Energy Transfer: A Most Amusing Speculation

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It hath come to my attention, gentle readers, that a certain enterprise, known as Energy Transfer LP (ET +0.26%), hath lately enjoyed a prosperity most…remarkable. Over these past five years, it hath delivered a return exceeding two hundred and fifty percent – a feat which doth cast the performance of the venerable S&P 500 (^GSPC 1.51%) into the shade, as a humble daisy before the sun. Indeed, in the current year, this midstream marvel hath already ascended some seventeen percent, a veritable rocket propelled by…well, by hydrocarbons, naturally.

And thus, the question arises, a query fit to provoke the musings of philosophers and the calculations of accountants alike: could a modest investment of ten thousand dollars in this high-flying pipeline concern transform one into a millionaire? A most diverting notion! One might almost suspect a touch of alchemy at play.

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Upon the Matter of a Million Dollars

Let us, with a due degree of practicality, examine the arithmetic. To transmute ten thousand dollars into a million requires a hundredfold increase. A swift transformation, one might suggest, akin to turning lead into gold. We may safely dismiss this possibility occurring within a short span of time, lest we succumb to the delusions of fortune tellers. But what of the longer term? Thirty years, perchance? A lifetime, nearly!

The necessary compound annual growth rate, it appears, would be approximately sixteen and six-tenths percent. A most ambitious undertaking! Reinvesting distributions, of course, would lend a hand, though it is unlikely to suffice entirely. Energy Transfer’s current distribution yield doth exceed seven percent, and they anticipate an annual increase of three to five percent. Laudable, to be sure, but still falling short of the desired elevation.

The remaining portion of the required growth – a substantial sum, indeed – doth present a challenge. Consider that even in its most prosperous moments, Energy Transfer’s growth in crude oil transportation and natural gas liquids fractionation hath only reached six percent. A respectable figure, to be certain, but hardly sufficient to achieve the desired transmutation.

‘Tis true, the company possesses solid long-term prospects. The demand for natural gas is expected to rise, fueled in part by the insatiable appetite of these new ‘data centers’ – curious structures, filled with blinking lights and humming machinery. Energy Transfer hath secured agreements to supply natural gas to three such establishments operated by Oracle (ORCL 3.75%), CloudBurst, and Fermi America (FRMI 8.51%). A prudent diversification, one might concede.

However, to predict that this midstream enterprise will consistently generate the necessary growth over three decades is, shall we say, a stretch of the imagination. An investment of ten thousand dollars made twenty years ago, when Energy Transfer first graced the public markets, would today be worth a mere one hundred and thirty-three thousand dollars. A respectable sum, to be sure, but hardly a king’s ransom.

A Modest Prosperity, If Not a Millionaire’s Fortune

Energy Transfer, alas, is unlikely to transform one into a millionaire – at least, not without a considerably larger initial investment. However, it may still prove to be a source of modest prosperity. The limited partnership currently enjoys a strong position, generating ample free cash flow to sustain and expand its distributions. Its long-term prospects appear reasonably sound, and it is investing in capital projects to capitalize upon these opportunities.

A stock need not bestow upon one a millionaire’s fortune to be considered a sound investment. Energy Transfer, in my estimation, doth fall into this category. Though, let us not mistake prudence for avarice, nor a sensible investment for a fool’s errand. For, as the playwrights of old were wont to observe, the pursuit of wealth, without a measure of wisdom, is often a most amusing, and ultimately, a most tragic spectacle.

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2026-03-23 11:52