Latest news with #NGLs
Yahoo
a day ago
- Business
- Yahoo
1 Magnificent Pipeline Stock Down Nearly 20% to Buy and Hold Forever
At its current share price, Energy Transfer's distribution yields more than 7%, and the payouts have been growing. It has greatly improved its balance sheet and contract structure over the past few years. The master limited partnership has strong growth opportunities ahead of it. 10 stocks we like better than Energy Transfer › One of my favorite pipeline stocks to buy right now is Energy Transfer (NYSE: ET), and investors can pick up the master limited partnership (MLP) on sale, with shares trading down nearly 20% from their high as of this writing. In fact, the stock is one of my largest holdings. Here's why Energy Transfer is a great stock to buy and hold for the long term. Energy Transfer has built one of the largest integrated midstream systems in the U.S., handling the transport, storage, and processing of natural gas, crude oil, natural gas liquids (NGLs), and refined products. Its scale enables it to benefit from rising volumes across the energy value chain, as well as take advantage of price spreads across regions, seasons, and products. For instance, natural gas prices often rise in winter and can vary across the country. Energy Transfer can profit by storing gas ahead of periods of peak demand or by moving it from lower-priced to higher-priced markets. The company also upgrades certain hydrocarbons into more valuable end products. This kind of integrated footprint is hard to replicate, and it makes growth opportunities easier to take advantage of. With a strong position in Texas and the Permian Basin, Energy Transfer has access to low-cost associated gas, putting it in a solid spot to benefit from trends like the country's rising liquefied natural gas (LNG) exports and growing electricity demand tied to the AI infrastructure build-out. Given the opportunities in front of it, Energy Transfer has transitioned into growth mode. It plans to spend around $5 billion in growth capital expenditures (capex) this year, up from $3 billion in 2024. One of its major projects is the Hugh Brinson pipeline, which will transport natural gas out of the Permian to help meet growing natural gas demand in Texas stemming from new AI data center construction. It also signed a deal with data center developer Cloudburst to directly provide natural gas to its AI-focused data center development in central Texas. The company has also received inquiries from more than 60 power plants regarding new connections in 14 states, and requests from more than 200 data centers. Energy Transfer also appears ready to make a final investment decision on its long-awaited Lake Charles, Louisiana, LNG facility. It signed a deal with MidOcean Energy to fund 30% of the project's construction costs in exchange for 30% of the facility's LNG production if the project goes through, while it has also signed several sale and purchase agreements with potential customers. Demand for LNG continues to grow rapidly, with much of the new demand coming from Asia. Shell recently projected that global LNG demand could climb by 60% by 2040, driven both by Asian growth and a broader push for lower-emission energy sources for segments like heavy industry and transportation. Energy Transfer is also in a strong financial position. Building pipelines and other midstream assets is a capital-intensive business, and in 2020, the company cut its distribution in half to reduce leverage and improve its balance sheet. However, its distribution is now above where it was before that cut, and its leverage ratio is toward the low end of its target range of 4 to 4.5 times its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). In fact, the company recently said it was in the best financial shape in its history. On top of its solid balance sheet, the MLP is also in a good position from a contract standpoint. This year, it expects about 90% of its EBITDA to come from fee-based services, meaning it's largely insulated from swings in commodity prices and spread differentials. Additionally, the company said it now has its highest-ever percentage of take-or-pay contracts, which means it gets paid whether or not customers actually use its services. Fee-based contracts with take-or-pay provisions increase the stability of its cash flows and support its distributions. Currently, the company is paying a quarterly distribution of $0.3275 per share, which at recent share prices is good for a forward yield of 7.3%. Management has said it's looking to grow its distribution by 3% to 5% annually. The distribution is well covered. Its distributable cash flow (operating cash flow minus maintenance capex) was more than twice its distribution last quarter. In addition to Energy Transfer being in a strong financial position with growing opportunities, the stock is also cheap on both a historical and relative basis, trading at a forward enterprise-value-to-EBITDA multiple of just 8. Between 2011 and 2016 (before the pandemic), midstream MLPs traded at an average multiple of 13.7, and the stock currently trades at a lower valuation than most of its peers. Now, Energy Transfer is not a risk-free investment. The company carries debt, and falling commodity costs and macroeconomic headwinds can take a toll on fossil fuel volumes. However, given its improved contract structure and balance sheet, along with its current growth opportunities, Energy Transfer's stock should provide investors with both an increasing income stream and solid price appreciation potential. That makes it a magnificent stock to buy and hold for the long run. Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Geoffrey Seiler has positions in Energy Transfer, Enterprise Products Partners, and Western Midstream Partners. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. 1 Magnificent Pipeline Stock Down Nearly 20% to Buy and Hold Forever was originally published by The Motley Fool
Yahoo
6 days ago
- Business
- Yahoo
Is Enterprise Products Partners the Smartest Investment You Can Make Today?
