than 10% this year. This growth will enable the company to increase its already high-yielding distribution by 3% to 5%.
One of the recent developments for Energy Transfer is the acquisition of WTG Midstream for nearly $3.3 billion. This deal, which closed earlier this month, includes cash payments and issuance of new common units to the sellers. WTG Midstream brings 6,000 miles of gas-gathering pipelines, natural gas processing plants, and other assets in the Midland Basin side of the Permian Basin. The acquisition is expected to enhance Energy Transfer’s revenue and distributable cash flow, with incremental benefits expected in the coming years.
In addition to acquisitions, Energy Transfer has also formed a joint venture with Sunoco LP to combine their crude oil and produced water-gathering assets in the Permian Basin. This JV will operate 5,000 miles of pipelines and have significant storage capacity. The partnership is expected to reduce costs, drive synergies, and enhance distributable cash flow for both companies. This joint venture follows Sunoco LP’s acquisition of NuStar Energy, which further strengthened its financial position and growth prospects.
The strategic initiatives undertaken by Energy Transfer have enhanced its growth profile and financial position. Despite making sizable acquisitions, the company remains in a strong financial position, allowing it to pursue further growth opportunities. The recent deals, including the WTG Midstream acquisition and the Sunoco JV, have provided Energy Transfer with additional avenues for growth and distribution expansion in the coming years.
With a visible growth trajectory and a high-yielding distribution, Energy Transfer presents an attractive investment opportunity for those seeking a steadily rising income stream. The company’s focus on enhancing its portfolio and leveraging strategic partnerships has positioned it well for continued success in the midstream sector.
In conclusion, Energy Transfer’s commitment to adding new growth drivers through acquisitions and joint ventures has set the stage for sustained earnings growth and distribution increases in the future. The company’s strong financial position and strategic initiatives make it an appealing option for investors looking for a reliable income stream with growth potential in the energy sector.
