Western Gas Partners, LP

Several midstream stocks hit their respective 52-week lows in the last five days. Crude oil prices took a hit yesterday amid concerns over trade talks.

Energy Transfer (ET) offers an estimated upside of more than 43%. The company has a median target price of $21.1.

Western Midstream Partners (WES) offers a solid potential upside of more than 30% compared to its current market price of $31.85.

Chevron (CVX) has agreed to acquire Anadarko (APC) in a cash and equity deal.

Magellan Midstream Partners (MMP) offers a potential upside of more than 21% based on analysts’ median target price of $73.2.

On November 2–9, midstream stock Western Gas Partners (WES) gained the most on our list of energy stocks.

On October 9, Antero Midstream Partners (AM) and Antero Midstream GP (AMGP) announced a simplification transaction.

Andeavor Logistics, Magellan Midstream Partners, and Plains All American Pipeline, top Alerian MLP Index constituents by market capitalization, are trading at price-to-DCF ratios higher than the peer average.

Noble Midstream Partners (NBLX) stock fell significantly in August and September as Initiative 97 was started and then made it onto the Colorado ballot as Proposition 112.

Integrated energy stock YPF Sociedad Anonima (YPF) was the second weakest on our list last week, and midstream stocks Western Gas Partners (WES) and Shell Midstream Partners (SHLX) ranked third and fourth.

EQT Midstream Partners (EQM) has an upside potential of 15.5% for the next 12 months. Analysts have given the company a target price of $66.6.

The EIA reported that US natural gas inventories increased by 35 Bcf (billion cubic feet) to 2,308 Bcf on July 20–27.

Crestwood Equity Partners (CEQP) was trading 4.0% above its 50-day SMA (simple moving average) and 22.0% above its 200-day SMA on July 13.

A total of 63.0% of analysts surveyed by Reuters have rated EnLink Midstream Partners (ENLK) as a “buy” as of June 28.

In this series, we’ll look at the historical outliers in midstream energy, which have generated massive wealth amid turbulent times.

Anadarko Petroleum’s (APC) DJ Basin upstream operations are to receive $1 billion–$1.5 billion in capex this year. Per Anadarko Petroleum management, free cash flow from the region is expected to surpass $1 billion.

Capital Research Global Investors added a major position in ONEOK (OKE) during the first quarter.

OKE has the highest forward EV-to-EBITDA multiple of 14.7x among the selected peers.

ONEOK has the lowest distribution yield of 4.8% among selected peers, which could be attributed to the partnership’s strong distribution growth guidance supported by its strong earnings growth potential and impressive distribution coverage.

In this article, we’ll look at the 2018 capital spending plans of the four selected peers.

The Permian region, which is currently the most prolific basin in the US, continues to experience strong drilling activity.

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.

Brookfield Investment Management added a major position of 4.3 million shares in Western Gas Partners (WES) during the first quarter.

Master limited partnerships or MLPs saw continued strong earnings growth in 1Q18 after a solid fourth quarter of 2017.

Western Gas Partners expects to grow its distribution at a fixed rate of 1.5 cents per quarter for the remainder of 2018.

Credit Suisse initiated coverage on CVR Refining (CVRR) with a “neutral” rating and assigned a target price of $14.

Western Gas Equity Partners (WGP), the MLP GP (general partner) of Western Gas Partners (WES), has fallen 11.1% since the start of this year.

Cheniere Energy Partners (CQP), the MLP midstream subsidiary of Cheniere Energy (LNG), saw an upward revision of its target price last week.

Targa Resources (TRGP) has the most “buy” among the four peers we’re analyzing in this series.

MLPs’ distribution yield has risen recently due to the massive correction, and the peers we’re analyzing in this series are no different.

All four of the peers we’re analyzing in this series—DCP Midstream (DCP), Western Gas Partners (WES), OKEOK (OKE), and Targa Resource Corporation (TRGP)—have leverage ratios within or below the industry standard.

