Latest news with #Permian
Globe and Mail
5 days ago
- Business
- Globe and Mail
Can Fee-Based Contracts Continue to Boost ET Stock's Performance?
Energy Transfer LP ET, a U.S. midstream operator, benefits significantly from its reliance on fee-based contracts across the diversified asset portfolio. These contracts, which form the backbone of its revenue model, ensure consistent cash flows by charging customers fixed fees for transporting, storing and processing energy commodities. This approach effectively shields Energy Transfer from commodity price volatility, enabling it to deliver stable earnings even during market downturns. Energy Transfer generates nearly 90% of its earnings from fee-based contracts and 10% from commodity and spread exposure. The company has a well-balanced asset mix that provides strong earnings support. Energy Transfer has 130,000 miles of pipelines and associated energy infrastructure in 44 states to transport oil and gas products from basins like the Permian, Eagle Ford and Marcellus. Widespread assets enhance its ability to lock in long-term agreements with producers and refiners. ET's assets are located to serve high-demand regions, making it a preferred partner for energy logistics. Fee-based arrangements improve visibility into future revenues, supporting disciplined capital allocation and long-term planning. Stable cash flow from these contracts directly supports Energy Transfer's strong distribution policy and debt reduction efforts. By generating predictable earnings, Energy Transfer maintains a solid credit profile, which in turn lowers financing costs and enhances its ability to reinvest in growth projects. This financial stability acts as a tailwind for the firm's performance. Energy Transfer's fee-based business model provides a resilient foundation for growth, allowing it to navigate industry cycles while delivering consistent returns to investors. Midstream Operators Gain From Fee-Based Contracts Midstream firms, leverage fee-based contracts to generate stable, predictable revenues regardless of commodity price swings. The fee-based structure protects these firms from direct exposure to market volatility, allowing them to focus on operational efficiency and capital discipline. Enterprise Products Partners EPD, with one of the largest integrated NGL systems in the United States, relies heavily on fee-based income to maintain strong distributable cash flow and fund infrastructure expansions. Similarly, Kinder Morgan KMI derives the bulk of its earnings from take-or-pay and fixed-fee contracts, which support high dividend payouts and ongoing deleveraging efforts. ET's Earnings Estimates Moving Up The Zacks Consensus Estimate for Energy Transfer's 2025 and 2026 earnings per unit indicates an increase of 2.86% and 4.26%, respectively, in the past 60 days. ET's Price Performance Units of Energy Transfer have risen 10.2% in the past year compared with the Zacks Oil and Gas - Production Pipeline - MLB industry's growth of 6%. ET's Units Are Trading at a Discount Energy Transfer units are somewhat inexpensive relative to the industry. ET's current trailing 12-month Enterprise Value/Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) TTM is 10.17X compared with the industry average of 11.39X. This indicates that the firm is presently undervalued compared with its industry. ET's Zacks Rank Energy Transfer currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kinder Morgan, Inc. (KMI): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis Report
Globe and Mail
11-06-2025
- Business
- Globe and Mail
How Will Oil Price Sensitivity Impact Enterprise Products' Business?
Enterprise Products Partners LP EPD relies heavily on oil prices since it has a strong presence in the Permian. Shippers utilize EPD's pipeline networks to transport crude from the most prolific basin of the United States to the end market or refineries. This confirms that Enterprise Products' midstream business is sensitive to oil prices. For the long term, EPD generally expects the price of West Texas Intermediate (WTI) to hover around $65 per barrel. However, on the earnings call for first-quarter 2025, the partnership expressed a more cautious outlook that the oil price will trade at $60 or even $55 per barrel in the next three to five years. The partnership mentioned that at $55 to $60 per barrel, producers are generally capable of maintaining current production levels and mostly stop investing in new drilling. Thus, it seems that EPD expects oil production to slow down due to declining oil prices. Once there is a slowdown in volumes, there will be lower demand for the partnership's pipeline network, which could hurt its revenue generation in the coming years. Are Operations of WMB & KMI Also Exposed to Crude Price? Although they are midstream energy majors, the businesses of Kinder Morgan KMI and Williams WMB are mostly exposed to natural gas prices rather than oil prices. This is because KMI's pipeline network, which transports natural gas and spans across 66,000 miles, is among the largest in the United States. Kinder Morgan's pipeline network is responsible for transporting roughly 40% of the natural gas consumed in the domestic market. Like KMI, Williams is also responsible for transporting huge volumes of natural gas. Notably, WMB is responsible for carrying a third of the nation's natural gas through its pipeline network that spans over 33,000 miles. EPD's Price Performance, Valuation & Estimates Units of EPD gained 20.8% over the past year, outpacing the 18.5% improvement of the composite stocks belonging to the industry. One-Year Price Chart From a valuation standpoint, EPD trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.27x. This is below the broader industry average of 11.54x. The Zacks Consensus Estimate for EPD's 2025 earnings hasn't been revised over the past seven days. EPD currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Williams Companies, Inc. (The) (WMB): Free Stock Analysis Report Kinder Morgan, Inc. (KMI): Free Stock Analysis Report
The National
09-06-2025
- Business
- The National
US energy production hit new record last year, agency says
The US produced a record amount of energy in 2024, the Energy Information Administration reported on Monday, with natural gas remaining the largest source of domestic production. Total US energy production passed 103 quadrillion British thermal units in 2024, a one per cent increase from the previous record set a year earlier, according to the EIA's Monthly Energy Review. Natural gas, which has been the biggest source of domestic energy production since 2011, accounted for 38 per cent of total energy production last year. Meanwhile, crude oil accounted for 27 per cent of total energy production last year. Crude oil production was 2 per cent higher than in 2023 at a record 13.2 million barrels per day. The EIA said nearly all of the production growth came from the Permian region, a major oil and gas-producing region in the south-western US. The agency said production in the region rose by 370,000 bpd last year to 6.3 million bpd. The US was the world's largest crude oil producer last year, according to EIA data from February. Saudi Arabia's crude oil production averaged 9 million barrels per day last year, while Russia was the largest crude oil producer among Opec+ members with 9.2 million barrels per day. Iraq (4.4 million bpd), the UAE (2.9 million bpd) and Kuwait (2.5 million bpd) were among the bloc's top five crude oil producers. US solar and wind production increased by 25 and 18 per cent, respectively, while coal production fell to its lowest annual output since 1964. The EIA said it expects oil and natural gas production in the Gulf of Mexico to remain stable through next year at 1.9 millions barrels per day.
