What’s the most important lesson that investors should draw from energy companies’ Q3 earnings and updated guidance?
RC: In the midstream business, companies’ results are being affected very differently by the cutback in drilling rig deployment. Investors are treating sector companies almost as though the blow will fall equally hard on all of them. And MLPs especially can’t catch a break, almost no matter what they report.
But the truth is there were very wide differences in the trends behind numbers reported by midstream companies in Q3. And that gap is likely to widen going forward.
On the positive side, we’re seeing Portfolio companies generate up to twice as much operating cash flow and they dish out in distributions. That’s enabling them to finance most or all capital spending without issuing equity or even debt in some cases.
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In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Aug. 31, 2021
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