2020 Midstream Guidance Outlook Report

The 2020 Midstream Guidance Outlook Report is NOW AVAILABLE!

The Midstream Guidance Outlook provides East Daley’s preview of the biggest trends impacting the midstream sector by bringing together commodity fundamentals with asset-level financial modeling. These trends will be expanded upon within East Daley’s comprehensive 2020 Dirty Little Secrets Report – From Molecules to Money: Asset-Level ROCE. 

As we approach the New Year, midstream companies will begin releasing 2020 guidance, giving investors a first look into management’s expectations for the coming year. In East Daley’s third annual installment of the Midstream Guidance Outlook, we discuss themes and trends for next year that we predict will have major impacts to the sector by bringing together commodity fundamentals with asset-level financial modeling. Additionally, this year’s Midstream Guidance Outlook includes an introduction to the largest upgrade ever to our asset-level modeling with the addition of the East Daley Return Metric (EDRM). EDRM acts as a proxy for Return on Capital Employed (ROCE) and is designed to allow investors to analyze ROCE at the asset-level and across different companies, commodity types, asset types, and basins/hubs. 

Contact East Daley if you have questions or need more information on how to obtain a copy of the full 2020 report.

Key Takeaways:

  • Global oil and natural gas demand growth is likely to continue into the foreseeable future and will support U.S. production increases and, in turn, U.S. midstream sector growth.
  • Despite recent concerns and cautious rhetoric from producers, East Daley still forecasts Permian production to register ~16% average growth in 2020.
  • The market is likely still underestimating the impact of the impending ~3 MMb/d Permian crude oil pipeline overbuild which could have significant negative impacts to midstream marketing and transportation revenues.
  • Preliminary 2020 production guidance and current rig activity indicates the U.S. natural gas market will still be oversupplied next year. The oversupply would push prices even lower to induce more supply rationalization, a negative for midstream assets tied to gas-levered basins.
  • East Daley’s asset-level ROCE (EDRM) makes its debut in 2020 and will allow return analysis for different companies, commodity types, asset types, and basins/hubs.

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