EnLink Midstream versus crude oil
So far in this series, we have discussed the top four midstream companies. These companies have the maximum correlation with crude oil. The top four companies are Targa Resources (TRGP), ONEOK (OKE), Williams Companies (WMB), and Hi-Crush Partners (HCLP). In this part, we’ll discuss the correlation between EnLink Midstream (ENLC) and crude oil.
EnLink Midstream, the general partner of EnLink Midstream Partners (ENLK), ranks fifth among midstream companies in terms of the correlation with crude oil. EnLink Midstream Partners, which owns the majority assets, is also among the top 15 midstream companies that have the highest correlation with crude oil.
EnLink Midstream’s one-year correlation with crude oil was 0.47 as of February 6, 2018. The correlation between EnLink Midstream Partners and crude oil was 0.37. EnLink Midstream Partners’ high correlation with crude oil could be attributed to its involvement in the natural gas processing and NGLs (natural gas liquids) marketing business. EnLink Midstream’s higher correlation compared to EnLink Midstream Partners is due to its dependence on the limited partnership for distribution income.
EnLink Midstream Partners’ commodity price exposure is expected to increase in the coming quarters following the addition of its natural gas processing capacity. The partnership’s extremely bullish on the expansion of processing capacity in the Delaware and STACK regions. To learn more, read EnLink Continues to Expand Capacity in Delaware and STACK Regions.
For EnLink Midstream, 83.3% of the analysts rated it as a “hold,” while 16.7% rated it as a “buy.” At the same time, 57.9% of the analysts rated EnLink Midstream Partners as a “hold,” 36.8% rated it as a “buy,” and 5.3% rated it as a “sell.” EnLink Midstream and EnLink Midstream Partners’ average target price of $18.5 and $18.1 implies 1.4% and 4.3% upside potential from the current price levels.
Next, we’ll discuss the correlation between DCP Midstream (DCP) and crude oil.