Enterprise has been a model of consistency throughout the years. While conservative in nature, the company is not afraid to pursue growth. The stock is attractively valued at current levels. 10 stocks we like better than Enterprise Products Partners › You'll sometimes see investors pose the question online: "If you had $1 million and could only invest in one stock to hold for the next 10 years, what would it be?" On the surface, it's a way to crowdsource stock ideas, but it also brings in two key factors: time horizon and downside protection. After all, if you're locking in that kind of money for a decade, the last thing you want is to end up with less than you started. The truth of the matter is that most stocks ultimately underperform. A J.P. Morgan study found that between 1980 and 2020 40% of stocks in the Russell 3000, which consists of the 3,000 largest companies that trade in the U.S., experienced what it called a "catastrophic stock price loss," which it defined as a 70% price decline from which a stock never fully recovered. In addition, 40% of stocks during this period had absolute negative returns, and two-thirds underperformed the index. Against that backdrop, that is why I also answer the question with the same stock: Enterprise Products Partners (NYSE: EPD). In fact, it is the stock I've owned the longest, holding it since 2008. For those unfamiliar with Enterprise, it is a master limited partnership (MLP) that operates one of the largest integrated midstream systems in the U.S. It provides essential services, such as transportation, storage, and processing, to both producers and consumers of fossil fuel-based products, including crude oil, natural gas, natural gas liquids (NGLs), petrochemicals, and refined products. Its large integrated system gives it geographic, product, and market diversification. One of the most attractive things about Enterprise is its consistency. Midstream MLPs are pass-through entities that tend to carry attractive yields. Enterprise is no exception, with it currently having a forward yield of nearly 7%. Distributions are important to its stockholders, and the company has been able to increase its payout for 26 straight years, navigating several difficult energy and economic periods during that span. A big key to Enterprise's strong track record is that the company takes a conservative approach. Typically, about 85% of its cash flow comes from fee-based businesses, where swings in commodity prices or spreads have no impact on it. It also likes to attach take-or-pay or minimum volume commitment (MVC) provisions to its contracts, which means it gets paid whether or not its customers use its services. This helps protect its cash flow. Approximately 90% of its long-term contracts also have escalation provisions based on inflation. In addition, the company has a conservative balance sheet. Building pipelines and other midstream assets is capital-intensive, so midstream companies generally carry debt. Enterprise has low leverage for the industry, with it sitting at 3.1x at the end of last quarter. The company has done a great job of terming out its debt. Over 95% of it is fixed rate, with an average maturity of 18 years and an average interest rate of just 4.7%. In other words, it's locked in low-cost debt for the long haul, which is a valuable asset in today's higher interest rate environment. Enterprise also carries a high coverage ratio, which is an important measure regarding the safety of its payout. Last quarter, its coverage ratio was 1.7x its distributable cash flow (DCF), which is operating cash flow minus maintenance capital expenditure (capex). DCF is a common metric used with MLPs because the companies have the ability to ratchet their growth capex spending up or down. Its high coverage ratio lets it self-fund growth without having to issue equity or greatly increase its leverage. Despite its conservative nature, Enterprise is not afraid to pursue growth when it sees good opportunities. The company reduced its growth capex coming out of the pandemic, taking it to $1.6 billion as opportunities dried up. However, it plans to spend between $4 billion to 4.5 billion on growth projects this year, up from $3.9 billion in 2024, as demand for natural gas and NGLs continues to grow. The company is also very well positioned in the Permian Basin, which is the most prolific oil basin in the U.S. Enterprise currently has $7.6 billion of major capital projects