Yahoo
03-06-2025
- Business
- Yahoo
Diamondback's Viper Energy buys Sitio Royalties for $4.1 billion in merger of the top two minerals players
Viper Energy will acquire Sitio Royalties for $4.1 billion in an all-stock deal combining the two biggest minerals and royalties players in the oil and gas sector. The June 3 industry shakeup further consolidates both the booming, but maturing Permian Basin in West Texas and the niche minerals and royalties space in which companies own the rights to fossil fuels beneath the surface, but do not drill or operate the wells. Viper is the publicly traded minerals subsidiary of Midland, Texas-based Diamondback Energy (ranked 383 in the Fortune 500), which continues to rapidly expand as the largest Permian oil and gas producer focused only on the West Texas region. 'The combination of Viper and Sitio signifies an important moment for mineral and royalty interests,' said Diamondback and Viper CEO Kaes Van't Hof in a prepared statement. 'This combination creates a leader in size, scale, float, liquidity, and access to investment-grade capital in the highly fragmented minerals industry.' The deal allows the expanded Viper the scale to compete for capital even with large-cap exploration and production players that own and operate their own oil and gas wells, Van't Hof added. The deal is the biggest in the minerals sector since Sitio first emerged as a power player in 2022 through its $4.8 billion combination with Brigham Minerals. The $4.1 billion equity deal, including $1.1 billion in debt assumption, represents an almost 15% premium on Sitio's stock value, which rose by 12% in early trading June 3. The deal is expected to close in the third quarter. Viper's stock largely held flat in early trading with a market cap of about $11.5 billion, while Diamondback rose 1% to a value of more than $40 billion. Diamondback's ascent continues after its nearly $4.1 billion acquisition of Double Eagle assets on April 1—a seemingly popular acquisition price for Diamondback—and its much larger $26 billion deal for Endeavor Energy Resources last year. Earlier this year, Sitio CEO Chris Conoscenti told this reporter that he saw 2025 as a growth opportunity through acquisitions. However, in the publicly traded energy space, a company is always for sale when the offer is right. In the booming Permian, which produces roughly 40% of the nation's crude oil and much of the natural gas, propane, butane, and ethane as well, Viper is more strongly positioned in the Permian's eastern Midland Basin, while Sitio is bigger in the western Delaware Basin that extends into southeastern New Mexico. 'This transaction is the next logical step in Sitio's evolution,' said Sitio chairman Noam Lockshin in a statement. 'By adding Sitio's coverage of the Delaware Basin to Viper's position in the Midland Basin, the combined company will be well positioned in the Permian for years to come.' The deal expands Viper's minerals footprint in the Permian by about 25,300 net royalty acres to a total of 85,700 net acres, about 43% of which are operated by the parent Diamondback, according to Viper. The net royalty acreage represents the geographic scale and value of Viper's ownership position of the unrecovered oil and gas still underground. The merger also expanded Viper beyond the Permian a bit with 9,000 net royalty acres in other oil and gas basins in or near South Texas, Colorado, and North Dakota. 'We are still focused on the Permian, and will hold the other basins for now—but eventually might sell them if prices improve,' Van't Hof told Fortune about the non-core assets being acquired. Diamondback is expected to own roughly 41% of Viper's outstanding shares after the deal, down from a majority ownership today. 'While this transaction will reduce Diamondback's ownership in pro forma Viper,' Van't Hof stated, 'it does not reduce the significance of the relationship between Diamondback and Viper. The Diamondback drill bit remains Viper's biggest competitive advantage and the most visible source of long-term production growth at Viper. 'Mineral interests offer the highest form of security and upside in the oil field, and any and all benefits an operator manages to unlock accrues directly to the mineral holder without any capital risk, forever,' he added. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-05-2025
- Business
- Yahoo
PROP vs. CIVI: Which DJ Basin Player Has the Upper Hand?
