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Midstream's 'Utility' as Yield, Inflation Shield

Released on Tuesday, March 21, 2023ENERGY
Improved balance sheets, disciplined spending, and free-cash-flow generation should support incremental distribution growth of North American midstream companies in 2023. A small increase in throughput and low-single-digit 2023 Ebitda expansion will likely be aided by tariff hikes and moderate E&P production gains that are restricted by pipeline constraints. The sector is likely better equipped to contend with inflation than many other industries as real assets, index-linked contracts, and above-average distribution yields mitigate inflation and damage returns. Still, limited long-term organic growth opportunities in a challenging regulatory environment suggest M&A will persist.

Talon Custer
Bloomberg Intelligence, Energy Research Analyst

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