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Oil and Gas Production Growth in the U.S. Will Continue to Propel Future Midstream Sector Earnings


Recently released analysis suggests strong earnings for midstream companies with exposure to the Permian Basin, including Energy Transfer (ETP), Enterprise Products Partners (EPD) and Plains All American (PAA), are expected to continue from increasing production growth and marketing profits.


Centennial, CO – August 29, 2018East 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 released new analysis which underscores that overall midstream sector growth is up, primarily due to increased oil and gas production, and will continue into the near future.  Permian Basin production growth is largely responsible for helping companies beat expectations, which is in line with East Daley’s Consensus Comparison Report, which provides investors with key analysis prior to earnings calls.  In the report, six of seven midstream companies beat consensus where East Daley had a significant (>5%) beat, which validates East Daley’s rigorous approach to asset-level research.

“We are optimistic about the fundamentals that support the cash-flow generating ability of the midstream market for the remainder of this year and as we move into 2019,” said Justin Carlson, VP and Managing Director, Research at East Daley Capital.  “The midstream sector is really strong right now, but outliers do exist, and investors do need to exercise some caution.  Looking closely at long-term asset health is an absolute must to truly understand how to best succeed in this boom environment, because even when the market is sending strong signals for growth, not all assets and companies are equal.”

East Daley analysis also indicated that companies not only benefited from volume growth, but also operational leverage, higher walk-up tariff rates and improved marketing profits.  Oil and gas marketing gains at midstream companies with exposure to the Permian should continue over the next 18-months as there is only one large-scale Permian takeaway project planned within the next year, which is the Sunrise expansion (PAA) going into operation in 4Q2018.  For Permian basis to equalize with other key pricing locations in the U.S., additional crude oil takeaway capacity is needed.

Contact East Daley for more information on the Consensus Comparison Report or Earnings Scorecard.

East Daley has the largest asset database of U.S. energy infrastructure tied to EBITDA and its 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.