Energy Transfer (NYSE:ET) continues to make strides with its Lake Charles facility conversion project, despite facing significant market obstacles. The company, which has been working to switch the facility from natural gas imports to exports, has secured capacity contracts with several customers, including Shell (LON:SHEL), SK Gas of South Korea, and U.S. natural gas producer EQT (ST:EQTAB).
Earlier this week, ET announced that it had applied for a new export license in August 2023 after the Department of Energy (DOE) denied an extension in May. This move was supported by several of ET's customers, who wrote to the DOE in favor of the application. The Lake Charles facility has the capacity to export 2.33 billion cubic feet daily (equivalent to 16.45 million metric tons of LNG). This could lead to steady fee-based income and increased cash flows from transporting natural gas on ET's Trunkline pipeline system.
According to InvestingPro data, the company has a market cap of 44.0B USD and a P/E ratio of 11.56, which suggests that the stock is reasonably priced relative to its earnings. The company's revenue growth, however, has been negative, with a decrease of 1.23% in the last twelve months ending Q2 2023.
Shell, a former partner of ET in a 50-50 joint venture, has remained a significant supporter of the firm. It has signed a 20-year sale and purchase agreement with ET, further bolstering the prospects of the project. This ongoing support comes despite an arbitration case with Venture Global over contract violations.
ET's co-CEO and CFO Tom Long stated that the company's distribution, currently yielding 8.9%, is projected to grow by 3% to 5% per year. This aligns with InvestingPro Tips which highlight ET's history of maintaining dividend payments for 18 consecutive years. Despite these positive developments, ET is not among the top ten stock picks recommended by the Motley Fool Stock Advisor.
The Lake Charles project is seen as crucial for ET's financial health. The company has faced intense competition and challenging market conditions during the early pandemic. The company remains committed to its plans and continues to make progress amidst these challenges.
InvestingPro Tips also notes that ET is a prominent player in the Oil, Gas, and consumable Fuels industry and that the company's stock generally trades with low price volatility. This stability, coupled with its significant dividend payments, makes ET a potential choice for investors seeking a steady income stream. For more insights like these, check out the additional tips available on InvestingPro.
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