Energy Stocks to Buy #2 — Energy Transfer Equity, L.P. (ETP)
This deal is a bit complex, but man is it a doozy
It starts with midstream stalwart Energy Transfer Partners (ETP) buying Susser Holdings (SUSS) for approximately $1.8 billion. By acquiring Susser, ETP will own the general partner (GP) interest and the incentive distribution rights (IDRs) in Susser Petroleum Partners LP (SUSP). Susser owns a ton of convenience stores and retail fuel distribution infrastructure.
That’s a great move for ETP as last year it purchased Sunoco and its fuel network. The master limited partnership (MLP) hopes to combine the two units and drop them down into SUSP. That will help boost cash flows at ETP.
But the MLP to buy in this deal isn’t ETP … it’s the general partner, Energy Transfer Equity (ETE).
The next step in the plan is for ETP transfer to ETE the GP/IDRs of SUSP. When it is all said and done, ETE will now be collecting IDRs, cash flows and dividends from the units it owns for a whopping 4 different MLPs — ETP, SUSP, Sunoco Logistics Partners L.P. (SXL) and Regency Energy Partners LP (RGP).
That’s insane for a MLP to get so many IDRs, and IT will only boost ETE’s current 2.6% yield much, much higher going forward.