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WES, DCP, OKE, and TRGP: Comparing Q1 Operating Performances

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Adjusted EBITDA

ONEOK (OKE) posted the highest YoY (year-over-year) EBITDA growth in the first quarter among the four selected peers despite its higher base. The c-corporation saw 24.1% YoY EBITDA growth during the first quarter. OKE’s strong earnings growth in the first quarter was mainly due to strong throughput volume growth across its Natural Gas Gathering & Processing and Natural Gas Liquids segments. Strong volume growth was driven by strong drilling activity in the region where it operates and expansion projects placed into service.

OKE is followed by Targa Resources (TRGP) and DCP Midstream (DCP). TRGP and DCP posted 10.8% and 9.4% EBITDA growth in the first quarter, respectively. Similar to OKE, TRGP and DCP benefitted from strong volume growth in their gathering and processing business.

Western Gas Partners (WES) saw the lowest EBITDA growth of 6.8% in the first quarter. WES’s relative underperformance in the first quarter was mainly due to weakness in natural gas throughput volumes. The partnership saw an 8.0% YoY decline in natural gas throughput volumes in the first quarter, which was offset by higher crude oil, NGLs (natural gas liquids), and water volumes and higher margins.

Distributable cash flow

Western Gas Partners’ DCF (distributable cash flow) growth was also muted during the first quarter due to weak EBITDA growth, which led to a slight decline in its distribution coverage. WES’s Q1 distribution coverage stood at 1.05x. For details on WES’s performance in the first quarter, read Western Gas Partners Posted Decent 1Q18 Results—What’s Next?

At 1.37x, OKE has the highest distribution coverage among the selected peers. OKE is followed by Targa Resources Corporation at 1.20x. DCP’s distribution coverage improved to 1.10x by the end of the first quarter. DCP is protected from the IDRs giveback announced by its sponsors, which has helped keep its distribution coverage above one.

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