Entries by Simon Lack

Natural Gas Is November’s Winner

Citibank published some interesting research recently, making the case for higher natural gas prices in the months ahead. Oil production in the U.S. has fallen sharply as a result of Covid. Gasoline demand has recovered from its low point in April, but remains about 9% below normal. Natural gas demand has shown much less impact, […]

Pipeline Earnings Provide A Boost

Investors often ask, what will it take to get pipeline stocks moving upwards? Attractive valuations and the prospect of higher cashflows are compelling, but when will investors start acting? They may already being doing so. Kinder Morgan kicked off earnings after the close on July 23rd. Since then, results for the sector have generally come […]

Williams Has Covid Immunity

Pipeline company earnings continue to provide reassurance about their ability to grow cash flows (see Pipeline Cash Flows Will Still Double This Year). Yesterday’s earnings call with Williams Companies (WMB) was an example.   WMB’s 2Q adjusted EBITDA came in at $1,240MM, $48MM ahead of expectations. For the full year they are guiding conservatively to […]

The Biggest Pipeline Companies Are Doing Well

Last week Enbridge (ENB) and Enterprise Products (EPD), North America’s two biggest pipeline companies, were among those reporting earnings. Both beat expectations – ENB reported 2Q EBITDA of $3,312MM versus $3,155MM, helped by strong results in natural gas transmission. EPD came in at $1,961MM versus $1,877MM, boosted by strength in crude oil. Dividend yields of […]

Lower Spending Cheers Pipeline Investors

In February, following our criticism of Kinder Morgan’s (KMI) return on invested capital (see Kinder Morgan’s Slick Numeracy) the company, to their credit, reached out to us so as to better present their perspective. Our point was that capital allocation decisions in recent years had not always been accretive to equity. We offered the company […]

Pipelines Are Becoming Less Risky

Before the Shale Revolution, midstream energy infrastructure was a boringly stable sector. MLPs, which predominated versus corporations back then, paid out most of the cash they generated and grew distributions through price escalators and improved operating efficiencies. Volatility was low, and attractive yields drew income-seeking investors. This happy marriage started to fall apart in 2015, […]

Covid By The Numbers

The recent news on Covid-19 has been mostly bad. Infections are increasing sharply in sunbelt states, where Florida now holds the record for two worst days’ new infections – 15,300 and 13,965, both reached last week. Reopening plans are being halted. Even the Republican convention scheduled for late August, which was moved from Charlotte, NC […]

Installed Pipelines Are Worth More

Sunday’s blog (see Pipeline Opponents Help Free Cash Flow) drew some interesting feedback. It seems odd to favor constrained growth opportunities, and it’s contrary to how most management teams will assess their outlook. But for many pipeline investors, including your blogger, the pre-Shale years of steady returns were what made the sector attractive. Anti-fossil fuel […]

The Stock Market’s Heartless Optimism

Last week in our local paper, the Obituaries section ran to three pages. 17 people were listed. 14 of them were over 80, and three were in their 60s. The steady drumbeat of death, economic destruction and lockdown is why the stock market looks as if it’s divorced from reality. The S&P500 is only down […]

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