Is Crestwood Equity Partners a Sinking Ship?
Crestwood Equity’s throughput volumes
The earnings of midstream companies, including the larger ones such as Enterprise Product Partners (EPD) and Plains All American Pipelines (PAA), as well as smaller ones like Antero Midstream Partners (AM) and Crestwood Equity Partners (CEQP), are mainly dependent on volumes of gas or oil gathered, compressed, transported, or stored. They don’t have much exposure to fluctuation in commodity prices. Together, EPD and PAA form 6.4% of the Global X MLP & Energy Infrastructure ETF (MLPX).
However, they are indirectly exposed to commodity prices through production levels. As crude oil and natural gas prices fall, upstream producers might cut their production, which might result in lower throughput volumes and lower earnings for these MLPs. Crestwood Equity Partners’ earnings were negatively impacted by declining throughput volumes at some of its major midstream assets.
Overall, the partnership’s gathering throughput volumes fell to 1087.1 MMcf/d (million cubic feet per day) in 3Q15 from 1301.2 MMcf/d, a YoY (year-over-year) change of 16.5%. Similarly, the partnership’s compression volumes fell by 8.8% YoY.
SW Marcellus gathering and compression
CEQP’s Southwest Marcellus gathering and compression volumes fell by 19% YoY and 8.8% YoY, respectively, due to the “downstream pipeline and processing plant curtailments.” However, the company expects that “Completion of 22 DUCs will improve volumes in 2016.”
NE Marcellus storage & transportation
The partnership’s Northeast Marcellus Storage & Transportation throughput volumes declined 11.1% YoY due to decline in both storage and transportation volumes. However, CEQP secured two anchor shippers for 120 MMcf/d of transportation capacity along the Marc 1 pipeline.
Barnett gathering and processing
CEQP’s Barnett gathering volumes declined by 24.1% YoY. “The decrease was due to natural production decline and shut-ins following Quicksilver Resources’ March 2015 bankruptcy proceedings.”
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