Kelcy Warren Adds to Energy Transfer Stake After Blowout Quarter
Energy Transfer’s second-quarter results, released August 4, gave income investors plenty to like. The pipeline partnership posted adjusted earnings of $0.59 per unit, easily topping estimates near $0.38, while revenue jumped 78% year over year to $34.33 billion. Two weeks later, the company’s co-founder decided to buy more of it.
Kelcy Warren, who co-founded Energy Transfer in 1996 and now serves as its executive chairman, built the company from a single East Texas pipeline system into one of the country’s largest energy infrastructure networks.
On August 18 and 19, he purchased 1,000,000 common units through Kelcy Warren Partners, the entity that holds most of his stake. The two blocks, priced at weighted averages of $21.27 and $21.26, came to roughly $21.3 million combined, according to the SEC filing disclosing the purchases.
A Quarter Built for Confidence
The earnings beat was not an isolated data point. Full-year adjusted EBITDA guidance was raised by management to between $18.8 billion and $19.1 billion. A growth capital plan of up to $5.9 billion is aimed at projects with contracted demand already attached, including the Hugh Brinson Pipeline, an expansion of NGL export capacity at Nederland, and new natural gas supply agreements tied to data center growth, as detailed in reporting from 24/7 Wall St.
The partnership also declared its 19th consecutive quarterly distribution increase, lifting the payout to $0.34 per unit, or $1.36 annualized, a streak that has continued through multiple commodity cycles. Energy Transfer’s units also carry a K-1 tax form rather than the standard 1099, a structural detail worth knowing before adding a large position in a retirement account.
Wall Street noticed the quarter too. TD Cowen raised its price target to $25 from $24 and kept a buy rating. Truist did the same. Its target moved to $25 from $23. Shares hadn’t quite caught up to those targets as of this week, changing hands in the low $21s, but the direction of analyst revisions has been consistently upward since the earnings report.
Kelcy Warren Adds to an Already Large Stake
Kelcy Warren has held Energy Transfer’s top operating role or its board chairmanship continuously since 1996. He served as chief executive until 2020, when he moved into the role of executive chairman while co-CEOs took over daily operations.
That tenure has produced a long list of recognitions. The Texas Business Hall of Fame traced his early climb through Cornerstone Natural Gas before he and Ray Davis founded Energy Transfer in 1996.
D CEO’s 2023 feature on Warren detailed how the acquisition of Sunoco’s retail fuel business became one of several deals that reshaped the company into a diversified midstream operator.
August’s purchase is a small change in percentage terms against a stake built over three decades. It is also the latest entry in a pattern: Kelcy Warren has bought Energy Transfer stock at highs and lows alike since the year he founded the company, adding roughly $21.3 million more two weeks after the numbers gave him reason to.