Energy transfer is not complete.

Acquisition in supply energy transfer (ET 1.06%) We need a lot of fuel this year. Master limited partnerships (MLPs) closed two large transactions last year. Sunoco (sun 0.32%), recently made an acquisition that moved the needle. These three deals put the company on track to grow its revenue by about 10% this year.

that much MLP I made it clear thereto 1st quarter conference call Consolidation in the midstream space continues to make sense. Here’s a look at what the company is seeking in future deals.

Add value to the value chain

Tom Long, Energy Transfer’s co-CEO and CFO, discussed the company’s acquisition strategy on the call. He said MLPs are always looking for opportunities to “supply downstream.” “We always talk about getting from source to water, and we do that across all our products,” he said.

long The company noted that its strategy is to look for opportunities to purchase assets that feed the value chain that drives raw materials from upstream wells to downstream markets, including refineries, petrochemical plants and export facilities. This presents a great opportunity to achieve commercial synergies and reduce costs.

For example, the company is currently working on a debottlenecking project at Gateway. pipeline That will allow it. To make the most of its benefits In ~ EPIC pipeline. This project will allow MLP to optimize deliveries from the Delaware Basin to the Mont Belvieu complex. This is one of several synergy projects underway related to the Crestwood acquisition. This helps support the company’s view that it can move more goods across its network, with cost synergies of approximately $80 million, double initial estimates, and significant commercial synergies. These additional synergies further enhance the already increased trading value of the MLP.

Sunoco fit

The company typically conducts these transactions at the energy transfer level. But Sunoco’s acquisition of NuStar showed how its controlled MLPs can pull off very profitable deals that lead to Energy Transfer. The company will see a $500 million revenue boost from the Sunoco deal this year. long On the call, Sunoco noted that it will continue to make highly profitable acquisitions that allow it to capture commercial synergies that benefit its wholesale fuel distribution and terminal businesses. The company typically makes asset acquisitions, but the NuStar deal shows that public companies can be acquired very profitably.

In addition to using Sunoco as an acquisition vehicle, Energy Transfer sees potential partnership opportunities with MLPs. Mackie McCrea, Co-CEO and Chief Commercial Officer, said: There There is some overlap between Sunoco’s assets and Energy Transfer’s operations, including those acquired in the NuStar transaction. As a result, “there are real benefits to potentially working with them.” He noted that the two companies are already discussing potential partnerships and joint ventures. favorable to Two entities.

Ready to jump in

Even though I made two big Long said on the call that with acquisitions made last year, the company’s financial position “continues to be stronger than at any time in Energy Transfer’s history.” This allows the company enough flexibility to pursue new growth opportunities, including acquisitions and partnerships, while also returning more cash to investors through: Increase Distribution and share repurchase.

Sunoco has also proven that it can pull off very profitable deals, and both companies are likely to continue making acquisitions. energy transfer only You need to find the right opportunities to enhance and enhance the value of your value chain. Additional acquisitions in the future will allow the MLP to continue to increase cash flow. so that you can do that Return more money to investors.