MLP/Midstream Guidance Updates: Some Stand Firm, Others Cut with a Focus on Flexibility

04/13/20 | Michael Laitkep

Amid ongoing market volatility and the long wait for first quarter earnings, some companies continue to proactively release updates to provide further clarity on financial expectations for 2020. Today’s piece summarizes company guidance updates since March 19 in a concise table, which you can find below. For company updates from prior to March 19, please see our previous research note.

In recent weeks, a few companies have notably reaffirmed past guidance. Magellan Midstream Partners (MMP) held a virtual analyst day on March 26 and maintained its 2020 distribution growth guidance of 3% and its expected growth capex of $400 million (read more). In an update with investors, Williams (WMB) reiterated its 2020 EBITDA and growth capex expectations but noted that both are trending toward the lower end of guidance. The company also maintained its expectation that it will be free cash flow positive in 2020.

In contrast, several companies have announced dividend cuts, reduced capital expenditures, or done both in the past few weeks. Three companies – Noble Midstream Partners (NBLX), Genesis Energy (GEL), and Inter Pipeline (IPL) – cut their dividends by 70% or more. Four additional names – DCP Midstream (DCP), EnLink Midstream (ENLC), Enable Midstream Partners (ENBL), and Plains All American Pipeline (PAA) – reduced their distributions by 50%. Most of the companies cited strengthening their balance sheets as the primary use for retained cash from dividend cuts (read more). A handful of companies also announced lower capital spending plans for 2020. DCP reduced its capex guidance for 2020 by 75% to $150 million at the midpoint in the largest announced revision, and ENBL said it would cut its spending by 38% this year. In addition, PAA announced it would reduce its combined capital spending by $750 million or 33% for 2020 and 2021. The combination of dividend cuts and lower capex spending in 2020 will provide additional financial flexibility for midstream companies amid ongoing macro volatility. In this environment, it is difficult to find fault with conservative financial management. As we wait for additional clarity from 1Q earnings calls in the coming weeks, interim company updates have been helpful for investors looking for answers in a noisy environment.

Links to Company Materials:

DCP Midstream (DCP)
EnLink Midstream (ENLC)
Antero Midstream (AM)
Phillips 66 Partners (PSXP)
Noble Midstream Partners (NBLX)
Williams (WMB)
Magellan Midstream Partners (MMP)
Genesis Energy (GEL)
Inter Pipeline (IPL)
Enable Midstream Partners (ENBL)
Shell Midstream Partners (SHLX)
Macquarie Infrastructure (MIC)
Plains All American Pipeline (PAA)