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In this piece, we will take a look at the 15 biggest midstream companies heading into 2023. If you want to skip our introduction to the industry and jump ahead to the top five stocks in this list, then take a look at 5 Biggest Midstream Companies Heading Into 2023.
The oil and gas industry has been the star performer in the stock markets this year, as the energy crisis ushered in by the Russian war in Ukraine drove investors to a sector that only recently was placed right at the heart of climate change. Populations in developing and developed nations alike suffered from high gasoline prices since the global oil market faced a demand imbalance in the wake of increased demand for non-Russian oil.
Now, the consensus is that there is an underinvestment in oil exploration, and this give and take between high costs and investment in energy exploration was summarized perfectly by hedge fund boss and billionaire Mr. Ken Fisher in an interview he gave in June 2022. Taking stock of the current situation, Mr. Fisher outlined:
. . .Rising prices do have a negative impact on the desire to consume and GDP are real, but I want to point out that there's counterbalances to all these features and these are ones that people don't think about at a time like this. Rising energy prices inherently create a greater desire on a global basis to invest in energy, in the ground, or other ways. And there's a fairly long history that shows that that's a tight correlation. And what that does is that it buoys the economy. The fundamental feature is that partly, when the price of energy is up, people choose to do maybe something that they wouldn't do otherwise, maybe drive a little less, maybe do something else. But in doing that they're also still spending money. To the extent they suffer the consequences of the price of energy, the counterbalance is that somebody, somewhere is investing in creating more energy, and that's helping somebody.
Today's list focuses on the midstream oil and gas sector, and these firms primarily serve as the link between the oil producers and the end consumer. The midstream equipment segment was worth $28 billion in 2020, and it will grow at a compounded annual growth rate (CAGR) of 6.36% to sit at $44.5 billion by 2027. The top firms on our list are Enterprise Products Partners L.P. (NYSE:EPD), Enbridge Inc. (NYSE:ENB), and TC Energy Corporation (NYSE:TRP).
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Our Methodology
We studied the midstream market in detail and identified the top players. These were then ranked through their market capitalization.
15 Biggest Midstream Companies Heading into 2023
15. Hess Midstream LP (NYSE:HESM)
Market Capitalization as of November 12, 2022: $6.9 billion
Hess Midstream LP (NYSE:HESM) gathers, stores, and processes oil and natural gas. The company has access to thousands of miles of gas and oil pipelines, which can process roughly 450 million cubic feet of natural gas and natural gas liquids per day. It is headquartered in Houston, Texas, the United States.
Hess Midstream LP (NYSE:HESM) has produced strong operating cash flow growth over the past three years. Between 2020 and 2021, its cash flows grew by a strong 24% annually, a remarkable achievement for a capitally intensive company. During the first half of this year, Hess Midstream LP (NYSE:HESM) reported another $404 million in operating cash flows, which continued to grow, at a rate that naturally slowed down due to the previously high readings.
Hess Midstream LP (NYSE:HESM) pays a 56 cent dividend for a 7.79% yield and its shares are up 3.51% year to date. The firm's latest market capitalization is $6.9 billion.
Hess Midstream LP (NYSE:HESM)'s largest investor in our database is Schonfeld Strategic Advisors which owns 355,700 shares that are worth $9.9 million.
Enbridge Inc. (NYSE:ENB), Enterprise Products Partners L.P. (NYSE:EPD), and TC Energy Corporation (NYSE:TRP) are met by Hess Midstream LP (NYSE:HESM) in our list of the world's largest midstream oil and gas companies
14. DCP Midstream, LP (NYSE:DCP)
Market Capitalization as of November 12, 2022: $8 billion
DCP Midstream, LP (NYSE:DCP) is an American company that operates midstream oil and gas assets such as gas processing plants. The firm is headquartered in Denver, Colorado.
DCP Midstream, LP (NYSE:DCP) posted a strong fiscal third quarter, which revealed that it had grown its revenues by a whopping 52% annually and turned a $6 million operating loss in the previous quarter to $247 million in operating profit. During that time period, the firm transported 731,000 barrels of natural gas liquids daily, and its distributable cash flow jumped by 29.6% annually.
