Robust earnings from companies such as Enterprise Products Partners (EPD) indicates strong market fundamentals for the U.S. oil and gas midstream sector
Centennial, CO – May 8, 2018 – East Daley, an energy information and insights provider that is redefining how markets view risk for midstream and exploration and production (E&P) companies reports that market fundamentals in the U.S. oil and gas midstream sector are extremely positive, led by impressive crude oil production growth in the Permian producing region, located primarily in Texas and New Mexico.
“Results from companies like EPD reflect our long-held view at East Daley that the U.S. midstream sector is in really good shape, especially for companies that touch the Permian,” said Justin Carlson, VP and Managing Director, Research at East Daley Capital. “Our analysis of EPD indicates that they will continue to grow at this rate well into 2019. EPD’s vertically-integrated business is really the best-in-class example of how to operate throughout the value chain.”
East Daley’s analysis indicates that crude oil, natural gas liquids (NGLs) and natural gas production will grow domestically in the U.S. for the next several years, which will provide a vital increase in revenue for many midstream companies, as oil and gas infrastructure utilization will increase. Companies with crude oil and NGL assets will benefit the most, as the surge in crude oil production has translated to a quicker than expected ramp in volumes and earnings.
“2018 is turning into a pivotal year for the U.S. midstream sector,” said Carlson. “Even though a few midstream companies are feeling the impacts of recent changes to FERC tax policies, low natural gas prices and delayed infrastructure projects, the overall theme is quite positive for much of the midstream sector.”
East Daley’s analysis indicates that the U.S. midstream sector will grow 14% from an overall EBITDA perspective in 2018 versus 2017, based on favorable market fundamentals. However, delays in Northeast natural gas pipeline projects and recent Federal Energy Regulatory Commission (FERC) tax policies are putting downward pressure on midstream companies with natural gas exposure. East Daley recommends investors in midstream oil and gas companies look closely at specific assets when evaluating risk.
About East Daley Capital Advisors, Inc. East Daley Capital is an energy information and insights provider that is redefining how markets view risk for midstream and exploration and production (E&P) companies. In addition to using top-level financial data to predict a company’s performance, East Daley delivers asset and commodity analysis that provides comprehensive, fact-based intelligence. Supported by a team of unbiased, experienced financial and commodity analysts, East Daley provides its clients unparalleled insight into how midstream and E&P companies operate and generate cash flow, in addition to commodity forecasting. East Daley uses publicly available fundamental data and intersects that data with a company’s reported financials to asset-level adjusted-EBITDA and distributable cash flow (DCF). The result allows for more informed portfolio decisions. Founded in 2014, the company is based in Centennial, Colorado.