1 Big Energy Deal Following the Trend

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.

Midstream energy companies like the ones mentioned above are great ways to invest in energy without worries about the inherent volatility exposure seen in the exploration and development arena. Master limited partnerships are always tempting because of the high dividends they offer. However, as with other astronomical dividend plays, buyer beware -- these dividends can change on a dime and leave investors in the dog house. Research must be done when making astute dividend choices, and that's exactly why our analysts have hand-selected nine great dividend stocks that you are sure to check out and gain the upper hand. The report, "Secure Your Future With 9 Rock-Solid Dividend Stocks," is free, and it is sure to prove as an invaluable resource. However, it's only available for a limited time, so get involved today! Just click here to discover the winners we've picked.

At the time thisarticle was published Austin Smith has no positions in the stocks mentioned above. Joel South has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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