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Energy Transfer ($ET) Founder Bets $34.7M More on AI Data Center Boom with Latest Purchase

08/21/2025 13:07

Energy Transfer ($ET) is capturing investor attention following a significant insider purchase by founder and director Kelcy Warren. On August 19-20, Warren acquired 2 million shares worth $34.7 million, building on his previous $47.04 million purchase in August 2024. Energy Transfer operates as one of America's largest energy infrastructure companies, with a $59.5 billion market cap built on natural gas pipelines, LNG exports, and crude oil transportation. The company maintains extensive pipeline networks across Texas and Louisiana, focusing particularly on infrastructure expansion to handle surging natural gas production from the Permian Basin. Warren's latest purchases carry strategic significance beyond simple investment decisions. He acquired shares indirectly through Kelcy Warren Partners II, LP, with company filings noting he disclaims beneficial ownership except to the extent of his pecuniary interest. This structural approach differs from typical executive transactions. Shares of $ET have shown considerable movement, rising from around $14 in mid-2024 to near $20 in January 2025, before settling around $17.30 recently. Warren's purchase price aligns closely with current market levels, suggesting confidence in future appreciation rather than defensive buying against further declines. The company's business outlook appears positive across multiple dimensions. Data center and power plant natural gas connection requests are surging, with Energy Transfer reporting over 16 billion cubic feet per day of new demand requests from 90+ facilities. This aligns with projections that data centers will account for 8% of U.S. power demand by 2030, up from 3% in 2022, driven by AI technology expansion. Particularly noteworthy is progress on the Lake Charles LNG project. The company signed a 20-year LNG supply agreement with Chevron in December 2024 for 2 million tonnes annually, targeting a final investment decision by Q4 2025. The Trump administration's resumption of LNG export approvals provides additional tailwinds for this project. The $2.7 billion Hugh Brinson natural gas pipeline construction is also proceeding smoothly. This two-phase project targets first-phase operations by end-2026. With Permian Basin gas production expected to reach 24.5 billion cubic feet daily in 2024, demand for additional pipeline capacity continues growing. However, investors must consider risk factors. Natural gas price volatility remains elevated, with Texas's Waha hub occasionally recording negative prices due to pipeline constraints. While this demonstrates infrastructure expansion necessity, it also creates short-term profitability pressures. China ethane export issues present another variable. The U.S. Commerce Department's licensing requirements temporarily halted exports, though restrictions were recently lifted amid trade truce developments, with exports resuming in July. Future U.S.-China trade relationship changes remain uncertain. Financially, the company shows improving profitability with record crude oil transportation volumes for three consecutive quarters. Third-quarter net income reached $1.18 billion, with crude exports up 49% year-over-year. For investors, several key indicators warrant close monitoring. The Lake Charles LNG project's final investment decision timing and scope will significantly impact share performance. Hugh Brinson pipeline construction progress and Permian Basin production trends are also crucial monitoring points. Natural gas price seasonal volatility requires consideration. Winter heating demand increases and LNG export expansion could drive price appreciation, but production growth and storage levels may create downward pressure. In the most optimistic scenario, simultaneous realization of surging data center demand, LNG project approvals, and pipeline expansion could accelerate the company's growth trajectory. If the AI boom drives power demand growth faster than expected, natural gas demand would likely surge correspondingly. Conversely, concerning scenarios include sharp natural gas price declines, major LNG project delays, or regulatory environment deterioration. Particularly, if environmental regulations tighten or renewable energy transitions accelerate beyond expectations, long-term demand prospects could face negative impacts. Warren's substantial purchases signal important insights into management's future outlook. His historical investment patterns show bold purchases at major inflection points to express conviction. This purchase likely reflects strong confidence in the company's medium-to-long-term growth drivers. However, investors should avoid relying solely on insider trading, requiring comprehensive consideration of project progress and market environment changes for investment decisions.