The pipeline companies remain well positioned despite the current disruption of the energy markets. Overall, they are toll companies where energy prices have only moderate direct impact on their results.
At the same time, the demand for natural gas increases. This comes from the increase in energy consumption from Artificial Intelligence (AI)as well as the demand for export of Mexico and LNG (liquefied natural gas) to Asia and Europe.
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Let’s look four pipeline actions that you can buy and hold in the long term.
Energy transfer(Nyse: and) operates one of the largest integrated median systems in the country, with various pipelines, storage and treatment assets. The company is particularly well positioned in and around the Permian basin, which is the most prolific oil pool in the United States with some of the lowest Breakevens. While operators drizzle the oil basin, wells also produce a lot of associated natural gas. Due to flared regulations (natural gas burns), this gas must be transported and find a house which, due to its abundance, leads to some of the cheapest regional prices in the country.
Access to this inexpensive natural gas gives the transfer of energy to many growth project opportunities. It considerably increased its growth capital expenses (CAPEX) by $ 3 billion in 2024 to $ 5 billion in 2025. One of its KEYSTONE projects is Pipeline Hugh Brinson, which will distance the gas from the permien to support the demand for growing power in Texas from AI. He also signed his first contract directly with a data centers developer.
The robust derisions from the energy transfer project is preparing it for solid growth in the coming years. Meanwhile, the stock has an attractive yield of 7.9% with a well -covered distribution that it plans to grow at a rate of 3% to 5% in the future.
A consistency model, Corporate products(NYSE: EPD) increased its distribution for 26 consecutive years. As energy transfer, the company is also well positioned in the permien and has increased its growth capex. It plans to spend between $ 4 and $ 4.5 billion in growth projects this year, compared to $ 3.9 billion a year ago and only $ 1.6 billion in 2022.
Enterprise currently has $ 7.6 billion in construction projections under construction, of which 6 billion dollars are expected to be posted at some point this year. This should help its growth this year and next year. Most of these projects are centered on the Permian basin.
The action has an attractive efficiency of 7.1% with a robust 1.7 -time robust coverage ratio based on its distributable cash flow (less maintenance capex operating flow). It increased its distribution by almost 4% from one year to the next in the last quarter.
Image source: Getty Images.
Williams companies(Nyse: wmb) Undoubtedly has the most precious gas pipeline in Transco country, which crosses the southeast of the United States from the Appalachian rich in natural gas to the Gulf Coast. Thanks to this system, it transports natural gas to the major cities of this growing region.
The beauty of Transco is that it provides Williams with many attractive expansion projects from the system. Much of this comes from public services that seek to switch from coal to natural gas. However, it can also send natural gas in the LNG corridor to be shipped abroad and is well positioned to also serve data centers in the Southeast. He had seven transco extension projects with target dates during service between the first quarter of 2025 and the fourth quarter of 2029 at the end of last year in his backlog.
Williams currently has a yield of 3.5% because he focuses more on growth. However, he plans to develop his dividend of more than 5% this year.
With around 40% of us, the production of natural gas flowing through its pipes, Kinder Morgan(NYSE: KMI) plays an essential role in the United States sector. It also has a solid presence in the Permian basin and throughout Texas, including near Abilene, Texas, where the first data center as part of the Stargate project will be built.
Like the other large pipeline companies, Kinder also notes increased growth projection opportunities resulting from the increase in natural gas demand. His project backlog increased from $ 3 billion at the end of 2023 to 8.8 billion dollars at the end of the first quarter of 2025. He indicates that these projects are under construction at around 6 gains before interest, taxes, damping and amortization (EBITDA). This means that for every $ 6 he spends, he generates a $ 1 yield in EBITDA, equal to a yield of 16.7%. This should add an increase of $ 1.5 billion in Ebitda of these projects in the coming years. It plans to generate about $ 8.3 billion in Ebitda in 2025, so it is solid growth.
The action has currently an attractive return of 4.5%, and it has improved its assessment in recent years, spending its lever effect (net debt divided by an adjusted Ebitda from the end of 12 months) from 5.1 times in 2017 to 4 times in 2024.
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Geoffrey Seiler has positions in energy transfer partners and corporate products. The Motley Fool has positions and recommends Kinder Morgan. The Motley Fool recommends partners in Enterprise products. The Word’s madman has a Disclosure policy.