under construction, of which $6 billion of these projects are set to come online this year. That sets the company up for solid growth in 2026 and beyond as these projects ramp up. Turning to valuation, the stock currently trades at an enterprise value (EV)-to-EBITDA multiple of 9.8, which is the most common metric used to value midstream companies. This is attractive from a historical perspective, as MLPs traded at an average EV/EBITDA multiple of 13.7x between 2011 and 2016. All in all, Enterprise is a solid, "sleep well at night" stock trading at an attractive valuation, and one of the smartest investments you can make today for the long term. It doesn't come without risks, as disruption in the economy and lower energy prices can impact volumes, but the company has a long track record of navigating these types of markets. So sit back and collect your ever-increasing distributions over the next decade. Before you buy stock in Enterprise Products Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Enterprise Products Partners wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Enterprise Products Partners. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy. Is Enterprise Products Partners the Smartest Investment You Can Make Today? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
10-05-2025
- Business
- Yahoo
U.S. exports of natural gas liquids touch record high in April
By Arathy Somasekhar and Georgina McCartney HOUSTON (Reuters) -U.S. exports of natural gas liquids touched a record high in April, even as a trade war between the U.S. and China cut shipments to the top buyer, ship tracking data showed. The recent trade developments have threatened U.S. exports of natural gas liquids (NGLs), such as ethane, butane and propane, used to make plastics and chemicals as well as for heating and cooking. U.S. exports have hit a new high every year since 2010 thanks to an abundance of cheap shale natural gas. NGLs, primarily extracted from raw natural gas during processing, are the latest energy products ensnared in the escalating trade war between the world's two largest economies. Nearly half of U.S. ethane exports go to China, and all of China's ethane imports come from the U.S. with practically no options for alternative sources, according to the statistical arm of the U.S. government. Chinese petrochemical firms use it as feedstock because it is a cheaper than alternative naphtha, while U.S. oil and gas producers need China to buy their natural gas liquids as domestic supply exceeds demand. The U.S. exported about 2.9 million barrels per day (bpd) of NGLs in April, a record high, data from ship tracking firms Kpler and Vortexa showed. But exports to China fell 35% to 619,000 bpd in the month, Kpler data showed, the lowest since November 2023. China waived the 125% tariff on ethane imports from the U.S. imposed earlier this month, two sources told Reuters this week. Other countries increased their purchases of U.S. NGLs in the global rerouting, making up for the U.S.'s loss of Chinese buying. India more than tripled its purchase to a record high of 179,000 barrels per day, Kpler data showed. Brazil more than doubled its purchases to 113,000 bpd, the highest in five years, while Japan, the second largest buyer of U.S. natural gas liquids, stepped up shipments by 64% to nearly 400,000 bpd, the highest since February 2023. U.S. production of ethane will rise 3.6% to 2.9 million bpd this year, the Energy Information Administration forecast, adding that most of this growth in production will be exported to supply growing international demand. "The market has already gone to work rerouting barrels between the world's biggest liquefied petroleum gas (a mix of propane and butane) suppliers, the U.S. and the Middle East, and the biggest importing countries being China and India," said Jim Teague, co-chief executive officer Enterprise Products Partners, one of the top exporters of U.S. natural gas liquids, in a quarterly earnings call. The company said it was not seeing a disruption of any of its exports of ethane, propane or butane. Rival Energy Transfer, also among the largest exporters of U.S. NGL, said it was not having a problem finding a home for its ethane or LPG. Enterprise Products said total NGL pipeline transportation volumes rose 5%, while marine terminal volumes climbed 11%. Energy Transfer's NGL transportation volumes were up 4% in the first quarter, while exports were up 5%.
