Core Insights - Energy Transfer LP (ET) is expanding the Transwestern Pipeline to increase its capacity to 2.3 billion cubic feet (Bcf) of natural gas per day by enlarging the pipeline diameter from 42 inches to 48 inches [1][10] - The expansion aims to meet rising natural gas demand in Arizona and New Mexico, driven by population growth, data center development, and potential coal-to-natural gas power plant conversions [2][10] - The total estimated cost of the project is approximately $5.6 billion, with an expected increase of $200 million in ET's growth capital expenditures for 2026 [3][10] Company Strategy - The capital investment in the pipeline expansion is expected to provide upside potential and secure long-term shipping contracts, which will lock in predictable cash flows and reduce risk [4] - ET is prioritizing pipeline expansions over capital-intensive projects like the Lake Charles LNG export project to enhance its position as a reliable natural gas infrastructure provider [5] Industry Context - Other companies in the oil and gas sector are also focusing on pipeline expansions to meet rising energy demand, which supports top-line growth [6] - TC Energy Corporation (TRP) is investing $900 million in a pipeline project that will add 400,000 million British thermal units of capacity, expected to be operational by late 2029 [7] - Kinder Morgan, Inc. (KMI) is constructing a $455 million expansion project to increase natural gas deliveries from the Permian Basin by 570 million cubic feet per day, with completion expected by mid-2026 [9] - The Williams Companies, Inc. (WMB) is undertaking two major expansions of its Transco pipeline system to support Gulf Coast demand and facilitate the transition from coal to natural gas in Alabama [12] Financial Performance - The Zacks Consensus Estimate for 2026 earnings per share (EPS) for TRP indicates a year-over-year growth of 7.5% [8] - The Zacks Consensus Estimate for 2026 EPS for WMB suggests a year-over-year growth of 10% [13] - ET's shares have declined by 16.9% over the past year, compared to a 12.3% decline in the industry [14]

Core Insights - Energy Transfer LP is expanding its asset footprint in the Permian Basin through the Transwestern Pipeline to serve growing markets in Arizona [1] Group 1: Company Expansion - The expansion of the Transwestern Pipeline is aimed at enhancing service capabilities in the Permian Basin [1] - This strategic move is intended to meet the increasing demand in the Arizona market [1]

Core Viewpoint - Energy Transfer LP is expanding its asset footprint in the Permian Basin by enhancing the Transwestern Pipeline to cater to the increasing markets in Arizona [1] Group 1: Company Expansion - The expansion of the Transwestern Pipeline is aimed at serving the growing demand in Arizona [1]

Core Viewpoint - Energy Transfer's growth has significantly slowed in 2025, with a decline in unit prices and underperformance compared to the S&P 500, despite a strong previous year [1][2]. Financial Performance - In 2024, Energy Transfer achieved a record $15.5 billion in adjusted EBITDA, a 13% increase from 2023 [4]. - The company generated $8.4 billion in distributable cash flow in 2024, marking a 10% year-over-year increase [5]. - For the first half of 2025, adjusted EBITDA was nearly $8 billion, reflecting a 4% increase, while distributable cash flow was $5.5 billion, showing less than 1% growth [6]. Growth Outlook - Energy Transfer expects adjusted EBITDA for 2025 to be at or slightly below the lower end of its guidance range of $16.1 billion to $16.5 billion, indicating less than 4% growth compared to 2024 [7]. - The company is investing $5 billion in growth capital projects in 2025, with many projects expected to come online by the end of 2026 [8]. - Recent completions include two new gas processing plants, with another scheduled for completion in the second quarter of next year [9]. Expansion Projects - Energy Transfer is finalizing the Nederland Flexport NGL expansion and the Hugh Brinson Pipeline, which are expected to significantly boost earnings and cash flow in 2026 and 2027 [10]. - The Desert Southwest expansion of the Transwestern Pipeline, a $5.3 billion project, is anticipated to be operational by the end of the decade [11]. - The company is also advancing the long-delayed Lake Charles LNG export project and exploring additional projects to supply gas to new power plants and data centers [12]. Financial Position - Energy Transfer is in its strongest financial position to date, allowing for potential acquisitions as opportunities arise [13]. - Although no deals have been made this year, its affiliate Sunoco LP has agreed to acquire Parkland for $9.1 billion, expected to enhance earnings by over 10% in the first year [14]. Investment Opportunity - Despite the slowdown in growth, the recent dip in unit prices may present a buying opportunity, especially for investors willing to accept the Schedule K-1 tax form [15]. - Investors can benefit from a distribution yield of over 7.5%, which is expected to grow as income rises, positioning them for a high total return [16].