Energy Transfer LP (ET)ET

Energy Transfer LP: A Comprehensive Overview

Company Profile:

Detailed history and background: Energy Transfer LP (ET) is a Dallas-based master limited partnership (MLP) formed in 2013. It originated from the separation of Energy Transfer Partners, L.P. from its parent company, Energy Transfer Equity, L.P. Today, ET is a leading North American energy infrastructure company owning and operating one of the largest and most diversified portfolios of midstream and downstream energy assets in the United States.

Core business areas: ET's core business is transporting, processing, and storing crude oil, natural gas, refined products, and other liquids across North America. Its assets include:

• 127,000 miles of pipeline network: Representing approximately 19% of the total crude oil and 44% of the natural gas pipeline miles in the United States.
• Logistics assets: Including terminals, storage facilities, and refineries.
• Wholesale marketing business: Marketing natural gas, NGLs, and refined products to industrial, commercial, and utility customers.

Leadership and corporate structure: ET's board of directors includes Chairman Kelcy Warren, CEO Tom Long, and seven other members with expertise in finance, law, and the energy industry. The company has a decentralized corporate structure with multiple business units responsible for different operations.

Top Products and Market Share:

Top products:

• Crude oil pipelines: ET transports crude oil from major producing regions like the Permian Basin and Bakken Shale to refineries and export terminals.
• Natural gas pipelines: It transports natural gas from production basins to markets across the US.
• NGLs (Natural Gas Liquids): Processes and transports natural gas liquids like propane, butane, and ethane.
• Refined products pipelines: Transports refined products like gasoline, diesel, and jet fuel.

Market share:

• Crude oil pipelines: ET holds the highest market share in the US with approximately 19%.
• Natural gas pipelines: With 44% market share, ET is the largest transporter of natural gas in the US.
• NGLs: It is one of the leading NGLs processors and transporters in the country.
• Refined products pipelines: ET has a significant presence in the refined products pipeline market, with a notable share in the Gulf Coast region.

Competitive landscape: ET faces competition from other major players in the midstream energy infrastructure sector, including:

• Magellan Midstream Partners, L.P. (MMP)
• MPLX LP (MPLX)
• Kinder Morgan, Inc. (KMI)
• Phillips 66 Partners LP (PSXP)

ET differentiates itself through its extensive asset base, geographically diversified operations, and integrated value chain.

Total Addressable Market:

The midstream energy infrastructure market in the US is massive, estimated to be worth over $400 billion in 2023. This market is expected to grow due to increasing demand for transportation and storage of energy commodities.

Financial Performance:

Recent financial statements:

• Revenue: As of the third quarter of 2023, ET's total revenue was $37.3 billion, with a net income of $1.8 billion.
• Profit margins: The company's gross profit margin was 70.2%, with an operating margin of 29.8%.
• Earnings per share (EPS): ET's EPS for the third quarter of 2023 was $0.89.
• Cash flow: The company generated $4.3 billion in operating cash flow during the third quarter.
• Balance sheet: ET has a strong financial position with a current ratio of 1.2 and a debt-to-equity ratio of 4.1.

Year-on-year comparison: Compared to the third quarter of 2022, ET's revenue grew by 7%, net income increased by 13%, and EPS rose by 10%.

Dividends and Shareholder Returns:

Dividend history: ET has a consistent dividend payout history, currently yielding an annual dividend of $2.04 per share, which translates to a dividend yield of 8.6%. Shareholder returns: Over the past year, ET's total shareholder return is 15%, outperforming the S&P 500. Over five and ten years, the total shareholder returns are 52% and 139%, respectively.

Growth Trajectory:

Historical growth: Over the past five years, ET's revenue has grown at a compound annual growth rate (CAGR) of 5.5%, and its net income has grown at a CAGR of 7.2%. Future growth: Analysts expect ET to continue growing at a moderate pace in the coming years, supported by increasing demand for energy transportation and infrastructure projects. Growth prospects: ET is investing in expanding its pipeline network and diversifying its operations into new areas like renewable energy, which should drive future growth.