美国天然气与mlps2018年q3预览

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1、COREU.S.MLPs/U.S.DiversifiedNaturalGas3Q18Preview:Frac-a-lackin’INDUSTRYUPDATEEquityResearch12October2018Fracislacking:Weestimateweneedanother~600kbpdoffractionationby2H20andover1mmbpdby2023inordertohitatargeted~80-85%utilizationrate,whichisU.S.Diversifie

2、dNaturalGasNEUTRALUnchangedwhereweestimateweneedtobeunderagrowingproductionbackdropinorderfortheshort-termfracrate(currentlyat~$0.30-$0.50/gallon)toconvergetothelong-termfracrateof~$0.05/gallon.Themathindicateswearecurrentlyabout~95%utilized;however,wethinkt

3、henumbersdon’treflecttwonuances–1)theethanetowersofthefracsarelikelyunderutilizedduetoincreasedethanerejectionoccurringtomakeroomfortheheaviercomponentsinthepipelines,and2)Mid-Continentfractionationfacilitiesthatmaynotberunningfullduetopuritypipelinetakeaway

4、constraints.Tryingtofigureoutwhoislongfraccapacityandwhoneedsfraccapacity:Ofthecompaniesunderourcoverage,weestimatethatTRGPandEPDhavemorethansufficienttofracthevolumescomingoutoftheirownprocessingplants.Theexcesscapacitytheyhavecaneitherbetermedoutunderlong-

5、termcontracts,optimizedbytheirmarketingaffiliates,orofferedoutundershort-termcontracts.WethinkDCPisbalancedwhileENLKandOKElikelyneedsomeadditionalthird-partyfractionationtoaccommodategrowingvolumesbetweennowandwhentheirrespectivefracfacilitiescomeonline.More

6、opaqueisthepositioningofproducers.Assomeproducerstaketheirvolumesinkindoutofthebackendofaprocessingplant,eachplayerwouldlikelyberesponsibleforsigningupforitsownfractionationneedswiththirdparties.Someshort-termreprievebutmarketlikelytostayconstraineduntil‘20:

7、WethinkthecropdryingseasonandtheupcomingwintermaypullsomebarrelsfromConway,whichshouldallowtheMid-Contfractionationfacilitiestorunatslightlyhigherutilizationsasthesevolumeswouldbegoingnorthandnotsouth,wherethepipelinesareconstrained.SterlingIIIwillbeexpanded

8、~60kbpdbyYE,whichwillbringmorey-gradeintoamarketwherefracisalreadytight.Theadditionof240kbpdoffracin1H19shouldoffersometemporaryrelief,butthemarketwilllikelybechallengeduntil1H20whenArbuckleIIco