Pipeline Shares Sink on Oil Decline, Coronavirus Impact

摘要

It's a common refrain among investors that "a rising tide lifts all boats," meaning the share prices of similar companies tend to act in unison. Unfortunately, that's equally true of falling tides, as demonstrated by the performance of North American midstream equities in recent weeks. The impact has been felt by midstream service companies and interstate pipeline operators alike, as well as those involved in LNG production and export. The responses have ranged from the expected reductions in capital spending and debt restructuring to legal maneuvers designed to protect companies from takeover while their prices are depressed. Calgary-based pipeline operator Pembina Pipeline notably announced that it is cutting nearly $700 million, or 43%, from a 2020 budget originally set at more than $1.5 billion. Five others cut a combined $1.2 billion from their capital expenditure (Capex) budgets, according to a research note from investment banking firm Simmons Energy, including Noble Midstream, Rattler Midstream, Targa Resources, EnLink Midstream and Tulsa's ONEOK. That figure represents an average reduction of 30% in planned Capex for new pipeline and storage projects, Simmons said.