Much the way that COVID-19 accelerated the trends toward working from anywhere, shopping online, and exercising at home, the pandemic and its far-reaching energy-market effects fast-forwarded the challenges that many North American midstream companies had been expecting to face more gradually through the 2020s. The good news — if you can call it that — is that a lot of economic pain was front-loaded into the past 10 months. The bad news is that a sizable subset of midstreamers is saddled with too much capacity in shale basins where drilling activity and production are down sharply. For them, there’s still more pain ahead, even bankruptcy in a few cases. In today’s blog, we discuss highlights from the newly released 2021 edition of East Daley Capital’s Dirty Little Secrets report about what’s ahead for the midstream sector and 27 leading companies within it.
2020 threw a gut punch to the midstream sector in the U.S. and Canada and forced a gut check at many midstream companies that saw their plans and expectations for the first half of the 2020s torn asunder. A year ago, before the coronavirus gained a foothold in North America, there was a general consensus among midstream executives that (1) the boom years for energy infrastructure development were beginning to wind down; (2) the midstream sector was entering an era of top-to-bottom reevaluation and rationalization; and (3) capacity was being overbuilt in some areas, most notably crude pipelines out of the Permian. All that remained true as COVID-19 took root and spread in March, April, and beyond, but all kinds of new, troublesome issues arose, many of them related to the fact that less crude oil and refined products were being produced and transported by pipeline.
Around the turn of each year, our friends at East Daley delve into the trends and developments they see affecting the broader midstream sector in the months ahead. They also assess how the ongoing evolution of the energy industry is likely to help or hurt a couple of dozen or so representative companies, as well as which midstreamers they believe will perform better or worse than consensus expectations.
We got the first glimpse at their findings last month, in the 2021 Midstream Guidance Outlook, which laid out three key themes:
To access the remainder of Down So Low - 2020's Upheavals Bring Midstreamers' Challenges to the Fore you must be logged as a RBN Backstage Pass™ subscriber.
Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at email@example.com or 888-613-8874.