Alerian's 2019 midstream outlook

By Luke Geiver | December 20, 2018

Investment opportunities for midstream entities look strong in 2019 thanks to record oil and gas production, according to Alerian, an energy infrastructure and Master Limited Partnership market intelligence firm.

Stacey Morris, director of research at Alerian, provided a breakdown on her 2019 outlook.  

2019 Key Points:

  • Strong fundamentals: Robust production growth anticipated for US oil and dry natural gas in 2019—benefits midstream as volume-driven businesses.
  • MLP consolidations reaching late innings: Helps alleviate uncertainty and removes some distraction for the space.
  • Potential Catalysts: Oil price improvement; generalists or new investors entering the space; MLP unit buybacks (likely limited); Major private equity transactions 
  • Tailwinds: Conclusion of restructurings; Positive momentum from strong 2Q18 and 3Q18 results; Solid EBITDA guidance for 2019; Space becoming more investable (IDR eliminations, self-funding equity, distributions stabilizing)
  • Headwinds: Oil price weakness; Underinvestment in energy


Bottom Line:

  • Fundamentals for midstream remain strong. Several companies are guiding to significant EBITDA growth in 2019. The MLP and midstream space is becoming more investable.