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Press Release: Midstream Companies Soar as Producers Fight It Out in the Marcellus and Utica

New Report Bridges the Gap Between Commodity and Equity Market Analysis in the Northeast U.S. Natural Gas and Natural Gas Liquids (NGLs) Region

Centennial, CO – May 10, 2017East Daley Capital Advisors, Inc., an energy assets research firm redefining how markets view risk in exploration and production (E&P) and midstream energy companies, released a new report: “Righting A Wrong: The Marcellus/Utica Balanced on a Knife’s Edge.” This two-part report dissects the interconnection between energy market fundamentals and a company’s future cash flow.

“This new report shows who wins the biggest piece of the total upside of $1.9 billion in annualized EBITDA for midstream gatherers and long-haul pipelines due to expansions coming out of northeast Pennsylvania,” said Justin Carlson, VP and Managing Director, Research at East Daley Capital. “What’s unprecedented is the literal transfer of wealth from producers to midstream companies in the Northeast because of the new infrastructure builds. Our unique analysis maps this financial ripple effect from producer to each gathering system to each long-haul pipeline.”

Part One of the report focuses on production growth centered in northern Pennsylvania and demand markets directly to the east. Part Two of the report, to be released in late May, will focus on the Marcellus and Utica in Eastern Ohio, Southwest Pennsylvania and West Virginia. It will also explore the impact on pricing and basis as the U.S. natural gas market is once again transformed.

“There are some companies that are clearly in a much better financial position than others in the Northeast gas market. Triple digit production and throughput growth rates will not be uncommon for some producers and midstream companies in the next couple of years, while others will barely grow at all,” said Carlson. “This will have serious cashflow implications for many operators in the region. In the Marcellus and Utica, a single market event can impact every party along the value chain from producer, to gatherer, to processor to long-haul pipeline. It’s a very dynamic time right now in that region.”

Key findings from Righting A Wrong – Part One include:

  • Expansions out of northeast Pennsylvania (NE PA) will result in $1.9 billion in EBITDA split almost evenly between midstream gathering and long-haul transportation.
  • Higher-risk long-haul transport projects account for $182 million in transportation EBITDA but $254 million in midstream gathering EBITDA.
  • Productive capacity for producers in NE PA is limited to 14.2 Bcf/d, 5.2 Bcf/d higher than current production levels.
  • Cabot, Chief, Seneca and Shell will all see over 100% increases in production growth.  
  • Williams Partners (WPZ) will realize an upside of $658 million from NE PA, driven by production linked through their gathering systems to new long-haul expansions.
  • ETP’s NE PA gathering system will almost double from 16% to 28% of midstream segment EBITDA.

Producers covered in Part One of the report include: Cabot Oil and Gas, Chief Oil and Gas, Southwestern, Seneca Resources, Alta Resources, Chesapeake Energy, Royal Dutch Shell, Repsol Oil and Gas Canada and others.

Midstream companies covered in Part One of the report include: Williams Partners, Energy Transfer Partners, National Fuel Gathering, DTE, Alta Resources, Howard Energy Partners, Repsol, UGI Corporation, Energy Corporation of America, Cardinal NE Midstream II, Appalachian Midstream Partners, Unit Corporation, XTO Energy and Boardwalk Pipeline Partners.

East Daley’s asset-level allocation model, combined with in-depth analysis, brings greater transparency to the midstream energy financial market by providing investors with deeper, more accurate data to inform their investment decisions.

For a complimentary copy of the overview of Righting A Wrong, Part One, please email insights@eastdaley.com.

About East Daley Capital Advisors, Inc.

East Daley Capital is an energy assets research firm that is redefining how markets view risk for midstream energy companies. In addition to using top-level financial data to predict a company’s performance, East Daley delivers asset-level analysis that provides comprehensive, fact-based intelligence. Supported by a team of unbiased, experienced research analysts, East Daley provides its clients unparalleled insight into how midstream companies operate and generate cash flow. East Daley uses publicly available fundamental data and intersects that data with a company’s reported financials to break midstream companies down to asset-level cash flows. 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.

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