The Permian region, which is currently the United States’ most prolific basin, continues to experience strong drilling activity.

In the previous part of this series, we looked at the recent operating performance for the four peers we’re analyzing: DCP Midstream (DCP), ONEOK (OKE), Targa Resources (TRGP), and Western Gas Partners (WES).

ONEOK (OKE) posted the highest YoY EBITDA growth in the fourth quarter among the four peers we’re analyzing in this series.

Midstream companies such as Kinder Morgan (KMI), Targa Resource (TRGP), and ONEOK (OKE) are taxed as C-corps, so the revised policy doesn’t apply to them.

In this part of the series, we’ll look at the recent institutional activity for Western Gas Partners (WES), the MLP subsidiary of Anadarko Petroleum Corporation (APC).

Tallgrass Energy Partners (TEP) stock has been volatile in 2018. The stock fell steeply at the start of February.

Western Gas Partners (WES) posted a 1.8% YoY (year-over-year) rise in its adjusted EBITDA in 4Q17.

EQT Midstream Partners posted a strong 18.0% YoY (year-over-year) rise in its EBITDA during the most recent quarter.

Williams Partners’ (WPZ) Atlantic Gulf segment posted a 4.6% YoY decline in its adjusted EBITDA during the fourth quarter.

Williams Partners’ (WPZ) Atlantic Gulf segment is expected to benefit in 4Q17 from the Transco expansion projects placed into service.

Barclays downgraded Western Gas Partners (WES) to “equal weight” from “overweight” last week.

Natural gas processing capacity Natural gas processing is the process of separating dry natural gas from natural gas plant liquids (or NGPL). The process involves the removal of water, carbon dioxide, sulfur, and the like because they could potentially cause mechanical issues during pipeline transit. The increase in natural gas production in the Appalachian region has therefore […]

Energy Transfer Equity’s (ETE) distribution income fell to $317 million in 3Q17, compared to $344 million in the same quarter of prior year, a year-over-year fall of 7.8%.

DCP Midstream (DCP) has the highest total outstanding debt among our select peers. DCP’s total outstanding debt was $5.2 billion as of September 30.

Among the top institutional holders in WGP, ~1.3 million positions were added, which indicates a bullish sentiment toward the stock.

Earnings in 3Q17 Midstream MLP Western Gas Partners (WES), which is mainly involved in natural gas gathering and processing, posted a 7.3% YoY (year-over-year) fall in its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in 3Q17. Moreover, the partnership missed its EBITDA estimate by 0.7%. The YoY decline in the MLP’s 3Q17 EBITDA was mainly […]

According to the EIA, crude oil production in the Permian region rose 21.4% YoY (year-over-year) in 3Q17, while natural gas production grew 16.7% YoY.

EnLink Midstream LLC (ENLC), the GP (general partner) of EnLink Midstream Partners (ENLK), was raised by UBS to a “buy.”

Western Gas Partners was trading at a price-to-DCF multiple of 9.5x at the end of 2Q17. It’s trading at a price-to-DCF multiple of 8.5x as of October 17, 2017.

On October 12, 2017, Western Gas Partners (WES) announced its 3Q17 distribution ahead of its earnings release. It declared a distribution of $0.905 per share.

Western Gas Partners’ natural gas volumes were 3.5 Bcf/d (billion cubic feet per day) in 2Q17 compared to 3.9 Bcf/d in 2Q16, a YoY fall of 10.3%.

Western Gas Partners (WES) and its GP (general partner) Western Gas Equity Partners (WGP) are scheduled to release their 3Q17 earnings on October 31, 2017.

Ferrellgas Partners (FGP), which is involved in propane logistics and distribution, was the top MLP loser in the week ending September 22.

According to PWC’s 1Q17 report, the upstream sector generated 32 deals, or 60%, of the total deals in 1Q17.

Energy Transfer Partners (ETP) has a capital budget of $3.9 billion for 2017, of which $1.7 billion was spent in the first half of the year.

