Natural gas prices fell from $8 to $2 per million cubic feet after the 2008 downturn, a drop that hit Energy Transfer hard given its dependence on the fuel. Kelcy Warren, worried about what the slide meant for a company built almost entirely on gas transport, pushed his executive team into a quiet round of acquisitions meant to spread the business across new products rather than wait for prices to recover on their own.

A Deal Closed in a Single Weekend

The clearest example came in March 2011, when Energy Transfer moved to buy the Louis Dreyfus natural gas liquids assets for about $2 billion. The window to close was tight, so Kelcy Warren called an emergency board meeting on a Friday night, secured approval, and had the deal ready to announce when markets opened. That kind of speed became something of a signature. Warren has said the company was roughly 99.9 percent dependent on natural gas going into the downturn and came out the other side balanced across oil, natural gas liquids, and refined products.

Building a Diversified Portfolio

The Louis Dreyfus purchase was followed a year later by the acquisition of Sunoco, which gave Energy Transfer a foothold in the Marcellus shale region and further diversified its revenue base. Warren has described the logic as a kind of natural hedge: when natural gas liquids prices climb, gas prices tend to be soft, and the reverse holds true as well. That balance meant the company was no longer exposed to a single commodity cycle the way it had been during the bust. Looking back at the decision making of that period, Warren has said nothing about the acquisitions felt reckless to him, even though outside analysts sometimes questioned the pace. The strategy reshaped Energy Transfer from a single product gas hauler into a company with exposure across the entire hydrocarbon spectrum, a shift that positioned it for the shale boom that followed in Texas and beyond. See related link for additional information.

 

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