Why Is Energy Transfer Stock (NYSE: ET) Trading At 5 Year Highs?

Energy Transfer stock (NYSE: ET) has been on a steady climb over these past 12 months, with 20% gains positioning the firm back towards 5 year highs. With new 52 highs hit in in the last weeks, we take a look at what may be helping drive sentiment.

For one, the energy company has recently completed a significant acquisition of WTG Midstream Holdings LLC. This strategic move involves the payment of $2.28 billion in cash along with the issuance of nearly 50.8 million common units of Energy Transfer, marking a substantial expansion for the firm.

The acquisition has notably bolstered Energy Transfer's infrastructure, adding a considerable 6,000 miles of gas-gathering pipelines situated in the Midland Basin. Additionally, it encompasses eight gas processing plants, boasting a cumulative capacity of 1.3 billion cubic feet per day.

The implications of this addition are extensive for Energy Transfer, as it opens avenues for increased revenue streams stemming from gathering and processing activities, along with downstream transportation and fractionation fees.

This transaction is projected to be immediately accretive to the firm's financials, with expectations of contributing 4 cents to the Distributable Cash Flow per common unit by 2025, which is anticipated to escalate to 7 cents by 2027. Such growth in cash flow is a positive indicator for Energy Transfer's stakeholders and suggests promising returns in the near future.

Energy Transfer's continued momentum in the energy sector is not isolated to this deal alone.

A previous transaction in the past year saw Energy Transfer's expansion through the acquisition of Crestwood Equity Partners LP, enlarging its pipeline assets substantially across key producing regions in the United States. This pattern of strategic acquisitions showcases Energy Transfer's commitment to growth and its prowess in consolidating its position within the industry.

In related industry movements, Antero Midstream Corporation (NYSE: AM) has recently made a notable acquisition of its own. It acquired gathering and compression assets in the Marcellus Shale from Summit Midstream Partners LP for $70 million. Such a transaction is expected to enhance free cash flow after dividends by over 5% through 2027. Notably, Antero Midstream's stock has seen an upsurge of 23.9% over the past six months, surpassing the industry's growth of 20.5%.

Energy Transfer's acquisition of WTG Midstream is a forward-looking step that not only expands operational capabilities but also promises to boost financial performance in the coming years. With a history of strategic acquisitions, Energy Transfer is set to further cement its place as a dominant player in the energy infrastructure domain.