Editor's note: It is misstated in the video that Energy Transfer Partners offered to purchase Sunoco for $5.3 million, when the correct amount is $5.3 billion. The Fool regrets the error.
The following video is part of our "Motley Fool Conversations" series, in which energy editor/analyst Joel South and consumer goods editor/analyst Austin Smith discuss topics across the investing world.
With record-low prices and curbed demand, natural gas is influencing a new trend in energy: acquisitions. Natural gas players are finding out that if a deal cannot be made, they will either be cannibalized or out of money in a hurry. This development can be seen with the number of limited partnerships forming, and natural gas players joining synergies in order to diversify their portfolios, adding oil and liquid capacity while decreasing natural gas production.
The latest move is Energy Transfer Partners' proposed purchase of Sunoco for $5.3 billion. This deal will allow ETP access to much-needed oil pipelines, which carry a higher price tag than natural gas transportation. This acquisition is similar to the one Kinder Morgan and El Paso are in the process of getting approved. ETP is expecting this oil play to bring in 33% of future free cash flow. This development is just one in a large series of acquisitions, and understanding the intended impact is the key to successfully investing in natural gas companies.
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