DCP Midstream, LP (NYSE:DCP) pays a 43 cent dividend for a 4.44% yield. After its shares dipped in June, they have reversed all their losses and are now up 35% year to date.
DCP Midstream, LP (NYSE:DCP)'s largest investor is Ken Griffin's Citadel Investment Group which owns 55,773 shares that are worth $1.6 million.
13. Plains All American Pipeline, L.P. (NASDAQ:PAA)
Market Capitalization as of November 12, 2022: $8.6 billion
Plains All American Pipeline, L.P. (NASDAQ:PAA) gathers, transports, and stores both oil and natural gas liquids. The firm has thousands of miles of pipelines, and it can store more than a hundred million barrels of crude oil. Plains All American Pipeline, L.P. (NASDAQ:PAA) is headquartered in Houston, Texas, the United States.
Plains All American Pipeline, L.P. (NASDAQ:PAA) has been having a good year so far, and the firm's latest quarter saw it raise its operating income guidance by another 3.2%. This managed to push the guidance up by 11% since the firm had first provided it at the start of the year. The firm also transported a whopping 11.3 million barrels of oil per day during the third quarter.
Plains All American Pipeline, L.P. (NASDAQ:PAA) has an $8.6 billion market capitalization and it pays a 22 cent dividend for a 7.06% yield.
Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital is Plains All American Pipeline, L.P. (NASDAQ:PAA)'s largest investor. It owns 1.6 million shares that are worth $16 million.
12. Magellan Midstream Partners, L.P. (NYSE:MMP)
Market Capitalization as of November 12, 2022: $10.86 billion
Magellan Midstream Partners, L.P. (NYSE:MMP) transports a wide variety of fuels such as diesel, kerosene, heating oil, aviation fuel, and gasoline to a host of different customers such as retailers and wholesalers.
Magellan Midstream Partners, L.P. (NYSE:MMP)'s shares have returned 10% year to date, a smack in the middle of a bear market. However, despite this, the firm is still trading at only roughly 10x of its cash flow, indicating that there might be some more growth left in the stock. This conjecture is boosted by its latest quarterly results, which saw the company grow revenue by 37%.
Magellan Midstream Partners, L.P. (NYSE:MMP)'s market capitalization is $10.86 billion.
Magellan Midstream Partners, L.P. (NYSE:MMP)'s largest investor is Jean-Marie Eveillard's First Eagle Investment Management which owns 1.5 million shares that are worth $74 million.
11. Western Midstream Partners, LP (NYSE:WES)
Market Capitalization as of November 12, 2022: $10.92 billion
Western Midstream Partners, LP (NYSE:WES) compresses, treats, processes, and transports natural gas, natural gas liquids, and crude oil. The firm is based in The Woodlands, Texas, the United States.
Western Midstream Partners, LP (NYSE:WES) has bought close to $447 million of its stock in the first three quarters of this year, indicating management confidence in the stock's future prospects. Firms generally only repurchase their shares if they believe that the stock is undervalued or when they want to satiate investors. Since Western Midstream Partners, LP (NYSE:WES) has performed well this year, the latter is unlikely.
Western Midstream Partners, LP (NYSE:WES) pays a 50 cent dividend for a 7.05% yield, and its shares are up 26% year to date. The firm has $10.92 billion in market capitalization.
Western Midstream Partners, LP (NYSE:WES)'s largest investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital which owns 1.2 million shares that are worth $29 million.
10. Targa Resources Corp. (NYSE:TRGP)
Market Capitalization as of November 12, 2022: $16.44 billion
Targa Resources Corp. (NYSE:TRGP) deals exclusively with natural gas liquids (NGLs) and NGL products. The firm stores and transports these to different end users. It is headquartered in Houston, Texas.
Targa Resources Corp. (NYSE:TRGP) mirrored the strong revenue growth trend in the midstream segment during its third quarter. Its fiscal results revealed that the company had grown its revenue by 20%. This growth came as Targa Resources Corp. (NYSE:TRGP) also increased its shipments by 19.9% annually to transport 499,500 barrels of NGLs per day.
Targa Resources Corp. (NYSE:TRGP) pays a 35 cent dividend for a 1.93% yield. It has a $16.44 billion market capitalization.
