Accurately assessing the value of—and prospects for—a midstream energy company requires a deep, detailed analysis that considers the firm’s individual processing plants, pipelines, storage and other assets; asset location and the degree to which the assets complement each other; and the underlying contracts that generate revenue. Do less, and you may be getting a pig in a poke. It’s true, things are definitely looking up in the midstream sector, but that hardly makes every midstream company a winner. Today, we review highlights from a new East Daley Capital report that shines a harsh, bright light on the inner workings of more than 20 U.S. midstream companies.
A house for sale can look move-in-ready from the curb, a year-old SUV can look sparkly and spiffy on a dealer’s lot, and a prospective date on match.com … well, you get the idea. Everyone—including the folks that run midstream companies—tries to put their best foot forward, to highlight their most positive attributes, and to de-emphasize the real turn-offs. Nothing and no one is absolutely perfect—we get that—but surely it makes sense, if you’re evaluating a midstream company’s value and prospects, to gain as full an understanding as you can of what’s not put out there on a pedestal for public view. In a newly issued report, Dirty Little Secrets—Lifting the Covers on Midstream Energy Company Risk, our good friends at East Daley Capital have done a lot of that work for you, taking company-by-company analyses far beyond the general overviews that are typically offered by research firms. (More information on the report, which runs more than 100 pages, is available here.)
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