A Quiet Calculation: Energy Transfer

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The year begins with a certain… eagerness in the energy sector. Crude oil, predictably, has stirred itself, climbing a respectable 15%. This has, of course, provided a momentary lift to the energy stocks within the S&P 500 – a gain of over 20%, they say. One observes these things, and wonders if it signifies anything lasting.

I find myself, as the days shorten, contemplating a position in Energy Transfer. It’s not a matter of enthusiasm, you understand. Enthusiasm is for younger men. It’s a calculation, a quiet assessment of probabilities. This March, I intend to add to my holdings, if the numbers continue to permit. There’s a certain… solidity to the enterprise, a sense of things continuing, even when one might wish they wouldn’t.

A Hesitant Acceleration

Last year, the growth, one notes, was… subdued. Lower oil prices cast a shadow, and the completion of projects lagged. No grand acquisitions, no sudden leaps forward. A rather ordinary year, all things considered. But this year, they predict a change. Between $17.5 and $17.9 billion in adjusted EBITDA. A rise of 9.2% to 11.7%. A modest improvement, perhaps, but an improvement nonetheless. A return to a growth rate of 3.2% from the previous year.

Higher oil prices, of course, contribute. But also, the completion of certain expansions. The Nederland Flexport NGL expansion, completed last year. And now, the Mustang Draw I & II plants, phase I of the Hugh Brinson Pipeline… a slow accumulation of progress. One imagines the engineers, diligently attending to their tasks, largely unnoticed.

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The affiliated MLPs, too, have been active. Sunoco LP acquiring Parkland for $9.1 billion. USA Compression Partners closing a deal for J-W Power. Such transactions, one suspects, are driven more by necessity than ambition.

The Illusion of Momentum

They speak of continued growth, of investing between $5 and $5.5 billion in capital projects. Expansions entering service, projects scheduled through the first quarter of 2030. A long timeline, filled with uncertainties. One wonders if these projections will truly materialize, or if they will, like so many plans, fade into the background.

Phase II of the Hugh Brinson pipeline, they say, will be completed early next year. The Transwestern Pipeline expansion project in the fourth quarter of 2029. A constant striving, a perpetual motion machine of investment and expansion. And all of it, ultimately, to deliver… what, exactly? More energy, certainly. But at what cost? And to what end?

They also mention projects to support AI data centers and power generation facilities. A convenient justification, perhaps, for continuing the cycle. The demand for energy is relentless, after all. A fact of life, like taxes and disappointment.

And, of course, the distribution. A current yield of 7.2%. They aim to increase it by 3% to 5% each year. A small consolation, perhaps, for those who seek a return on their investment. A modest reward for enduring the inevitable fluctuations of the market.

A Quiet Hope, Perhaps

The growth rate is accelerating, they assure us. Expansions are underway, and more are planned. Combined with the distribution, Energy Transfer, they claim, could deliver high-octane total returns. A rather dramatic phrase, all things considered. But one allows for a little hyperbole, even in the world of finance.

That strong return potential, they say, is why I plan to make it the first energy stock I buy this month. It’s not a matter of conviction, you understand. It’s simply… a calculation. A quiet hope, perhaps, that things will continue, more or less, as they are. And in the grand scheme of things, isn’t that all one can ask for?

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2026-03-01 18:02