- While midstream equity performance remains stubbornly tied to concerns of partnership simplification, distribution stability and more recently the fallout from FERCs mid-March ruling, the U.S. energy industry is quietly posting some very important milestones.
- Per the Department of Energy, weekly crude oil export volumes achieved an all-time high of 2.175 million barrels per day in the final week of March. Similarly, U.S. natural gas pipeline flows in March indicated LNG exports touched 3.8 billion cubic feet per day, another all time high.
- For midstream companies providing the necessary transportation capacity linking sources of supply with points of export, export volume expansion continues to be an important tailwind to midstream company operating and financial results.
- Widening demand from foreign consumers recognizing the attractiveness of abundant, low cost, reliable U.S. energy resource has always been a central theme in our investment process, with origins in the Pickens Plan laid out in 2008.
- For us, evidence of increasing U.S. energy exports continues to provide encouraging signs of midstream sector growth potential, underpinning our enthusiasm for a sector that continues to trade at a material discount to historical trading multiples. The Alerian MLP Infrastructure Index is currently at 9.8x vs 11.8x, on a 10 year historical EV to Forward 12 month EBITDA multiple basis.
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Information related to the Pickens Plan can be found at http://pickensplan.com.