In this article, we’ll look at the 2018 capital spending plans of the four selected peers. Let’s start with ONEOK (OKE). ONEOK expects its 2018 capital expenditure to lie between $2.1 billion and $2.5 billion compared to 2017 capital expenditure of $512.4 million, which represents a YoY jump of 300%.
ONEOK had increased its capital guidance earlier this year following the announcement of new projects including a new 400,000 bpd (barrels per day) pipeline, a new fractionator, and a new 200 Mcf/d (million cubic feet per day) processing plant.
Overall, OKE expects to spend $2.3 billion on these projects during the 2018–2020 period. The company is bullish on the expansion of its Natural Gas Liquids business and addition of processing capacity particularly in the Permian, Williston, and Anadarko basins.
Targa Resources (TRGP) expects its 2018 capital expenditure to be ~$2.3 billion, which is 54.0% higher compared to 2017 capital expenditure. TRGP will likely continue to focus on the expansion of its processing capacity and NGLs pipeline expansion. It recently announced two new projects including the expansion of its Grand Prix NGL Pipeline and expansion of processing capacity in the Delaware Basin.
Western Gas Partners
Western Gas Partners (WES) announced an increase in its 2018 capital guidance during the first-quarter earnings release. WES now expects its 2018 capital spending to lie between $1.35 billion and $1.45 billion, which is 100.0% higher at the midpoint than capital spending during 2017. The increase in WES’s 2018 capital expenditure is due to its inclusion in two-haul crude pipeline projects, which include a 20% interest in Enterprise Products Partners’ (EPD) Midland-to-Sealy pipeline and a 15% interest in Plains All American Pipeline’s (PAA) Cactus II pipeline.
WES is extremely bullish on expansion in the Delaware basin due to its sponsor’s, Anadarko Petroleum’s (APC), strong presence in the region.
DCP Midstream (DCP) has the lowest 2018 capital budget among the selected peers. The partnership has announced several new projects in recent months including the Southern Hills NGL pipeline expansion, the Front Range Pipeline expansion, and the Texas Express Pipeline expansion. However, it has kept its 2018 capital guidance unchanged for now.
Apart from this, the partnership is expected to majorly focus on the expansion of Sand Hills Pipeline, natural gas gathering and processing infrastructure expansion, and the Gulf Coast Express pipeline. The Gulf Coast Express project is a joint venture between DCP, Kinder Morgan (KMI), and Targa Resources.
In the next article, we’ll compare the leverage position of the four peers.