Middle East flare ups around Saudi refineries and key shipping routes have pushed oil back into the spotlight, and attention is swinging to the companies that move the fuel rather than just those that find it. When flows are at risk, pipes and storage matter. That is where US midstream pipeline operators come in as a potential way to play this trend. This article breaks down three that merit a closer look.
The three stocks covered below are just a sample set, and the full screen surfaced 19 more US midstream oil and gas pipeline operators with equally compelling stories that are not featured in this article. To go straight to the source and identify, filter, and analyze your own highest conviction midstream pipeline ideas, head into the US Midstream Oil and Gas Pipeline Operators screener .
DT Midstream (DTM)
DT Midstream plugs directly into the screener theme because its long-haul gas pipelines and storage assets are the infrastructure that moves molecules from production regions to LNG facilities and power plants when policy aims to accelerate new energy projects.
DT Midstream generates most of its revenue from its Pipeline segment, which brings in about $710 million, with a further $613 million from Gathering activities in the US, and the business carries a market value of roughly $12.7b.
"Increasing regulatory support and constructive processes for brownfield expansions are visible in looping and compression based projects such as Guardian G3+, Midwestern MIST, NEXUS and modernization programs on Viking and Midwestern. These are expected to flow through future rate cases and can lift regulated revenue and EBITDA as the enlarged $3.4b backlog enters service."
What happens to DT Midstream's earnings power if a single assumption about how that project backlog converts into contracted volumes breaks?
If that question is on your mind, read the full narrative for DT Midstream to see how contract risk, project timing and balance sheet strength all interact.
Antero Midstream (AM)
Antero Midstream gives you direct exposure to the Appalachian build out theme, with gathering pipes, processing plants and water infrastructure tied to higher permitted volumes as policy speeds up midstream projects.
Antero Midstream Corporation owns gas gathering pipelines, processing and water handling assets across the Appalachian Basin that move and treat volumes for Antero Resources under long term fees, and the business carries a market value of about US$9.8b.
"Rising in basin natural gas demand from new West Virginia gas fired power plants and data centers is expected to increase throughput on Antero Midstream's gathering and intrastate pipeline system over time, which can support higher fee based revenue."
What happens to Antero Midstream's cash flow profile if a single assumption about how that new demand uses its expanded system shifts?
That hinges on how those throughput assumptions flex under real world stress tests, so read the full narrative for Antero Midstream to see how capacity, contracts and cash flows could really interact.
PBF Energy (PBF)
PBF Energy is mainly a refiner supplying gasoline, diesel and jet fuel across North America, with its smaller Logistics arm providing the pipeline transportation and storage services that link it to this midstream theme. The group is valued at about US$8.7b on the market.
"Pipelines and storage facilities will be critical to moving larger volumes of oil and gas efficiently, especially with the renewed emphasis on LNG exports to meet global demand."
For PBF Energy, what happens if a single assumption about how tight fuel markets support refinery runs and logistics throughput no longer holds?
If you want to see how that refinery and logistics exposure could be accelerating or stalling the bigger thesis, read the full narrative for PBF Energy for what the market might be missing.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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