$KNTK

Midstream M&A Gains Momentum as Permian, Power Demand Support Growth, RBC Says

Midstream mergers and acquisitions are accelerating as companies pursue scale and new volumes, while RBC's preferred picks offer growth tied to gas, power and Permian demand, RBC Capital Markets said in a Friday note.The Alerian Midstream Index gained 0.6% for the week ended Sep. 10, compared with a 2% decline for the S&P 500 as West Texas Intermediate crude rose about 12% to $102.48 per barrel.Year to date, the AMZ has advanced 25.5% versus a 10.9% rise for the S&P 500, outperforming utilities and real estate investment trusts by 2,473 and 1,305 basis points.The AMZ remains behind oilfield services and exploration and production stocks by 2,208 and 2,933 basis points, respectively, while Henry Hub natural gas declined about 3% to $2.83 per million British thermal units.Venture Global (VG) led RBC's coverage universe with a 7.0% weekly gain, helped by higher Dutch Title Transfer Facility prices, while Cheniere Energy (LNG) fell 4.5% after missing the latest S&P 500 rebalance.Master limited partnerships rose 0.4% over the week and outperformed C-corporations, which slipped 0.1%, while RBC estimates its coverage universe trades at 10.3 times 2027 estimated enterprise value to EBITDA.RBC said midstream deal activity has accelerated, citing ONEOK's (OKE) acquisition of Brazos Midstream's Permian Midland assets and renewed market attention on a potential Kinetik (KNTK) sale.RBC has long viewed Kinetik Holdings as an attractive acquisition target because of its Permian presence, natural gas liquids exposure and New Mexico sour-gas capabilities, which could add scale and near-term growth.Kinetik could benefit from stronger customer demand in New Mexico, including an expansion of its KL2 processing plant, which RBC expects to enter service in mid-2028.RBC also noted that external insurance capital could help finance acquisitions.The US Third Circuit Court of Appeals vacated a water-quality certificate for the Northeast Supply Enhancement project on technical and procedural grounds, sending the matter back to the New Jersey Department of Environmental Protection.Williams (WMB) does not expect the ruling to affect construction and continues to target an in-service date in the fourth quarter of 2027, while viewing the remand as a path to resolve the outstanding issues.RBC sees Kinetik well positioned for growth in the second half of 2026 and beyond as new Permian gas takeaway capacity comes online and producer interest rises across the Northern Delaware Basin.A May 2026 federal lease sale generated about $4 billion in bids, compared with the prior record of $972 million in 2018, underscoring the scale of producer interest in the Northern Delaware Basin.Kinetik Holdings has built its sour-gas handling system, giving it an advantage over new entrants because permits for acid-gas injection wells can take more than three years.RBC expects Kodiak Gas Services (KGS) to deliver about 16% annual adjusted EBITDA growth over five years, supported by Permian production, tight compression capacity and rising data-center power demand.RBC favors Targa Resources (TRGP), citing customer-backed growth projects that reduce capital-spending risk, expanded customer agreements and exposure to well-capitalized Permian producers. Rising gas-to-oil ratios could also support mid-single-digit gas growth.RBC also favors Williams, which it sees benefiting from rising power and natural gas demand through 2030 and beyond. The company targets more than 11% adjusted EBITDA growth through 2030.Midstream M&A Gains Momentum as Permian, Power Demand Support Growth, RBC Says

Midstream Operator Kinetik Reportedly Mulls Sale

Energy midstream provider Kinetik (KNTK) is exploring a potential sale of the company, although the process is still in the early stages and no final decision had been made, media outlets reported, citing people familiar with the matter.The sale procedure could begin within weeks, Bloomberg reported Thursday, adding that the company's market value stood at around $8.9 billion as of the morning of Sep. 10.The company has engaged advisers for the sale process, sources told Reuters Wednesday, but there is no guarantee that a deal will be finalized.Kinetik, which is partially owned by Blackstone (BX), is a pure-play midstream company that operates in the Permian's Delaware Basin. It has more than 4,600 miles of pipelines, as well as associated gathering, compression, and processing infrastructure, to bring natural gas, natural gas liquids, and crude oil to markets, according to its website.Kinetik and Blackstone did not immediately respond to' requests for comment.

