{"id":59307,"date":"2024-03-03T06:00:28","date_gmt":"2024-03-03T11:00:28","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=59307"},"modified":"2024-04-01T10:15:43","modified_gmt":"2024-04-01T14:15:43","slug":"is-energy-transfer-et-a-buy-opportunity-amidst-acquisition-momentum","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2024\/03\/is-energy-transfer-et-a-buy-opportunity-amidst-acquisition-momentum\/","title":{"rendered":"Is Energy Transfer (ET) a Buy Opportunity Amidst Acquisition Momentum?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">As a<\/span><a href=\"https:\/\/oilprice.com\/Energy\/Energy-General\/US-Oil-and-Gas-Merger-Mania-Extends-to-the-Midstream.html\"> <span style=\"font-weight: 400;\">merger frenzy sweeps across the U.S. oil industry<\/span><\/a><span style=\"font-weight: 400;\">, pipeline operators are seizing the opportunity to join the fray. Fueled by ambitions to enhance scale, optimize assets, and capitalize on lucrative export markets, they're making their mark by jumping on the merger bandwagon.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Natural gas pipeline operator<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_ET\"> <span style=\"font-weight: 400;\">Energy Transfer LP\u2019s (ET)<\/span><\/a><span style=\"font-weight: 400;\"> recent merger and acquisition endeavors stand out as a shining example in this dynamic landscape. Commanding a market cap of approximately $49 billion, ET is a powerhouse in the energy industry, boasting one of the most extensive and diverse portfolios of assets in the U.S.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Owning and operating over 125,000 miles of pipelines and vital infrastructure, ET\u2019s strategic footprint covers 44 states, tapping into every major U.S. production basin.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Despite its vast footprint, ET made significant moves last year, securing two major deals. It<\/span><a href=\"https:\/\/pgjonline.com\/news\/2023\/march\/energy-transfer-to-acquire-lotus-midstream-for-15-billion-adding-3-000-miles-of-permian-pipeline\"> <span style=\"font-weight: 400;\">acquired Lotus Midstream<\/span><\/a><span style=\"font-weight: 400;\"> for close to $1.50 billion and<\/span><a href=\"https:\/\/www.hartenergy.com\/exclusives\/energy-transfer-completes-crestwood-acquisition-207081\"> <span style=\"font-weight: 400;\">merged with Crestwood Equity Partners<\/span><\/a><span style=\"font-weight: 400;\">, a fellow Master Limited Partnership (MLP), in a deal worth $7.10 billion.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ET\u2019s Co-CEO Tom Long, in the fourth-quarter conference call, conveyed the company's steadfast belief in the rationale behind consolidation within the energy sector and indicated that the company will<\/span><a href=\"https:\/\/ca.finance.yahoo.com\/news\/post-7-1b-crestwood-deal-170000574.html\"> <span style=\"font-weight: 400;\">continue assessing potential opportunities<\/span><\/a><span style=\"font-weight: 400;\"> for further consolidation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That said, ET's acquisition of Lotus Midstream's Centurion Pipeline assets marks a pivotal expansion for the company, amplifying its presence in the thriving heart of the Permian Basin. This strategic move bolsters ET's capacity for transporting and storing crude oil and<\/span><a href=\"https:\/\/ir.energytransfer.com\/news-releases\/news-release-details\/energy-transfer-acquire-lotus-midstream-145-billion-transaction#:\"> <span style=\"font-weight: 400;\">elevates its connectivity<\/span><\/a><span style=\"font-weight: 400;\"> across key markets.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Centurion assets, located across some of the most active areas of the Permian Basin, boast substantial gathering volumes from prominent producers, fortifying ET's access to crucial downstream markets characterized by consistent demand. These assets serve as direct conduits to major hubs such as Cushing, Midland, Colorado City, Wink, and Crane, unlocking a network of unparalleled opportunities for ET to thrive and flourish.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Meanwhile, last year November, ET successfully completed its merger with Crestwood Equity Partners LP, solidifying its dominant position in the midstream sector. The transaction boosts ET\u2019s<\/span><a href=\"https:\/\/ir.energytransfer.com\/news-releases\/news-release-details\/energy-transfer-completes-acquisition-crestwood\"> <span style=\"font-weight: 400;\">distributable cash flow per unit<\/span><\/a><span style=\"font-weight: 400;\">, bringing in substantial cash flows from long-term contracts and acreage dedications.