Zawya
08-05-2025
- Business
- Zawya
U.S. exports of natural gas liquids touch record high in April
U.S. exports of natural gas liquids touched a record high in April, even as a trade war between the U.S. and China cut shipments to the top buyer, ship tracking data showed. The recent trade developments have threatened U.S. exports of natural gas liquids (NGLs), such as ethane, butane and propane, used to make plastics and chemicals as well as for heating and cooking. U.S. exports have hit a new high every year since 2010 thanks to an abundance of cheap shale natural gas. NGLs, primarily extracted from raw natural gas during processing, are the latest energy products ensnared in the escalating trade war between the world's two largest economies. Nearly half of U.S. ethane exports go to China, and all of China's ethane imports come from the U.S. with practically no options for alternative sources, according to the statistical arm of the U.S. government. Chinese petrochemical firms use it as feedstock because it is a cheaper than alternative naphtha, while U.S. oil and gas producers need China to buy their natural gas liquids as domestic supply exceeds demand. The U.S. exported about 2.9 million barrels per day (bpd) of NGLs in April, a record high, data from ship tracking firms Kpler and Vortexa showed. But exports to China fell 35% to 619,000 bpd in the month, Kpler data showed, the lowest since November 2023. China waived the 125% tariff on ethane imports from the U.S. imposed earlier this month, two sources told Reuters this week. Other countries increased their purchases of U.S. NGLs in the global rerouting, making up for the U.S.'s loss of Chinese buying. India more than tripled its purchase to a record high of 179,000 barrels per day, Kpler data showed. Brazil more than doubled its purchases to 113,000 bpd, the highest in five years, while Japan, the second largest buyer of U.S. natural gas liquids, stepped up shipments by 64% to nearly 400,000 bpd, the highest since February 2023. U.S. production of ethane will rise 3.6% to 2.9 million bpd this year, the Energy Information Administration forecast, adding that most of this growth in production will be exported to supply growing international demand. "The market has already gone to work rerouting barrels between the world's biggest liquefied petroleum gas (a mix of propane and butane) suppliers, the U.S. and the Middle East, and the biggest importing countries being China and India," said Jim Teague, co-chief executive officer Enterprise Products Partners , one of the top exporters of U.S. natural gas liquids, in a quarterly earnings call. The company said it was not seeing a disruption of any of its exports of ethane, propane or butane. Rival Energy Transfer, also among the largest exporters of U.S. NGL, said it was not having a problem finding a home for its ethane or LPG. Enterprise Products said total NGL pipeline transportation volumes rose 5%, while marine terminal volumes climbed 11%. Energy Transfer's NGL transportation volumes were up 4% in the first quarter, while exports were up 5%. (Reporting by Arathy Somasekhar and Georgina McCartney in Houston; Editing by David Gregorio)
Yahoo
08-05-2025
- Business
- Yahoo
U.S. exports of natural gas liquids touch record high in April
By Arathy Somasekhar and Georgina McCartney HOUSTON (Reuters) -U.S. exports of natural gas liquids touched a record high in April, even as a trade war between the U.S. and China cut shipments to the top buyer, ship tracking data showed. The recent trade developments have threatened U.S. exports of natural gas liquids (NGLs), such as ethane, butane and propane, used to make plastics and chemicals as well as for heating and cooking. U.S. exports have hit a new high every year since 2010 thanks to an abundance of cheap shale natural gas. NGLs, primarily extracted from raw natural gas during processing, are the latest energy products ensnared in the escalating trade war between the world's two largest economies. Nearly half of U.S. ethane exports go to China, and all of China's ethane imports come from the U.S. with practically no options for alternative sources, according to the statistical arm of the U.S. government. Chinese petrochemical firms use it as feedstock because it is a cheaper than alternative naphtha, while U.S. oil and gas producers need China to buy their natural gas liquids as domestic supply exceeds demand. The U.S. exported about 2.9 million barrels per day (bpd) of NGLs in April, a record high, data from ship tracking firms Kpler and Vortexa showed. But exports to China fell 35% to 619,000 bpd in the month, Kpler data showed, the lowest since November 2023. China waived the 125% tariff on ethane imports from the U.S. imposed earlier this month, two sources told Reuters this week. Other countries increased their purchases of U.S. NGLs in the global rerouting, making up for the U.S.'s loss of Chinese buying. India more than tripled its purchase to a record high of 179,000 barrels per day, Kpler data showed. Brazil more than doubled its purchases to 113,000 bpd, the highest in five years, while Japan, the second largest buyer of U.S. natural gas liquids, stepped up shipments by 64% to nearly 400,000 bpd, the highest since February 2023. U.S. production of ethane will rise 3.6% to 2.9 million bpd this year, the Energy Information Administration forecast, adding that most of this growth in production will be exported to supply growing international demand. "The market has already gone to work rerouting barrels between the world's biggest liquefied petroleum gas (a mix of propane and butane) suppliers, the U.S. and the Middle East, and the biggest importing countries being China and India," said Jim Teague, co-chief executive officer Enterprise Products Partners, one of the top exporters of U.S. natural gas liquids, in a quarterly earnings call. The company said it was not seeing a disruption of any of its exports of ethane, propane or butane. Rival Energy Transfer, also among the largest exporters of U.S. NGL, said it was not having a problem finding a home for its ethane or LPG. Enterprise Products said total NGL pipeline transportation volumes rose 5%, while marine terminal volumes climbed 11%. Energy Transfer's NGL transportation volumes were up 4% in the first quarter, while exports were up 5%.
