New analysis indicates that as takeaway constraints for natural gas out of the Marcellus and Utica producing areas begin to lift, wet natural gas production growth will be limited by a new set of constraints caused by limited natural gas liquids (NGL) takeaway capacity in 2018.
Centennial, CO – April 16, 2018 – East Daley Capital Advisors, Inc., an energy information and insights provider that is redefining how markets view risk for midstream and exploration and production (E&P) companies reports that as the much needed additional NGL takeaway capacity is delayed in the Northeast, midstream NGL players will become increasingly constrained which will create a ceiling for wet gas production and put downward pressure on earnings for the operators in the region.
“The NGL market in the Northeast continues to be a logistical quagmire for producers, midstream operators and marketers,” said Justin Carlson, VP and Managing Director, Research at East Daley Capital. “The impact of the constraints in that region will result in low propane prices this summer, even for Northeast standards. One reason for this is Energy Transfer Partner’s ME-1 pipeline has been shut down for a month removing vital C3 takeaway from the Northeast as spring quickly approaches.”
The analysis indicates that if ME-1 and ME-2 are further delayed, producers such as Antero Resources, Range Resources and Southwestern can expect lower earnings from lower realized liquids prices and stalled wet production growth. Wet producers unable to reach production guidance will drive earnings lower for midstream providers such as MPLX, Antero Midstream, Williams and CNX Midstream.
“NGL takeaway challenges from the Northeast are amplified with scarce liquids storage within the basin,” said Carlson. “The geology in Pennsylvania and West Virginia does not allow for significant amounts of large underground storage, leaving limited room for emergency storage if problems with takeaway arise. Couple this with the rapid growth in wet gas production, both current and expected, and some very real issues begin to present themselves.”
East Daley’s largest asset database of U.S. energy infrastructure and patent-pending production allocation model, combined with in-depth analysis, brings greater transparency to the energy and commodity financial market by providing investors and market participants with deeper, more accurate data to inform their investment and strategy decisions.
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. For more information visit http://www.eastdaley.com.