Sunoco Inc. (NYSE:SUN) is to be purchased by Energy Transfer Partners LP (NYSE:ETP) for a fee of $5.3 billion. The deal will mean $50.13 per share for stock holders. That price is a large return for shareholders. The price will be an incentive for the company’s owners to close the deal. The move has to be approved by both shareholders and regulators before it can be closed. That is expected to take until December later this year. The deal, announced earlier today, is one of many recent acquisitions in the oil and gas industry as the sector expands.
The high price of oil has attracted many to the industry in the hopes of a continuing high price in the commodity. In contrast the low price of natural gas has brought companies into that sector. Hopes that the demand for the fuel will pick up on increased commercial and industrial accompanied by an export market have led many to speculate on the future of that sector of the economy.
Other acquisitions in the sector in recent months include Penn Virginia Resources LP (NYSE:PVR) acquisition of Chief Gathering, a pipeline company, and The Blackstone Group LP’s (NYSE:BX) purchase of Cheniere Energy Partners LP (NYSEAMEX:CQP). The expansion in the sector has driven acquisitions to higher and higher levels as companies require more extensive logistical networks to support growth in the natural gas sector.
Sunoco Inc. operates as a refiner of oil and a seller of products associated with the refining process. The company operates pipelines and refining facilities that have clearly been deemed valuable by Energy Transfer Partners. ETP is mostly engaged in natural gas operations. The logistics resources brought in by the firm’s latest acquisition, particularly in relation to natural gas byproducts.
With the explosion in natural gas production ETP requires more logistical operations in order to expand its operations. The natural gas industry is changing rapidly as hydrofracking, or fracking, becomes the de jure tool for producing the energy source. Firms involved in pipelines and other supports for the industry are garnering interest as production increases. The problems facing the industry remain sever however. The low prices have done much to crowd suppliers out of the market, with many wells stopping production, but it does not seem able to actually raise the price. Low gas prices seem to be a fixture at least inside the United States for some time to come. The industry’s only saving grace is the height of prices worldwide and the export opportunities that seems to offer.
