(Idea) Genesis Energy - At Its Cash Flow Inflection Point
Genesis Energy (GEL) is wrapping up a transformational 2025. The company spent the year restructuring its operations and simplifying its balance sheet. It is now poised to complete the offshore transportation buildout that management had telegraphed since 2022.
GEL’s unitholders have been rewarded for management’s commendable execution. The 64.94% total return was one of the best in the midstream and MLP space in 2025.
Today, the company is well-positioned to generate free cash flow and deleverage. If management continues to execute on the operations front, I expect the paydown of long-term debt and redemption of preferred units to push the common unit price higher.
GEL is the third-largest holding in the HFIR Energy Income Portfolio, which has held the units since February 2023. I believe that deleveraging will boost free cash flow and increase distributions to common unitholders. Strengthening fundamentals and decreasing risk are likely to drive the units significantly higher from here.