
Core Viewpoint - The midstream energy sector presents attractive investment opportunities for those seeking high yields and growth, despite facing some risks related to energy volumes and prices [1] Group 1: Energy Transfer - Energy Transfer has one of the largest integrated midstream systems in the U.S., with over 90% of its EBITDA tied to fee-based contracts, providing stable cash flows and a 7.1% forward yield [2][4] - The company is increasing its growth capex from $3 billion in 2024 to $5 billion in 2025, leveraging its position in the Permian Basin to meet rising energy demand from AI data centers and LNG exports [3] - Energy Transfer is trading at a forward EV-to-EBITDA multiple of 8.2, indicating a favorable combination of yield and growth potential [4] Group 2: Enterprise Products Partners - Enterprise Products Partners is recognized for its reliability, having increased its distribution for 26 consecutive years, with around 85% of its business being fee-based [5][6] - The company plans to invest $4 billion to $4.5 billion in growth projects in 2025, with $7.6 billion in projects currently under construction [6] - Trading at a forward EV-to-EBITDA multiple under 10 and offering a 6.7% dividend yield, Enterprise is appealing for income-focused investors [7] Group 3: Western Midstream - Western Midstream offers a high yield of 9.4%, supported by consistent fee-based cash flow and a conservative balance sheet with a leverage ratio under 3 [8] - The company aims for mid-single-digit annual distribution growth and is investing in high-return projects, including the Pathfinder pipeline [9] - Trading at a forward EV-to-EBITDA ratio of 9, Western Midstream combines a high yield with a disciplined growth strategy [10] Group 4: MPLX - MPLX features a high yield of 7.4% and has achieved double-digit distribution growth over the past three years, including a 12.5% increase in 2024 [12] - The company is increasing its growth capex from $889 million in 2024 to $1.7 billion in 2025, focusing on natural gas and NGL segments [13] - Trading at a forward EV-to-EBITDA ratio of just over 10, MPLX offers a blend of income and growth at a reasonable valuation [14] Group 5: Genesis Energy - Genesis Energy is transitioning after selling its soda ash business, which provided over $1 billion in proceeds, allowing for aggressive deleveraging and an estimated annual interest savings of $84 million [15] - The company is focusing on offshore pipeline expansion, with projects expected to generate up to $150 million in incremental annual operating profit by mid-2025 [15] - Although Genesis has a current yield of 3.9%, it is positioned for significant future distribution increases, with potential upside if execution is successful [16]