How WPZ Can Benefit from Strong Northeast Drilling Activity



Northeast drilling activity

Drilling activity in the Marcellus region has remained resilient despite the weakness in natural gas prices. According to the recent drilling report by Baker Hughes (BHI), the natural gas rig count in the Marcellus region has ranged from 43 to 45 since the beginning of April through the week ended June 16, 2017. 

The natural gas rig count in the Utica region increased to 28 by the end of last week compared to 20 rigs at the beginning of 2017.

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Williams Partners (WPZ), which has a strong presence in the Northeast region, is expected to benefit from the resilient Northeast activity. According to its Analyst Day presentation, Williams Partners gathered ~34% of the total natural gas gathered volumes in the Marcellus and Utica regions during 1Q17.

Northeast region natural gas growth forecast

According to a recent report by Wood Mackenzie, the Northeast region is expected to experience natural gas production growth of 14.7 Bcfpd[1. billion cubic feet per day] from 2016 to 2021. The region is expected to account for 70% of total natural gas production growth in the US. 

Williams Partners is expected to benefit from this trend due to its strong presence in the region. The partnership is expected to spend ~27% of its growth capex in 2017–2019 on Northeast gathering infrastructure. 

Crestwood Equity Partners (CEQP), Spectra Energy Partners (SEP), and EQT Midstream Partners (EQM) are among the other midstream companies that are bullish on expansion in the Northeast region.


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