Which Segment Will Drive Crestwood Equity’s 4Q15 Performance?



Crestwood Equity’s adjusted EBITDA

The increase in Crestwood Equity Partners’ (CEQP) 3Q15 adjusted EBITDA was driven by contributions from its Storage and Transportation segment and its Marketing, Supply, and Logistics segment. However, these increases were offset by a decline in its Gathering and Processing segment.

Article continues below advertisement

Crestwood Equity’s Gathering and Processing segment

CEQP’s Gathering and Processing segment, which mainly provides natural gas gathering, processing, and compression services, saw its 3Q15 EBITDA fall by 9.7% YoY (year-over-year) as compared to 3Q14. The trend is expected to continue in 4Q15 driven by a decline in the company’s gathering volumes in the southwest Marcellus Shale and Barnett Shale regions. Barnett gathering and processing volumes started falling due to shut-ins following Quicksilver Resources’ bankruptcy.

Crestwood Equity’s Storage and Transportation segment

CEQP’s Storage and Transportation segment, which mainly provides natural gas transportation and storage services, saw its 3Q15 adjusted EBITDA increase marginally by 0.6%. The segment might experience similar EBITDA growth in 4Q15 driven by higher take-or-pay revenue at the partnership’s COLT Hub terminal.

Crestwood Equity’s Marketing, Supply, and Logistics segment

CEQP’s Marketing, Supply, and Logistics segment saw 3Q15 EBITDA increase by 13.3% YoY. The segment provides crude oil trucking and NGLs (natural gas liquids) transportation, storage, and marketing services. However, the segment might experience a YoY decline in 4Q15 EBITDA due to lower NGL demand considering the warmer winters in 2015 compared to 2014.

Summit Midstream Partners (SMLP), Southcross Energy Partners (SXE), and Enable Midstream Partners (ENBL) are among the midstream companies that might experience a similar decline. ENBL forms 0.04% of the Global X MLP & Energy Infrastructure ETF (MLPX).


More From Market Realist