East Daley: Lack of New Oil and Gas Infrastructure in the U.S. Continues to Limit Upside For Many Midstream Companies
October 25, 2018
Market sentiment has shifted from investors impatiently waiting for
increased production from new drilling activity to producers impatiently
waiting for additional infrastructure to connect the supply glut to
demand centers, particularly on the U.S. Gulf Coast
CENTENNIAL, Colo.–(BUSINESS WIRE)–#bakken—East
Daley Capital Advisors, Inc., an energy information and insights
provider that is redefining how markets view risk for midstream and
exploration and production (E&P) companies, released their Consensus
Comparison Report for third quarter earnings that highlights East
Daley’s views on how company earnings forecasts diverge from market
expectations. East Daley’s third quarter analysis indicates midstream
sector growth for many companies is lagging as producers await new
infrastructure to support an increase in drilling activity over the past
year.
“Our analysis shows a significant year-over-year shift, where we now
have an influx of potential supply that needs to get to market as
producers are waiting for new infrastructure to get to the demand
markets, which is ultimately limiting potential earnings for many
midstream companies,” said Justin Carlson, VP and Managing Director,
Research at East Daley Capital. “With that said, until new
infrastructure is completed in areas such as the Permian, there are a
handful of companies that will profit from the supply bottlenecks due to
price differentials.”
Regional price differentials that exceed the cost of transportation
exists for crude oil (in the Western Canadian Sedimentary Basin (WCSB),
Permian, Bakken and Guernsey), natural gas liquids (NGLs) (between
Conway to Mt. Belvieu) and natural gas (in the Permian) and each of
those regions have projects being built to alleviate the bottlenecks.
Companies like Energy Transfer (ET), ONEOK (OKE), Plains All American
(PAA), DCP Midstream (DCP) and Tallgrass Energy (TGE) will benefit once
these projects come online. In the near-term, any company with spare
capacity, either for 3rd party volumes or through its own marketing
affiliate, will benefit. Companies like Enterprise (EPD), Plains All
American (PAA), ONEOK (OKE) and Energy Transfer (ET) have potential
upside from marketing. For example, PAA has likely trimmed its crude oil
hedges in August and September of 2018 while continuing to market
volumes on Cactus, Basin and Sunrise.
“Consensus has also raised several company forecasts to be in line with
East Daley for 2018, with one example being Energy Transfer,” said
Justin Carlson, VP and Managing Director, Research at East Daley
Capital. “However, there are wide cash flow divergences between East
Daley earnings forecasts versus the street for 2019. We will cover those
variances in further detail in East Daley’s 2019 Guidance Outlook Report
that will be released in mid-November. 2019 is looking like a great year
for well-positioned midstream investors.”
East Daley’s Consensus Comparison Report is released on a quarterly
basis and helps clients identify market opportunities by showing East
Daley’s earning expectations versus the street. This quarterly
comparison shows how East Daley’s unique approach to analyzing companies
down to the asset-level can produce different earnings expectations than
that of sell-side research. East Daley goes down to the asset-level in
its forecasts allowing clients an easy way to spot potential investment
opportunities.
Contact
East Daley for more information on the Consensus
Comparison Report or the 2019 Guidance Outlook Report.
East Daley has the largest asset database of U.S. energy infrastructure
tied to EBITDA and its patent-pending production allocation model,
combined with in-depth analysis, brings greater transparency to the
energy and commodity financial market by providing investors and market
participants with deeper, more accurate data to inform their investment
and strategy decisions.
About East Daley Capital Advisors, Inc.
East Daley Capital is an energy information and insights provider that
is redefining how markets view risk for midstream and exploration and
production (E&P) companies. In addition to using top-level financial
data to predict a company’s performance, East Daley delivers asset and
commodity analysis that provides comprehensive, fact-based intelligence.
Supported by a team of unbiased, experienced financial and commodity
analysts, East Daley provides its clients unparalleled insight into how
midstream and E&P companies operate and generate cash flow, in addition
to commodity forecasting. East Daley uses publicly available fundamental
data and intersects that data with a company’s reported financials to
asset-level adjusted-EBITDA and distributable cash flow (DCF). The
result allows for more informed investment decisions. Founded in 2014,
the company is based in Centennial, Colorado. For more information visit http://www.eastdaley.com.
Contacts
East Daley Capital
Lisa Schellenberg, 720-372-2962
Director
of Marketing
lschellenberg@eastdaley.com