Stuart J. Zimmer's Zimmer Partners is Targa Resources Corp. (NYSE:TRGP)'s largest investor through a $185 million stake that comes via 3 million shares.
9. Pembina Pipeline Corporation (NYSE:PBA)
Market Capitalization as of November 12, 2022: $19.33 billion
Pembina Pipeline Corporation (NYSE:PBA) transmits heavy oils and other similar products. It also provides equipment to other companies for storing and fractionating fuels. It is headquartered in Calgary, Canada.
Pembina Pipeline Corporation (NYSE:PBA) handled a whopping 3.4 million barrels of oil equivalent per day in its third quarter, with the reading remaining relatively flat over the year. The firm also has a stable business model, since more than 80% of its contracts are fixed and long term in nature, with typical time periods ranging between five to ten years.
As of November 12, 2022, Pembina Pipeline Corporation (NYSE:PBA) had a $19.33 billion market capitalization.
Pembina Pipeline Corporation (NYSE:PBA)'s largest investor is Jim Simons' Renaissance Technologies which owns 631,212 shares that are worth $22 million.
8. ONEOK, Inc. (NYSE:OKE)
Market Capitalization as of November 12, 2022: $28.89 billion
ONEOK, Inc. (NYSE:OKE) is a natural gas midstream company. The firm gathers, stores, processes, and transports the fuel all over the U.S. It is based in Tulsa, Oklahoma.
ONEOK, Inc. (NYSE:OKE) has a strong dividend coverage ratio of 1.6x for this year and 1.8x for 2023, despite the fact that it is one of the smaller players in its industry. The firm's exclusive focus on natural gas and the fact that its contracts are tied to prices are slated to benefit it during the current environment that is seeing U.S. gas companies replace Russia as Europe's primary natural gas supplier.
Additionally, ONEOK, Inc. (NYSE:OKE) has a strong dividend yield of 5.78% through paying a 93 cent dividend, while the market values it at a whopping $28.89 billion.
ONEOK, Inc. (NYSE:OKE)'s largest investor is Ken Griffin's Citadel Investment Group which owns 682,050 shares that are worth $37 million.
7. MPLX LP (NYSE:MPLX)
Market Capitalization as of November 12, 2022: $34 billion
MPLX LP (NYSE:MPLX) stores and transports both natural gas and crude oil. The firm operates all over the globe and it is based in Findlay, Ohio.
MPLX LP (NYSE:MPLX) is expanding its pipeline infrastructure in the Permian basin area, which it currently serves through the Whistler pipeline that has a capacity of 2 billion cubic feet per day. The company is aiming to grow this to 2.5 million cubic feet, during a time when global interest in natural gas is at its highest in recent years.
MPLX LP (NYSE:MPLX) has a $34 billion market capitalization and it pays a 78 cent dividend for a strong 9.14% yield.
6. Energy Transfer LP (NYSE:ET)
Market Capitalization as of November 12, 2022: $37.67 billion
Energy Transfer LP (NYSE:ET) has more than 30,000 miles of natural gas and natural gas transportation pipelines under its wing. The firm operates in several different American states and cities, such as Texas, Pennsylvania, Oklahoma, and Ohio. It is headquartered in Dallas, Texas.
Energy Transfer LP (NYSE:ET) is the world's largest natural gas liquid exporter, as the company is responsible for supplying a stunning 20% of the global market. The ongoing boom in the energy market has also helped the company's balance sheet, as while its debt levels have stayed constant, the debt to operating income ratio is currently 3.96x, which is at the bottom end of its five year range.
Energy Transfer LP (NYSE:ET) pays a 27 cent dividend for a 8.69% yield. It has a $37.67 billion market capitalization.
Energy Transfer LP (NYSE:ET)'s largest investor is David Abrams' Abrams Capital Management which owns 22 million shares that are worth $220 million.
Energy Transfer LP (NYSE:ET) joins Enterprise Products Partners L.P. (NYSE:EPD), Enbridge Inc. (NYSE:ENB), and TC Energy Corporation (NYSE:TRP) in the list of some of the biggest midstream companies out there.
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Disclosure: None. 15 Biggest Midstream Companies Heading into 2023 is originally published on Insider Monkey.