Plains GP Holdings (PAGP) was the most battered last month of the four in our peer group, witnessing a new YTD (year-to-date) low of $19.8 in August.

The four MLP partners we’ll compare in this series are Energy Transfer Equity, Western Gas Equity Partners, Plains GP Holdings, and Williams Companies.

BPL recently announced its plans to enter the prolific Permian Basin, where it plans to build a 600-mile haul pipeline.

Analysts’ ratings for Western Gas Partners Of the analysts covering Western Gas Partners (WES), 53.0% recommend “buy,” 42% recommend “hold,” and 5.0% recommend “sell” as of August 17, 2017. WES had no “sell” ratings until it was downgraded from “neutral” to “underperform” by Bank of America Merrill Lynch in February 2017. Overall, the partnership has […]

Western Gas Partners’ moving averages Western Gas Partners (WES) is trading at a significant discount to its short-term (50-day) and longer-term (200-day) moving averages due to recent weakness. The partnership was trading 7.6% below its 50-day SMA (simple moving average) and 14.2% below its 200-day SMA as of August 17, which may indicate a bearish sentiment […]

Western Gas Partners’ price-to-distributable cash flow Western Gas Partners (WES) was trading at a price-to-distributable cash flow ratio of 7.6x on August 17, lower than the 8.8x it stood at in late 2Q17 and its last-ten-quarter average of 8.3x. Peers Crestwood Equity Partners (CEQP), DCP Midstream (DCP), and EnLink Midstream Partners (ENLK) have seen a similar […]

Western Gas’s outstanding debt Western Gas Partners (WES) ended 2Q17 with a total outstanding debt of $3.2 billion, which was 5.2% higher than its debt at the end of 2016. The slight increase in the partnership’s outstanding debt could be attributed to a recent increase in capital spending and acquisitions. How Western Gas’s debt compares Western Gas […]

EnLink Midstream Partners (ENLK) and its GP (general partner), EnLink Midstream (ENLC), are scheduled to release their 2Q17 earnings on August 1, 2017.

Western Gas Partners (WES) rose above its 50-day moving average as a result of its recent rally, which might indicate a bullish sentiment in the stock.

Wall Street analysts’ 2Q17 consensus EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate for WES is $258.1 million.

Short interest in DCP Midstream was ~5.6 million shares on June 27, 2017. At the same time, its short interest as a percentage of float ratio was 3.8%, the highest among its selected peers.

In this series, we’ll perform a comparative analysis of four MLPs’ general partners: Energy Transfer Equity, Plains GP Holdings, Western Gas Equity Partners, and EnLink Midstream LLC.

On Wednesday, April 12, 2017, NuStar Energy (NS) announced that it will acquire Permian-focused Navigator Energy Services for ~$1.5 billion.

MLPs had a good start to 2017 in terms of M&A activity. The sector saw deals amounting to $27.6 billion in the first two months of the year.

According to the recent rigs report published by Baker Hughes (BHI), the region’s rig count had risen to 41 as of March 10, 2017, compared to its all-time low of 21 in August 2016.

US drilling activity in February 2017 US drilling activity stayed strong in major shale plays in February 2017, driven by the slight recovery in commodity prices and the decline in drilling costs with the usage of efficient drilling methods. According to recent Baker Hughes (BKI) rig data, the US rig count rose for the seventh […]

Anadarko’s 2017 capex plan On March 7, 2016, Anadarko Petroleum (APC) announced its 2017 capex program and guidance. The 2017 capital expenditure budget is $4.5 billion–$4.6 billion, a ~40% increase from its capex of $3.3 billion in 2016.  The $2.8 billion reported above does not include its $491 million of capital spending in Western Gas Partners […]

Short interest in Western Gas Partners (WES) as a percentage of float ratio has fallen to 1.5%. The ratio is lower than the 2016 average of 2.9%.

