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EnLink Midstream Partners Could Gain Upward Momentum

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Part 3
EnLink Midstream Partners Could Gain Upward Momentum PART 3 OF 10

Where Are EnLink Midstream’s Throughput Volumes Headed?

Throughput volumes

In this part, we’ll discuss the drilling activity in the basins where EnLink Midstream Partners (ENLK) has exposure. Drilling activity and production growth drive midstream companies’ throughput volumes.

Where Are EnLink Midstream’s Throughput Volumes Headed?

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Barnett

EnLink Midstream Partners has high exposure to the Barnett Shale due to Devon Energy’s (DVN) active presence in the region. The Barnett region has seen a slight recovery in the drilling activity in recent months. However, it’s still way below the levels before the rout in energy prices.

Devon Energy plans to sell $1 billion worth of upstream assets in the Barnett region. EnLink Midstream Partners expects the throughput volumes from the region to pick up after the asset sale “assuming the counterparty actively develops the area,” as noted in EnLink Midstream Partners’ 2Q17 earnings press release.

Delaware and Midland basins

The Delaware and Midland basins, which are part of the prolific Permian Basin, continue to experience strong drilling. According to the recent rigs report by Baker Hughes, the rig count in the Permian region has risen to 386 as of September 22, 2017—compared to 370 by the end of the second quarter. The increase is expected to drive the partnership’s natural gas and crude oil throughput volumes. EnLink Midstream Partners had 15 active rigs in the acreage dedicated to the partnership’s crude oil gathering and natural gas gathering and processing systems in the Midland region as of September 1. At the same time, EnLink Midstream Partners had 15 active rigs in the Delaware region.

STACK

EnLink Midstream Partners has a strong presence in the STACK, Merge, and Cana Woodford regions of the Anadarko Basin. The basin, particularly the STACK play, is among the most prolific regions in the US. The EIA (U.S. Energy Information Administration) started reporting production data for the Anadarko Basin. According to the EIA, the rig count in the region rose to 127 by the end of July 2017—compared to 84 by the end of 2016.

EnLink Midstream Partners, which has increased its presence significantly in the region in recent years, is expected to benefit from strong throughput volume growth. DCP Midstream (DCP) and Enable Midstream Partners (ENBL) are among the midstream companies that have high exposure to the STACK play.

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