Report: U.S. Midstream Sector Positioned for Strong Growth Despite Growing Uncertainty

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A new report shows a positive forecast for the U.S. oil and gas midstream sector amid growing uncertainties in a volatile oil market.

Energy information and insights provider East Daley Capital Advisors Inc. released its “2019 Midstream Guidance Outlook” in December 2018. The report forecasts a positive midstream outlook for the majority of companies under coverage when compared to consensus, including TC Pipelines (TCP), Tallgrass Energy (TGE), Enable (ENBL), Pembina (PBA), Enbridge (ENB) and others. The Outlook reviews the high-level expectations for 2019 and how headwinds like the downturn in liquids prices, a potential natural gas oversupply and the speed of company-specific treadmills could impact the midstream sector moving forward.

“U.S. production growth is driving value performance by shifting global dynamics like OPEC and Canada supply cuts and the [approximately]1.3 million barrels per day global demand growth realized each year over the last decade. However, investors should be cognizant of the treadmill their company is running on and how it will mitigate or offset expansion growth in 2019,” said Justin Carlson, vice president and managing director of research at East Daley Capital. “East Daley will go into further detail in our Dirty Little Secrets Annual Report including several key themes: The North American Supply Glut in Gas, Evolution of the Crude Constraint, Financial Gravity and Growth and more.”

The analysis also indicates that company and basin-specific risks are still present, and investors should be mindful of company-specific activity. One example is that several natural gas producers in the northeast, Haynesville and Rockies producing regions may be forced to announce revised and lowered production growth rates which would have a negative impact to some midstream companies due to an oversupply in natural gas. The Outlook also reviews long-haul natural gas pipeline re-contracting risks, which is a key market theme to monitor for the coming years.

East Daley’s Midstream Guidance Outlook Report is released on an annual basis and helps provide clarity on near-term risks, updates and the health of the 27 companies that East Daley covers. This report will be expanded upon in East Daley’s definitive guide to understanding the midstream sector, Dirty Little Secrets, which will be released later this month.

Contact East Daley for a complimentary 2019 Midstream Guidance Outlook Report.

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