Market Chatter: Blackstone-Backed Kinetik Explores Options Including Sale

Kinetik Holdings (KNTK), a pipeline company owned partly by Blackstone (BX), is in the preliminary stages of exploring options, including a potential sale, Bloomberg reported Wednesday, citing people familiar with the matter.Kinetik is in talks with advisers to prepare for a potential sale process that may occur within weeks, though the company might decide to remain independent, the report said.Kinetik and Blackstone did not immediately respond to requests for comment from.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Strong US Hydrocarbon Demand Lifts Midstream Profits, Supports Volume Growth, RBC Says

Strong global demand for US hydrocarbons is lifting midstream profits and supporting volume growth, RBC Capital Markets said in the midstream weekly on Friday.For the week ended July 30, the Alerian MLP Index fell 0.5% while the S&P 500 gained 0.4%, RBC said.Year to date, the AMZ has risen 21.6%, outperforming utilities by 1,614 basis points and real estate investment trusts by 155 bps, but trailing oilfield services by 1,036 bps and exploration and production companies by 1,689 bps.Front-month West Texas Intermediate crude fell 9% to about $83.50 a barrel, while Henry Hub natural gas declined 5% to $2.76 per million British thermal units.Sunoco (SUN) led weekly gains with a 1.9% advance, helped by potential refinery tailwinds, while Venture Global (VG) dropped 12.7% as weaker Dutch Title Transfer Facility gas prices weighed on sentiment, RBC said.Enterprise Products Partners (EPD) beat Q2 expectations after stronger global demand for US hydrocarbons generated about $200 million in benefits across natural gas liquids, crude oil and petrochemicals.EPD also raised growth capital spending by $700 million to add Permian processing plants and a natural gas liquids fractionator. RBC said the projects support long-term volume growth and bode well for Energy Transfer (ET), Targa Resources (TRGP) and Kinetik Holdings (KNTK).Looking ahead, RBC expects demand-driven volumes, commodity tailwinds and margin strength to remain common themes during the upcoming earnings season.RBC continues to favor Kinetik Holdings, citing new Permian gas takeaway capacity and growing opportunities in New Mexico's Delaware Basin.The firm noted the Bureau of Land Management's May 2026 lease sale generated about $4 billion in bids, surpassing the previous $972 million record set in 2018.RBC said KNTK's sour gas infrastructure provides a competitive advantage because new projects face permitting timelines of more than three years for acid gas injection wells.RBC also reaffirmed its positive view on Cheniere Energy (LNG), noting 95% of its contracted volumes extend through 2035. The firm said LNG can fund two additional brownfield expansion projects after Corpus Christi Midscale Trains 1-9 while maintaining a strong balance sheet.RBC said TRGP remains well positioned as customer-backed expansion projects reduce capital risk. The firm expects rising gas-to-oil ratios to support mid-to-high single-digit natural gas production growth even if crude production levels flatten.Williams (WMB) remains one of RBC's preferred names because of its exposure to growing power-related gas demand. The firm expects WMB to deliver more than 10% adjusted EBITDA compound annual growth through 2030, with sanctioned projects and Haynesville growth already contributing about 9%.RBC said Williams also has an attractive portfolio of Transco expansion and Power Innovation projects, which should benefit from growing power demand.Price: $76.60, Change: $+0.63, Percent Change: +0.83%

Commodity Prices, Export Demand to Drive Strong US Midstream Q2 Earnings, RBC Says

