Follow The Footsteps Of An Oil Billionaire
I’m in my car doing about 70 miles an hour on Interstate 17. The radio was softly playing a nice jazz piece. My windows were down a bit, I was enjoying the breeze, and the cool air.
I’d spent the morning in Flagstaff helping open up the mountain cabin for the season.
Every spring we get the cabin ready for a new season of use. It takes a few hours to clean out the dust. We spend some time checking for winter damage and raking pine needles.
Three fully-loaded trips to the dump was all it took this year.
It’s still cold up in the mountains. On Friday afternoon, it snowed a bit… and again on Saturday too. Nothing stuck to the ground, but it was nice to see the snow flurries.
My drive home reminded me of an article I wrote back in June.
If you remember, a firm called Energy Transfer Partners (ETP) had installed a huge natural gas pipeline through the desert. The scar on the earth could be seen for miles around.
Heading home I noticed the scar was fading. The desert was reclaiming its ground.
ETP is a publicly traded partnership. They own more than 17,500 miles of pipelines throughout the American southwest.
When I last wrote about ETP, the stock was trading at just under $43 a share… now it’s closing in on $50! Add that stock appreciation to the 8% dividend and you have yourself a nice little return of just over 24%.
After seeing how great that trade turned out, I started looking at a few other pipeline companies.
That’s when I read about Dan Duncan.
Dan recently passed away, but the legacy he left behind is something to admire.
Dan was listed as number 74 on Forbes’ list of global billionaires. His fortune is estimated to be more than $9.0 billion!
How did Dan make all his money?
Oil. Black Gold. Texas Tea!
Dan grew up in the oil industry. His family was poor, but his father no doubt worked hard in the oil industry. Dan served our country with a stint in the Army in the 1950s. After that, he cut his teeth in the oil industry as a roughneck. Dan moved on to become an industry accountant.
In 1968, he co-founded Enterprise Products Partners (EPD).
It’s an amazing story.
Dan started the business with $10,000 and a truck. From that humble beginning, Enterprise has grown into a firm with 49,000 miles of oil and gas pipelines and huge oil and gas storage terminals.
The company is now worth more than $22 billion!
I took a look at their recent quarterly report and what the business has done is nothing short of amazing.
Net income is up 24%.
And, distributable cash flow is up a whopping 69%. Can you say holy cow!
Enterprise has a simple business. They move and store oil and gas for people. As you can see, it’s incredibly profitable. Enterprise is an MLP meaning they also distribute a big chunk of earnings directly to shareholders.
Right now the company pays out $2.27 per share in dividends. That’s a yield of more than 6.4%. The recent increase in dividend also represents the 32nd increase in payout since the company went public.
The stock has flat lined in the last few weeks… probably because of the general selloff in oil and gas stocks. The BP oil leak in the Gulf of Mexico isn’t helping the industry. I think now’s a perfect time to be grabbing a piece of Dan Duncan’s legacy. By picking up shares in Enterprise, you can follow in the footsteps of an oil billionaire!
Category: Commodities
