When natural gas prices collapsed from $8 to $2 per million cubic feet during the 2008 to 2009 downturn, Kelcy Warren had reason to worry. Energy Transfer, the company he co-founded in 1996, was still heavily tied to natural gas as the country’s largest transporter of the fuel, and the Barnett Shale boom that had fueled its growth was losing steam. Rather than wait out the slump, Warren and his executive team moved quickly to remake the business.
A Deal Struck in a Hurry
The clearest example came in March 2011, when Energy Transfer moved to acquire the natural gas liquids assets of Louis Dreyfus Highbridge Energy for roughly $2 billion. The window to close the deal was narrow, so Kelcy Warren called an emergency board meeting on a Friday night to pitch the transaction and secure approval before markets opened again. The purchase gave the company its first real foothold in the natural gas liquids business, an area long dominated by rivals such as Enterprise Products.
Diversifying by Design
The Louis Dreyfus deal was only the beginning. Warren followed it with the 2012 acquisition of Sunoco, which added a Marcellus footprint and pushed Energy Transfer further into oil and refined products. What had been, in Warren’s words, a “one-trick pony” built almost entirely on natural gas became a company balanced across multiple hydrocarbon streams. He has described the shift as a kind of natural hedge, since strength in one commodity often offsets weakness in another.
Looking back on the reinvention, Kelcy Warren credits speed and conviction as much as strategy. Acting decisively during a downturn, when many competitors were still retrenching, let Energy Transfer buy assets that would anchor its growth for the next decade and reposition the company well ahead of the shale boom that soon followed across Texas and the Bakken. Read this article for more information.
Find more information about Kelcy Warren on https://www.hartenergy.com/hall-fame/2023/kelcy-warren/