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In its fourth-quarter earnings release, the company emphasized the transformative impact of its merger with Crestwood, projecting an impressive $80 million in annual cost synergies by 2026, with an anticipated $65 million to be realized by 2024 alone.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These synergies, however, are just the tip of the iceberg, with further benefits expected to emerge from enhanced financial and commercial alignments in the near future. Moreover, during the fourth quarter, ET\u2019s assets surged to unprecedented heights with the addition of new growth projects and acquisitions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Notably, Natural Gas Liquids (NGL) fractionation volumes soared by a remarkable 16%, establishing a new record for ET. Similarly, NGL transportation volumes witnessed a substantial uptick of 10%, also setting a new benchmark.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Meanwhile, NGL exports experienced an impressive surge of over 13%, reflecting the company\u2019s expanding global reach. Additionally, both crude oil transportation and terminal volumes witnessed substantial increases, soaring by 39% and 16%, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For the fiscal year 2024, the company expects its growth capital expenditures to range from $2.40 billion to $2.60 billion and maintenance capital expenditures are expected to be between $835 million and $865 million. The forecasted adjusted EBITDA for the same period is expected to hover somewhere between $14.50 billion and $14.80 billion.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Apart from mergers and acquisition endeavors, ET is dedicated to returning its unitholders\u2019 value through quarterly distributions. The company\u2019s annual dividend of $1.26 translates to an 8.58% yield on the prevailing price level, while its four-year average dividend yield is 10.24%. Its dividend payouts have grown at a CAGR of 10.8% over the past three years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With a surge of roughly 14% over the past year, analysts on Wall Street are forecasting a potential increase in the stock's value, estimating it to reach $18.22 within the next 12 months. This suggests a<\/span><a href=\"https:\/\/www.tipranks.com\/stocks\/et\/forecast\"> <span style=\"font-weight: 400;\">potential upside of 25.4%<\/span><\/a><span style=\"font-weight: 400;\">. The price target varies, ranging from a low of $15 to a high of $22.<\/span><\/p>\n<p><b>Bottom Line<\/b><\/p>\n<p><span style=\"font-weight: 400;\">ET emerges as a formidable player in the energy industry, driven by its aggressive growth strategy and slew of acquisitions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company's major deals, including the merger with Crestwood and the acquisition of Lotus Midstream's Centurion Pipeline assets, demonstrate its commitment to expanding its footprint and enhancing its capabilities. Additionally, ET's strong operational performance in the fourth quarter underscores its remarkable ability to capitalize on growth projects and acquisitions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, the company's attractive dividend yield, the potential for further acquisitions this year, analyst\u2019s bullish forecasts for ET's stock value, and its robust growth prospects all point toward promising opportunities for investors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With these factors in mind, investors could closely monitor ET's shares for potential gains in the future.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>As a merger frenzy sweeps across the U.S. oil industry, pipeline operators are seizing the opportunity to join the fray. Fueled by ambitions to enhance scale, optimize assets, and capitalize on lucrative export markets, they're making their mark by jumping on the merger bandwagon. Natural gas pipeline operator Energy Transfer LP\u2019s (ET) recent merger and [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":56981,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[33705,33703,33701,33702,33706,33704,33707,33700],"class_list":["post-59307","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-acquired-lotus-midstream","tag-continue-assessing-potential-opportunities","tag-distributable-cash-flow-per-unit","tag-elevates-its-connectivity","tag-energy-transfer-lps-et","tag-merged-with-crestwood-equity-partners","tag-merger-frenzy-sweeps-across-the-u-s-oil-industry","tag-potential-upside-of-25-4"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is Energy Transfer (ET) a Buy Opportunity Amidst Acquisition Momentum? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"Energy Transfer (ET) is making waves with its recent string of acquisitions, locking in two major deals last year and eyeing more opportunities ahead. 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