Commodity prices, export demand and new infrastructure should drive strong second-quarter US midstream earnings across the sector, RBC Capital Markets said in a Tuesday note.Waha basis spreads, spot export cargoes, expanding natural gas and power demand continue to provide favorable operating conditions for the sector, RBC said.RBC expects the Iran conflict and additional Permian pipeline capacity to strengthen long-term demand for US hydrocarbons, support new export infrastructure and restore previously curtailed production as takeaway constraints ease.RBC highlighted Kinetik Holdings (KNTK) and Targa Resources (TRGP) as its preferred picks, expecting both companies to post solid second-quarter results.The firm expects Kinetik to enter the second half of 2026 and 2027 with positive momentum, while Targa should benefit from supportive commodity prices and rising gas volumes as new takeaway capacity comes online.Kinder Morgan (KMI) could transfer projects from its shadow backlog into its formal project backlog during the quarter, while Williams (WMB) may provide updates on its Power Innovation financing platform, new power projects and Momentum Midstream, RBC said.RBC's second-quarter EBITDA forecasts remain within 2% of consensus across most of its coverage. It projects Venture Global (VG) about 4.4% above consensus after incorporating recent cargo and fee disclosures.RBC also expects Targa to outperform consensus on stronger-than-expected volume growth. Kinetik's margins should offset curtailed production, while the Kings Landing 2 final investment decision supports higher future output.Waha natural gas prices averaged negative $3.10 per million British thermal units during Q2 and briefly fell to about negative $8/MMBtu before recovering as additional pipeline capacity eased transportation constraints.The 570 million cubic feet per day Gulf Coast Express pipeline expansion entered service late in the quarter, helping restore some curtailed volumes. Energy Transfer (ET) also expects the first 1.5 billion cubic feet per day phase of the Hugh Brinson Pipeline to start in Q4, with some flows possible in Q3.RBC expects 5.27 Bcf/d of new Permian takeaway capacity to enter service between mid-2026 and Q1 of 2027, creating favorable conditions for higher regional production.The Iran conflict has increased spot exports of liquefied petroleum gas, crude oil and liquefied natural gas while reinforcing the need for diversified energy supplies, supporting long-term demand for US hydrocarbons and export infrastructure, RBC said.RBC identified Energy Transfer, Enterprise Products Partners, Targa Resources, ONEOK (OKE), Cheniere Energy (LNG) and Venture Global among the companies positioned to benefit from stronger export demand and future infrastructure investment.The firm also expects natural gas demand to remain a long-term growth driver as US liquefied natural gas export capacity nearly doubles by 2030 and electricity demand rises from reshoring, electrification, artificial intelligence and data center expansion, benefiting Williams and Kinder Morgan.Price: $50.47, Change: $-0.64, Percent Change: -1.25%

Kinetik Keeps Quarterly Dividend at $0.81 Per Share; Payable July 31 to Shareholders of Record on July 24

RBC Highlights Preferred Midstream Names as Earnings Season Approaches

BP's midstream benchmark fell 1.6% over the week ended June 11, but still delivered a 16.4% gain so far this year, outperforming the S&P 500's 8.0% advance, RBC Capital Markets said Friday.The sector also outperformed utilities by 1,314 basis points and real estate investment trusts by 160 basis points this year, although it lagged oilfield services by 3,319 basis points and exploration and production companies by 1,306 basis points, RBC said.Commodity prices weakened during the week, with front-month West Texas Intermediate crude dropping about 6% to roughly $88 per barrel and Henry Hub natural gas falling about 7.5% to $3.09 per million British thermal units, according to RBC.Archrock (AROC) led performance among RBC-covered companies with a 3.7% gain, supported by continued strength in the compression market, while Sunoco (SUN) fell 4.4% as investors likely locked in profits, the firm said.C-corporations gained 0.1%, outperforming master limited partnerships, which declined 1.6%.RBC estimates its coverage universe trades at an average 2027 enterprise value-to-adjusted EBITDA multiple of 10.0x and expects midstream stocks to remain sensitive to Iran-related developments that influence commodity prices.The firm said companies with greater perceived commodity exposure, including Targa Resources (TRGP), ONEOK (OKE), and Kinetik Holdings (KNTK), as well as liquefied natural gas-focused names such as Venture Global (VG) and Cheniere Energy (LNG), could react most sharply to geopolitical headlines.Kinder Morgan will kick off the second-quarter earnings season for RBC's coverage universe on July 22. RBC expects management to discuss geopolitical and macroeconomic conditions, stronger export activity, commodity-price support, and growth opportunities across its project pipeline.Among its preferred investments, RBC highlighted Cheniere Energy, citing 95% contracted cash flows through 2035, a $10 billion share repurchase program, and a target to increase dividends by 10% annually through 2030.RBC said Sunoco can build on operational momentum through 2027, benefiting from stronger refining margins at Burnaby, synergies from the Parkland acquisition, and an additional $500 million bolt-on acquisition strategy.The firm also favors Targa Resources, citing customer-backed expansion projects, exposure to leading Permian Basin acreage, and rising gas-to-oil ratios that could support natural gas growth even if crude production levels off.For Williams Companies (WMB), RBC sees growing electricity demand and natural gas consumption creating opportunities for high-return projects tied to Transco expansions and power-related infrastructure through 2030 and beyond.Williams is targeting adjusted EBITDA compound annual growth of more than 10% through 2030, including roughly 9% growth from Haynesville-related projects, while maintaining a balance sheet capable of supporting further expansion, RBC said.Price: $36.67, Change: $+0.59, Percent Change: +1.65%

