Can Energy Transfer Gain From BIS' Current Stance on Ethane Export?

Energy Transfer LP ET, a midstream energy firm, is well-positioned for long-term value creation through its extensive pipeline network, diversified asset base and strong exposure to the natural gas liquids (“NGL”) export market. The recent decision by the U.S. Bureau of Industry and Security (“BIS”) to remove the license requirement for ethane exports to China can act as a catalyst for Energy Transfer’s long-term growth.
 
This regulatory change significantly reduces trade barriers and uncertainty prevailing over the ethane export to China and opens a major global demand center for U.S. ethane. Energy Transfer, which already exports ethane through its Marcus Hook terminal and operates pipelines connected to export hubs, is well-equipped to meet this rising demand and benefit from increased throughput volumes and export margins.

The company operates more than 140,000 miles of pipelines and has a strategic footprint across key producing regions such as the Permian, Eagle Ford and Marcellus. This robust infrastructure enables efficient transportation and export of hydrocarbons, particularly ethane, which is vital for petrochemical production.

The new regulatory development enhances Energy Transfer’s competitiveness in the global ethane market, supporting higher utilization rates across its NGL infrastructure. This reinforces Energy Transfer’s strategic vision of expanding international energy partnerships while capitalizing on its cost-advantaged U.S. supply position.

How the Removal of the License Requirement Impacts Other Ethane Exporters

This decision of BIS to revoke the licensing requirement can boost the prospects of other ethane exporters to China. Enterprise Products Partners EPD, which exports a large volume of ethane to China, will benefit and continue to export as BIS rescinded licensing requirements. Phillips 66 PSX has a significant presence in the global ethane market and China is a key destination for the U.S. ethane exports. PSX too will benefit from BIS’ decision.

ET Stock’s Price Performance

Units of ET have risen 3.9% in the past three months compared with the Zacks Oil and Gas - Production Pipeline - MLB industry’s growth of 2.8%.

ET’s Earnings Estimates

The Zacks Consensus Estimate for Energy Transfer’s 2025 earnings per unit (“EPU”) indicates a decline of 1.33% in the past 60 days, while the same for 2026 EPU indicates an increase of 2.56% in the same time period.

ET’s Units Are Trading at a Discount

Energy Transfer’s 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 10.16X compared with the industry average of 11.54X. 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.

 

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This article originally published on Zacks Investment Research (zacks.com).

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