$SUN

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%

Energy Transfer, Sunoco, SunocoCorp, USA Compression Partners to Redomicile to Texas

Energy Transfer (ET), Sunoco (SUN), SunocoCorp, and USA Compression Partners (USAC) will redomicile from Delaware to Texas, with the change taking effect on July 6, the companies announced Thursday.The four companies said the redomiciliations will become legally effective in Delaware and Texas at 12:01 a.m. Central Time on July 6, 2026. The New York Stock Exchange will recognize the changes for market purposes on July 13, 2026.The companies said the Committee on Uniform Securities Identification Procedures (CUSIP) numbers for their registered securities and their New York Stock Exchange ticker symbols will remain unchanged following the redomiciliations.The redomiciliations will preserve the economic and governance rights of unitholders under each entity's organizational documents.Price: $19.33, Change: $+0.28, Percent Change: +1.47%

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%

RBC Raises Price Target on Sunoco to $76 From $64, Keeps Outperform Rating

Sunoco (SUN) has an average rating of buy and mean price target of $70.50 according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)Price: $69.70, Change: $+0.04, Percent Change: +0.06%

Kinder Morgan Q1 Earnings Beat Estimates, Lifts 2026 Outlook, RBC Says

Kinder Morgan's (KMI) Q1 earnings exceeded expectations, supported by stronger volumes, winter weather tailwinds and firmer commodity prices, RBC Capital Markets strategists said in a note on Friday.RBC analysts said it now expects 2026 adjusted EBITDA to come in at least 3% above its prior budget, reflecting stronger operating conditions across its network.However, despite the upbeat results, Kinder Morgan shares edged lower following the release, which analysts attributed to limited backlog growth, uncertainty surrounding its Western Gateway project and investor positioning ahead of other earnings in the sector.The broader midstream space has continued to outperform this year. The Alerian MLP Index rose 1.6% in the week ended April 23, outpacing the S&P 500, which gained 1%. Year-to-date, the midstream benchmark is up 14.5%, compared with a 3.8% rise in the S&P 500.RBC said that strength in the sector has been supported by steady cash flows and growing demand for natural gas infrastructure, even as commodity prices remain volatile.Front-month West Texas Intermediate crude rose about 2% on the week to about $97 per barrel, while Henry Hub natural gas prices slipped about 2% to $2.59 per million British thermal units.Cheniere Energy (LNG), in contrast, declined 2.1%, in what RBC analysts said could reflect positioning ahead of earnings and a rotation into other midstream names.Master limited partnerships modestly outperformed C-corporations during the week, with MLPs up 1.2% versus a 1% gain for corporates.Going forward, investors are focused on upcoming earnings from Enterprise Products Partners (EPD) and Oneok (OKE), both scheduled to report on April 28.Market participants will be watching for commentary on the impact of higher commodity prices, producer activity, project ramp-ups, export demand and capital allocation plans, as well as the effects of winter weather and evolving price spreads across key basins.RBC analysts flagged potential read-throughs for other operators, including Williams Companies (WMB), Energy Transfer (ET), Targa Resources (TRGP) and Sunoco (SUN), citing expected tailwinds from seasonal demand, marketing optimization and commodity price volatility.

Sunoco Boosts Quarterly Dividend by $0.0582 to $0.9899 per Unit, Payable May 20 to Holders of Record as of May 8