Midstream Giant Energy Transfer Fuels Growth with Strategic Acquisitions and Expansion
Energy Transfer, a leading midstream company, has been on a buying spree, closing its massive $3.1 billion purchase of WTG Midstream and a $7.1 billion merger with Crestwood Equity Partners. These strategic moves have fueled record volumes across several of its assets, driving strong earnings growth.
Robust Volume Growth Across the Board
The company’s third-quarter results were impressive, with record-setting volumes in:
- Crude oil transportation, up 25%
- Crude oil export volume, up 49%
- Midstream gathered volume, up 6% to a record level
- Midstream natural gas liquids (NGLs) produced volume, up 26% to a record level
- NGL fractionation volume, up 12% to a record level
- Total NGL exports, up 3% to a record level
- NGL transportation volume, up 4% to a record level
- Refined products transportation volume, up 4%
Strong Earnings Growth and Cash Flow
The acquisition of Crestwood Equity Partners and WTG Midstream, combined with recently completed expansion projects and a strong market environment, contributed to the company’s robust earnings growth. Energy Transfer generated nearly $4 billion of earnings before interest, taxes, depreciation, and amortization (EBITDA), an almost 12% increase from the year-ago period. Distributable cash flow was roughly flat, compared to the year-ago period, at about $2 billion.
Financial Flexibility and Growth Outlook
With ample financial flexibility, Energy Transfer is well-positioned to continue growing its volume and earnings. The company expects to invest between $2.8 billion and $3 billion into growth capital projects this year, expanding its export, processing, and pipeline capacity, building natural gas-fired electric generation plants, and working on optimization and debottlenecking projects. Its current slate of projects should come online through 2026, providing visibility into its volume and cash-flow growth for the next few years.
A High-Yielding Distribution and Growth Potential
Energy Transfer’s strong growth outlook, combined with its high-yielding distribution (nearly 7.5% yield), makes it an attractive option for investors seeking income and growth. The company is targeting 3% to 5% annual growth in its distribution, which could enable it to produce robust total returns in the coming years.
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