Seeking Alpha

Energy Transfer buys Trunkline LNG regasification assets for ~$1B

  • Energy Transfer Equity (ETE +6.6%) and Energy Transfer Partners (ETP +1.9%) are pushing higher after disclosing an agreement for ETE to acquire Trunkline LNG Co. from ETP in exchange for the redemption by ETP of 18.7M ETP units held by ETE; the deal represents an effective purchase price of ~$1B.
  • Trunkline LNG is a 2.1B cf/day liquefied natural gas import and regasification facility in Lake Charles, La., which is expected to be a three-train LNG export project capable of producing up to 16M metric tons/year.
Comments (7)
  • Why is the General Partner moving assets around like this? Is it in order to generate more profits for ETE now and then have ETP buy the same asset back at a later date at a higher price?

     

    It seems that ETE always comes out smelling like a rose and we the stock holders of ETP keep taking it on the chin.
    20 Nov 2013, 01:40 PM Reply Like
  • @Skibob

     

    Helping ETP raise its distribution by reducing its intracompany payment requirements (reduction of ETP units in ETE hands). You should be in ETP for income, not capital growth.

     

    Long ETP but Longer ETE
    20 Nov 2013, 07:24 PM Reply Like
  • There is this quote from the 8-K they filed. "The transaction will be immediately accretive to distributable cash flow per unit for both ETP and ETE for 2014 and beyond, and is expected to also be credit neutral to both parties." Works for me. I own ETE and ETP.
    20 Nov 2013, 08:26 PM Reply Like
  • Long both ETE and ETP. I like to bracket the growth of income I get from ETE with the higher current income of ETP. As as blended security, it has worked well for me. That being said, Skibob echoed the same thought I had.
    20 Nov 2013, 10:30 PM Reply Like
  • It is important to own BOTH. You'll have a lot less heartburn if you can view it as your money being moved from one of your pockets to another. In a similar vein I was holder of SXL before it was acquired by ETP. And when ETP sold 50% of SXLs GP interest to ETE, it didn't bother me at all. Some said they under-paid, but it matters not to me since I am on both sides of the deal. I take a similar approach with KMI/KMP/KMR. And also EMB/EEP/EEQ. And others where the GP is separate from the MLP. You get the picture.

     

    I have no true understanding of why ETE is doing these things. It only matters that I have confidence in management. So far, so good.
    20 Nov 2013, 10:36 PM Reply Like
  • @skibob

     

    Reduction of ETP units in ETE hands reduces distribution requirement, while shifting a multi-year project to the GP so less of a capital burden.

     

    You should be in ETP for income, not capital growth.

     

    Long ETP but longer ETE
    20 Nov 2013, 10:36 PM Reply Like
  • The GP always is the place to be . Long ETE , KMI, PAGP, and NSH, SDRL.
    20 Nov 2013, 11:18 PM Reply Like
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