Western Gas Partners (WES) and its general partner, Western Gas Equity Partners (WGP), are set to release their 4Q16 earnings on February 22, 2017.

ENLK expects central Oklahoma region to become its largest operating region by the end of 2017.

EnLink Midstream Partners (ENLK) is expected to keep its quarterly distribution flat at $0.39 per unit for all of 2017.

Short interest in Western Gas Partners (WES) as a percentage of float has fallen to 1.2%—lower than its 2016 average of 2.9%.

Western Gas Partners (WES) has an enterprise value of $12.3 billion—the highest among select peers, topped only by EQT Midstream Partners (EQM).

Western Gas Partners’ (WES) growth capital spending started to decline at the beginning of the rout in energy prices.

Anadarko Petroleum, Western Gas Partners’ sponsor, recently announced the sale of its Eagle Ford assets to Houston-based Sanchez Energy for $2.3 billion.

DCP Midstream Partners’s (DPM) simplification received a negative reaction from investors. DPM fell 4.3% in two trading sessions following the announcement.

TC PipeLines stock mostly traded above its 200-day moving average since April 2016. The stock fell below the 200-day average in November and December.

On a broad level, 50.0% of analysts rate Summit Midstream Partners a “buy,” 42.0% rate it a “hold,” and the remaining 8.0% rate it a “sell.”

EnLink Midstream Partners (ENLK) has risen 11.0% year-to-date. In this series, we’ll analyze ENLK’s balance position, cash flow measures, operating results, and analyst projections.

On December 21, 2016, Anadarko Petroleum announced that it had agreed to sell a portion of its Marcellus natural gas (UGAZ) assets for ~$1.2 billion.

MLPs generally have an LP-GP (limited partner and general partner) model structure in which the LP is a publicly traded entity and owns the majority of the operating assets.

Enable Midstream Partners (ENBL) ended 3Q16 with a total outstanding debt of $3.1 billion, which is $442.0 million higher than at the end of 2015.

Natural Gas Services DCP Midstream Partners’ (DPM) Natural Gas Services segment mainly provides natural gas gathering, processing, compression, and transportation services. Natural Gas Services is DPM’s largest business segment. It alone accounted for 63.8% of DPM’s 2Q16 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization). The segment’s 3Q16 earnings could be negatively impacted by […]

Western Gas Partners recently announced a new long-term gas-gathering agreement with SWEPI LP, a subsidiary of Royal Dutch Shell, in the Delaware Basin.

Western Gas Partners’ (WES) natural gas volumes stood at 3.9 Bcfpd (billion cubic feet per day) in 3Q16, compared to $4.40 Bcfpd in 2Q15, a year-over-year fall of 12.0%.

Western Gas Partners (WES) has the highest enterprise value among its select peers, at $10.4 billion. WES is followed by EQT Midstream Partners (EQM).

APC and other upstream producers are benefiting from declining DC&E (drilling, completion, & exploration) costs in the Delaware Basin. This scenario indirectly benefits WES.

Western Gas Partners’ (WES) distributable cash flow for 2Q16 was $199.3 million compared to $211.7 million in the second quarter of 2015, a YoY fall of 5.9%.

The YoY decline in WES’s natural gas volumes is due to lower drilling activity in some regions, including Eagle Ford and Marcellus.

Midcoast Energy Partners’s (MEP) forward distribution yield at 11.7% is higher compared to its peer average of 6.4%.

Midcoast Energy Partners (MEP) has generated total returns, including dividends, of 8.5% so far in 2016. Analysts’ median target price for MEP for the next year is $8, and all of the analysts surveyed rated MEP a “hold.”

EnLink Midstream Partners (ENLK) has the second-highest enterprise value of $10.4 billion among selected peers.

DPM’s Natural Gas Services segment mainly provides natural gas gathering, processing, compression, and transportation services.

DCP Midstream Partners (DPM) ended 2Q16 with a total outstanding debt of $2.4 billion, which is 1.9% lower than its debt in the previous quarter.