Energy Transfer (ET) Oct 2024 Valuation Model and Risk Framework

This ET valuation model includes an company valuation, financial forecasts, segment breakdown, and detailed operating model. Assumptions can easily be adjusted by the user.

This company is one of the 3 top energy master limited partnerships in the U.S. with an ~8% dividend yield and minimal exposure to commodity prices vs. and upstream or downstream energy company.

Business:

Energy Transfer LP owns and operates one of the largest and most diversified portfolios of energy assets in the US, with more than 125,000 miles of pipeline and associated energy infrastructure. The primary activities in which the company is engaged, which are in the US, and the operating subsidiaries through which it conducts those activities are natural gas midstream and intrastate transportation and storage, crude oil, NGL, and refined products transportation, terminalling services and acquisition and marketing activities, as well as NGL storage and fractionation services. In addition,

Energy Transfer owns investments in other businesses, including Sunoco LP and USAC. Its strategic network spans almost 45 states with assets in all of the major US production basins.

Operations

The major types of revenue within Energy Transfer's reportable segments, are as follows: intrastate transportation and storage; interstate transportation and storage; midstream; NGL and refined products transportation and services; crude oil transportation and services; investment in Sunoco LP; fuel distribution and marketing; all other; investment in USAC; contract operations; retail parts and services; and all other.

The crude oil operations (almost 30%) provide transportation (via pipeline and trucking), terminalling and acquisition and marketing services to crude oil markets throughout the Southwest, Midwest, and Northeast US. Through its crude oil transportation and services segment, the company owns and operates (through wholly-owned subsidiaries or joint venture interests) approximately 14,500 miles of crude oil trunk and gathering pipelines in the Southwest, Midcontinent, and Midwest US.

Sunoco LP (some 25%) is engaged in the distribution of motor fuels to independent dealers, distributors, and other commercial customers and the distribution of motor fuels to end-user customers at retail sites operated by commission agents. Additionally, it receives rental income through the leasing or subleasing of real estate used in the retail distribution of motor fuel. Sunoco LP also operates about 75 retail stores located in Hawaii and New Jersey.

The NGL operations (nearly 25%) transport, store, and execute acquisition and marketing activities utilizing a complementary network of pipelines, storage and blending facilities, and strategic off-take locations that provide access to multiple NGL markets.

Through its midstream segment (around 10%), it owns and operates natural gas gathering and NGL pipelines, natural gas processing plants, natural gas treating facilities and natural gas conditioning facilities with an aggregate processing capacity of approximately 11.4 Bcf/d. Its midstream segment focuses on the gathering, compression, treating, blending, and processing, and its operations are currently concentrated in major producing basins and shales in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, Oklahoma, Arkansas, Kansas, Louisiana, Montana, North Dakota, and Wyoming. Many of its midstream assets are integrated with its intrastate transportation and storage assets as well as its NGL assets.

Through its intrastate transportation and storage segment (generates nearly 10% of revenue), Energy Tranfer owns and operate (through whollyowned subsidiaries or through joint venture interests) approximately 12,200 miles of natural gas transportation pipelines with approximately 24 Bcf/d of transportation capacity, three natural gas storage facilities located in the state of Texas and two natural gas storage facilities located in the state of Oklahoma. Through its interstate transportation and storage segment, the company directly owns and operates approximately 20,090 miles of interstate natural gas pipelines with approximately 20.1 Bcf/d of transportation capacity and another approximately 7,085 miles and 12.3 Bcf/d of transportation capacity through joint venture interests.

USAC provides natural gas compression services throughout the US, including the Utica, Marcellus, Permian Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. USAC provides compression services to its customers primarily in connection with infrastructure applications, including both allowing for the processing and transportation of natural gas through the domestic pipeline system and enhancing crude oil production through artificial lift processes.

Overall, Refined products and Crude sales each account for about 30% of the company's revenue. Revenue from NGL account for some 20%, Gathering, transportation, and other fees for about 15%, while Natural gas and Other account for the remainder.

Geographic Reach

Based in Dallas, Texas, Energy Transfer's interstate natural gas network spans the US from Florida to California and Texas to Michigan, offering a comprehensive array of pipeline and storage services. Its pipelines have the capability to transport natural gas from nearly all Lower 48 onshore and offshore supply basins to customers in the Southeast, Gulf Coast, Southwest, Midwest, Northeast, and Canada.

Additionally, it receives rental income through the leasing or subleasing of real estate used in the retail distribution of motor fuel. Sunoco LP also operates roughly 75 retail stores located in Hawaii and New Jersey.

Sales and Marketing

Energy Transfer's customers include petrochemical companies, commercial and industrial end-users, oil and gas producers, municipalities, gas and electric utilities, midstream companies, and independent power generators. It also operates approximately 18,000 solar panel-powered metering stations across the US.

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