How About A Little Miracle Grow On Your Hedge


DAPL was in the news again this week as the fight between federal regulators, Indian tribes, environmentalists and Energy Transfer heats up over the partially constructed pipeline. The ruckus seems to have cast a little bit of a shadow on ETP with the stock price falling ~10% in the last week. However, ETP might be getting a little bit of a dirty hedge from some potential growth on the other side of their business? According to East Daley models, the average number of rigs operating on ETP assets in the Permian is back up near 1Q2016 levels (graph on the right) and could grow more in 4Q2016. That, of course, has also pushed well counts up, which are likely to end the quarter around 130. That is an increase of around 43 wells over last quarter. Accounting for each wells first month of production, at an average IP rate of 1,050 Mcf/d, the bump in drilling will add over 45 MMcf/d of gas inlet volumes through ETP’s Permian systems. Additionally, growth in the Permian is amplified given volumes then feed ETP’s Lone Star Pipeline and Lone Star Fractionators. New company level financial models will be updated by October 15 but expect to see higher throughput and revenue expectations from their Permian driven assets.

About The Author Justin Carlson

I have over 10 years of experience in data analysis, research, and consulting across the energy sector. I currently serve as Vice President of Research and Managing Director at East Daley Capital, an energy assets research firm that is changing how investors look at midstream energy risk with an asset-driven information service that combines proprietary research with a trusted team of unbiased, experienced energy analysts. My insights and analysis bring greater transparency to the energy financial market by quantifying potential risks by asset and enabling investors to make more informed and accurate projections and investments. Prior to joining East Daley Capital, I was a senior manager at Platts, a division of McGraw Hill Financial, which acquired Bentek Energy, where I was a senior member of the leadership team.