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Energy Transfer Shifts Growth to Permian Pipelines as Yield Climbs Above 8%

Pausing Lake Charles frees capital for higher‑return pipelines, with management targeting 4–4.5x leverage.

Overview

  • Energy Transfer suspended development of its Lake Charles LNG project on Dec. 18 and said it remains open to third‑party developers for the site.
  • The company plans about $5 billion in growth capex next year focused on projects including the Desert Southwest and Hugh Brinson pipelines tied to Permian gas.
  • Management highlights growing customer demand, with direct natural‑gas supply deals to data‑center operators such as Oracle, Fermi, and Cloud Burst.
  • The stock is down roughly 17% year to date, lifting the distribution yield to about 8% as coverage characterizes the payout as sustainable.
  • Analysts keep generally constructive views, with Morgan Stanley reiterating Hold at $19 and Scotiabank reiterating Buy at $21, while valuation sits near 7.5x 2026 EV/EBITDA and distribution growth is projected at 3%–5% annually.