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Large Purchase By Co-Founder Of Energy Transfer – Insider Weekends

  • February 26, 2023

Energy Transfer LP (ET) is one of the largest midstream energy companies, with a wide variety of business segments and operations – ranging from natural gas transportation and storage to midstream activities (such as natural gas gathering, processing, and more). The company also has ventures in natural gas liquids and crude oil transportation. The complete list of Energy Transfer’s services can be seen below:

The insider who made a purchase of Energy Transfer this week was Kelcy Warren, the co-founder and Executive Chairman of the company. Over the last six months, Mr. Warren has purchased over $90 million of Energy Transfer stock, with his most recent purchase valued at $17.4 million. Since his purchases in September, the stock has not done a whole lot but then again this is a master limited partnership (MLP) with a large yield (forward yield of 9.49%) and the returns are most likely going to be driven by distributions instead of capital gains on the units.

Crude oil prices have dropped significantly over the last year from a high of over $120 per barrel to just over $76 right now. This was driven by the U.S. government releasing significant amounts of oil from the Strategic Petroleum Reserve, concerns about an impending recession driven by Fed policies and partial access to Russian oil. Crude oil futures prices seem to have relatively stabilized, with futures marginally higher than the spot price until June.

Mr. Warren’s purchase follows the announcement of fourth quarter and fiscal year 2022 results, which were fairly positive. Throughout 2022, Energy Transfer made a series of acquisitions and dispositions – the most significant of which was the acquisition of the gas gathering and processing system Woodford Express in September. The company also sold its interest in Energy Transfer Canada. A pipeline and processing plant were also put into service in December 2022.

In Q3 2022, the company hit record intrastate natural gas transportation volumes, record midstream gathered volumes, and record natural gas liquids (NGL) fractionation volumes. To meet the global demand for liquid natural gas (LNG), the company continues to build the Lake Charles LNG Export Terminal project, and has  struck numerous agreements with a variety of companies from all over the world to start supplying them with LNG starting in 2026. Given the big price difference between U.S. natural gas prices and prices in Europe and Asia, this can become a significant source of revenue and profits over the next couple of decades. This is one of the reasons energy investors have bid up the price of LNG export companies like Cheniere Energy (LNG) by nearly 189% over the last five years.

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