One of the most important features of the US shale oil and gas revolution has been the rolling wave of oversupply that has moved through the energy value chain, creating market imbalances and distorting long-standing price relationships between various hydrocarbons.
Over the past several years, oil and gas companies’ overzealous production of natural gas and natural gas liquids has restored the fortunes of domestic petrochemical producers, an energy-intensive industry that relies on these commodities to generate power and as feedstock.
Within this space, olefin producers have benefited the most thus far, thanks to extraordinarily low feedstock prices. But the multiyear boom in profit margins for US polyethylene producers appears to be winding down, with the baton of profitability likely to move further downstream.
The divergent performance between Noble Midstream Partners LP and Hess Midstream Partners LP since their initial public offerings demonstrates what investors value in an environment where energy prices remain lower for longer.
Break-even rates continue to fall across the board in US shale plays, but the efficiency gains that come from exploiting multiple oil-bearing formations with the same infrastructure give the Permian Basin an edge in the battle for market share.
Over the past 12 months, the difference between the top and bottom performers in the Alerian MLP Infrastructure Index amounted to about 60 percentage points. Capturing this upside requires on-the-ground intelligence, which is why we attend the MLPA Association's annual investor conference every year.
Expansions to the Gulf Coast refinery complex will translate into higher ethane demand in the US, creating opportunities for short-term trades and longer-term wealth building.
Enterprise Products Partners LP's acquisition of Azure Midstream Partners LP's gas-gathering and -processing assets marked the latest in a series of deals involving assets in the resurgent Haynesville Shale and the emerging Cotton Valley play. We explore what it all means and whether it's worth placing a bet.
We review our investment strategy and second-quarter results from the names on our Focus List.
With the ethylene and polyethylene up-cycle winding down, investors should shift their attention further down the petrochemical value chain.
Technical factors suggest that energy stocks could fare better in the back of the year.
Stepped-up drilling activity and declining break-even costs, coupled with weather-adjusted inventory trends, suggest that natural-gas prices will struggle to remain above $3 per million British thermal units for a prolonged period.
After OPEC and other oil-producing countries announced an "historic" production cut in fall 2016, our out-of-consensus outlook called for the recovery in US oil output to surprise to the upside and drag prices lower. This forecast has played out thus far and has become the consensus view. We lean against the crowd once more and explain why oil prices could recover to $50 per barrel or more later this year.
Elliott and Roger on Jul. 27, 2017
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