Market Chatter: Permian Operators Shut Wells as Waha Gas Prices Stay Below Zero

Persistently weak gas prices in the Permian Basin are forcing some producers to curb output even as stronger crude prices encourage additional oil drilling, Bloomberg reported Monday.Producers, including Permian Resources (PR) and Devon Energy (DVN), have shut in wells with elevated gas-to-oil ratios after prices at the Waha Hub remained below zero for 124 straight days.Describing the move as an obvious economic decision, Permian Resources Co-Chief Executive Officer James Walter said the company curtailed gas-heavy production that was generating losses.While gas producers struggle with negative pricing, crude output across the Permian continues to climb as operators respond to oil prices that remain roughly 50% above levels seen before the Iran conflict.Flooding the market with associated gas from oil wells, rising crude-focused activity has overwhelmed existing pipeline infrastructure across West Texas and southeastern New Mexico.According to Targa Resources (TRGP) President Jennifer Kneale, producers are currently shutting in between 200 million and 400 million cubic feet of gas per day, compared with basin-wide dry gas production of about 23 Bcf/d.Middle East-related supply disruptions have encouraged additional oil-weighted drilling, which is adding further pressure to already constrained gas takeaway capacity, Rystad Energy Vice President Matt Bernstein said.Despite stronger crude prices, some operators have refrained from increasing production because losses tied to associated gas can offset gains from oil sales, Bernstein added.Instead of curtailing output, privately held Elevation Resources has opted to flare excess gas, allowing the company to free up infrastructure capacity and continue producing more crude oil, according to the report.Highlighting the pressure facing gas-focused operators, Elevation Resources Chief Executive Officer Steve Pruett said, "We're losing money hand over fist on gas," adding that natural gas accounts for roughly half of the company's production.Recent production curtailments have started to tighten the market, helping lift natural gas prices at the Waha Hub, according to the report.Recovering from a record low of negative $9.60 per million British thermal units on April 24, Waha prices improved to negative $0.33/MMBtu on Thursday, their highest level since February.Later this year, new Permian gas pipeline projects are expected to ease transportation constraints, allowing producers to move more gas to demand centers and improving in-basin pricing, the report said.Despite those expected improvements, Kinetik Holdings (KNTK) raised its full-year gas curtailment outlook and said higher oil prices continue to encourage crude-focused operators to expand activity while gas-focused producers face a much more challenging market environment."It's a tale of two cities: crude folks that are doing cartwheels and backflips," Kinetik Holdings (KNTK) Chief Executive Officer Jamie Welch said, while "those that are literally localized, gas-centric sellers are literally crying poverty."(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Sector Update: Energy Stocks Advance Premarket Tuesday

Energy stocks were advancing premarket Tuesday, with the State Street Energy Select Sector SPDR ETF (XLE) 0.4% higher.The United States Oil Fund (USO) was up 1.5% and the United States Natural Gas Fund (UNG) was 0.8% higher.Front-month US West Texas Intermediate crude oil was 0.7% lower at $107.95 per barrel at the New York Mercantile Exchange. Global benchmark North Sea Brent crude oil fell 1.5% to $110.40 per barrel, and natural gas futures were up 0.6% at $3.04 per 1 million British Thermal Units.Equinor (EQNR) shares were up more than 2% after the company said it signed a 5-year agreement with Dutch energy provider Eneco to supply natural gas from the Norwegian continental shelf.BP (BP) maintained the lockout at its Whiting refinery in Indiana after failing to reach a deal with the United Steelworkers, or USW, Local 7-1, the company said. BP stock was 0.4% higher pre-bell.Kinetik Holdings (KNTK) shares were up more than 1% after the company said it has reached a final investment decision and will proceed with the Kings Landing II natural gas processing plant at its existing Kings Landing complex in New Mexico, which is estimated to cost about $260 million.