Citi initiates midstream coverage, sees resilience amid macro headwinds

EnLink Midstream LLC

09/12/2022 14:57

** Citi initiates midstream coverage on a positive note,
sees crude oil and natural gas volumes rising, thus befitting
volume-based midstream firms
    ** As midstream contracts often contain inflation escalators
to mitigate rising costs, the brokerage doesn't expect inflation
to be a major headwind
    ** Brokerage sees >10% average free-cash-flow yield, nearly
double the S&P500, and expects over 50% of that cash flow to
return to shareholders
    ** The overbuild of the last decade has allowed cos to grow
with brownfield expansions and avoid multi-year budget-busting
projects that typically top-ticked the market, says Citi
    ** Broker adds that recent turbulence in energy markets
demonstrate that owners of the critical infrastructure see
asymmetric gains in periods of tightness and volatility
 Company                                  PT
 The Williams Companies Inc  WMB.N        $36
 Kinder Morgan Inc  KMI.N                 $19
 Oneok Inc  OKE.N                         $67
 Magellan Midstream Partners  MMP.N       $56
 EnLink Midstream  ENLC.N                 $13
 Cheniere Energy Inc  LNG.A               $205
 Energy Transfer  ET.N                    $16
 MPLX LP  MLPX.N                          $33.50
 (Reporting by Arshreet Singh in Bengaluru)
 ((Arshreet.Singh@thomsonreuters.com))