2021 Dirty Little Secrets

Fight or Flight: Taking Stock of the Midstream

East Daley’s newest, in-depth market report titled Dirty Little Secrets 2021 - Fight or Flight: Taking Stock of the Midstream is now available for purchase that includes a detailed breakout of all midstream companies under coverage. The in-depth annual report expands upon the trends included in our 2021 Midstream Guidance Outlook.  Read more from an industry veteran, our very own CEO and Co-founder, Jim Simpson.

Key highlights from Dirty Little Secrets 2021:

• Natural Gas: The Once and Future King. The call on dry gas grows as associated gas falls. We assess the basin-level activity we expect, with all roads leading to Ark-La-Tex.
• Dealer’s Choice: Crude Oil Scenario Modeling in the Permian Basin. We outline what the Permian would look like under three price scenarios driving our view that Permian natural gas processing could hit full utilization by 1Q2024 in our base case and as early as 4Q2021 if oil prices rise.
• Crude Oil Egress Capacity Glut: The Dire Outlook for Rates and Volumes. Incremental Cushing egress capacity coupled with pipeline developments outside of Cushing will divert supply from the most important crude oil hub in North America, creating a more overbuilt market in 2021 than in 2020. But the Permian will have over 3 MMb/d of excess capacity with more commitments than actual production in 2021, a serious infrastructure glut.
• Running Fast and Slow: Dissecting our Treadmill Incline Intensity Metrics. The crash in commodity prices, large E&P bankruptcies, and lower production outlooks have sped up and exacerbated legacy cash flow declines. We assess company- and asset-specific risks.
• The New Regime: Aboveground Regulatory, Legislative, and Judicial Hurdles for Midstream. The Biden administration kicked off its first day with a revocation of the Keystone XL, among other orders, while Interior imposed a 60-day moratorium on Federal leasing. We examine go/no-go implications of key disputed infrastructure, including Mountain Valley Pipeline (MVP), Dakota Access Pipeline (DAPL), and Keystone XL (KXL).
• Midstream Free Cash Flow: The Pot of Gold at the End of the Rainbow. The midstream sector offers compelling free cash flow growth as capex slows – we assess durability and sustainability, and arrive at some company-level assessments that may not be obvious.
• Company Analysis. Our deep dive into the top 26 North American midstream companies provides long-term projections and an assessment of key risks, rewards, catalysts and hurdles.