Prairie Operating Co. PROP and Civitas Resources CIVI are two key independent energy firms with operations deeply rooted in Colorado's Denver-Julesburg (DJ) Basin. PROP, a newer entrant with a bold consolidation strategy, has expanded rapidly through high-profile acquisitions. In contrast, CIVI is a more established player, sharpening its focus on cost discipline while also expanding into the high-return Permian shared presence in the DJ Basin makes them natural competitors. With oil prices hovering in uncertain territory and investor appetite leaning toward disciplined capital deployment and free cash flow visibility, it's crucial to evaluate which name better balances risk, growth and return dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now. Strategic Growth via Acquisitions: PROP has undergone a dramatic transformation since 2023, executing over $800 million in deals that tripled its scale. Acquisitions of Genesis, Nickel Road, and Bayswater have added 54,000 net acres and more than 28 thousand barrels of oil-equivalent per day (BOE/d) in output. With an estimated 10-year inventory runway and over 580 gross locations, Prairie Operating Co.'s strategy positions it for long-term growth in a basin where large-cap competitors are pulling back. Its rural Colorado location also reduces permitting risk and accelerates development Firepower and Production Growth: Prairie Operating Co.'s financial metrics are quickly scaling after the $602 million acquisition of Bayswater assets. Adjusted EBITDA for 2025 is forecasted between $350 million and $370 million, a massive leap from the $140 million previously projected. Net income guidance stands between $69 million and $102 million, while the company maintains a low leverage ratio of 1.0x. With $475 million in liquidity, PROP has the balance sheet strength to fund growth without diluting shareholders. On the production side, Prairie Operating Co. expects to average 29,000 to 31,000 BOE/d in 2025, representing a more than 300% increase year over Hedging Locks in Upside: One of the more underappreciated aspects of Prairie Operating Co.'s story is its proactive hedging strategy. It has locked in about 85% of its remaining 2025 daily production at $68.27/bbl WTI and $4.28/MMBtu Henry Hub. For 2026 through Q1 2028, the hedges average $64.29/bbl and $4.09/MMBtu. This not only secures visibility on future cash flows but also shields the company from downside risk in a volatile energy market. In fact, the hedge book is giving it about $70 million in built-in value at today's prices. Prairie Operating Co.'s program also stands out for its scope and timing, implemented just before a pullback in commodity prices. Cost Optimization and Cash Flow Strength: Civitas Resources focuses heavily on driving efficiencies. A company-wide cost optimization plan is targeting $100 million in additional annual free cash flow, with 40% of those savings expected to be hit by the second half of 2025. Deals like a new oil gathering agreement are helping cut costs and boost margins. In 2024, CIVI generated $1.3 billion in free cash flow and expects another $1.1 billion in Permian Expansion: One favorable investment case for Civitas Resources centers on its sharpened focus and early success in the Permian Basin, particularly in the Delaware sub-region. In Q1 2025, Civitas strategically shifted 40% of its capital activity to the Delaware Basin, which has consistently offered the highest returns within its portfolio. This move is already yielding tangible operational gains. According to management, the Delaware team is drilling approximately 10% faster than expected, reflecting meaningful efficiency improvements. Additionally, longer lateral developments enabled by prior ground acquisitions are enhancing capital efficiency Balance Sheet and Hedging Strategy: Civitas remains laser-focused on achieving its $4.5 billion net debt target by year-end 2025. The company has nearly $200 million in hedge value secured, with about 50% of crude volumes hedged, insulating free cash flow against further oil price volatility. Management noted they have structured their base dividend and spending to remain cash flow neutral even if WTI dips to $40. Both stocks have been hammered over the past year. PROP is down 71%, while CIVI has fallen 61%. The declines reflect weak oil prices, EPS misses, and macro concerns. However, Prairie Operating Co.'s sharper decline may also reflect uncertainty around its recent acquisitions. Image Source: Zacks Investment Research PROP trades at just 0.27X forward sales, a significant discount to Civitas Resources' 0.56X. Image Source: Zacks Investment Research According to Zacks' estimates, PROP's earnings are set to surge 382.9% in 2025 and another 13.5% in 2026. Image Source: Zacks Investment Research Civitas Resources, in contrast, is expected to see EPS fall by 29.3% in 2025 and another 9.5% in 2026. Image Source: Zacks Investment Research These trends underscore Prairie Operating Co.'s near-term growth trajectory versus CIVI's short-term reset. Both PROP and CIVI currently carry a Zacks Rank #3 (Hold), reflecting mixed near-term prospects. CIVI offers strong free cash flow, disciplined cost control, and targeted Permian focus. Prairie Operating Co., meanwhile, brings exciting growth potential, low valuation and accelerating volumes. While both stocks have merits, PROP appears slightly better positioned at this moment given its explosive earnings growth outlook and improving cash flow can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Civitas Resources, Inc. (CIVI) : Free Stock Analysis Report Prairie Operating Co. (PROP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
