S&P Global – Midstream Energy Credit Outlook, 2024

This report by S&P Global's Midstream Energy Credit Outlook for 2024 highlights several key points. The first is the challenges and opportunities facing Canadian midstream companies, which have faced pressure on their credit metrics due to project cost overruns and a large acquisition. The improvement of their credit situation can serve as an example for the broader industry. Another area of focus is the need for new pipeline infrastructure in the U.S. Gulf Coast to support liquid natural gas projects and the growing supply of natural gas liquids from West Texas. The report also discusses the continued trend of mergers and acquisitions in the industry, as well as asset rationalization. Small tuck-in acquisitions and asset divestitures will be used by companies to position themselves for future growth and opportunities in the energy transition. Key assumptions for 2024 include higher spending on infrastructure in the Permian region to support growth, as well as a focus on financial discipline and building free cash flow. Shareholder returns are also expected to be a priority, with companies using excess free cash flow to reward shareholders. The report also identifies key risks to the industry, including lower demand for hydrocarbons, which could impact volumes for midstream companies. Additionally, the availability of capital in the capital markets and from banks for refinancing debt is seen as a potential risk. Increased regulation and the growth of renewables could pose challenges for new pipeline projects and emissions reduction efforts.