While the midstream energy sector is less vulnerable to fluctuations in oil and gas prices, the outlook for the Zacks Oil and Gas – Production and Pipelines industry remains uncertain. Reduced capital spending by upstream companies and weak global oil demand could negatively impact the utilization of midstream assets held by companies.
Despite the challenges, pipeline players are in a stronger position than upstream and downstream firms, as they benefit from steady, fee-based income through long-term contracts with shippers. Leading companies in the sector include Enbridge Inc. ENB, Kinder Morgan, Inc. KMI, The Williams Companies Inc. WMB and MPLX LP MPLX.
About the Industry
The Zacks Oil and Gas – Production and Pipelines industry comprises companies that own and operate midstream energy infrastructure assets. The properties consist of extensive pipeline networks that transport crude oil, liquids and natural gas. The midstream energy players are also involved in the processing and storing of natural gas. The companies have interests in natural gas distribution utilities, serving millions of retail customers across North America. Some companies are ramping up investments in renewable energy and power transmission businesses. The firms invested in wind farms, solar energy operations, geothermal projects and hydroelectric facilities. Thus, with a diversified portfolio of renewable energy projects, the firms have room to generate extra cash flows in addition to stable fee-based revenues from transportation assets.
Source: finance.yahoo.com