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Solid midstream outlook for 2019: East Daley report

Published by , Senior Editor
World Pipelines,

Despite lacklustre market sentiment for US midstream companies, energy fundamental tailwinds will propel the sector to new heights in 2019 for companies like TC Pipelines (TCP), Tallgrass Energy (TGE), Enable (ENBL), Pembina (PBA), Enbridge (ENB) and others.

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 its 2019 Midstream Guidance Outlook Report. This is an important period for the midstream sector, as guidance provides a first look at next year’s earnings which can vary widely from market expectations.

The Outlook reviews the high-level expectations for the coming year as well as the key trends and headwinds that East Daley will monitor heading into next year. East Daley’s 2019 Outlook shows a positive midstream outlook for a 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 case for continued strong US crude and natural gas production growth is supported by global demand for natural gas liquids, which will continue to have a positive impact on many midstream companies,” said Justin Carlson, VP and Managing Director, Research at East Daley Capital. “Even with recent 30% drop in liquids prices, East Daley analysis shows that increased production is likely to continue into the foreseeable future as developing countries modernise and grow.”

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 companies that East Daley covers. This report will be expanded upon in East Daley’s Annual Report, Dirty Little Secrets, which will be released in January 2019.

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