The most-read energy infrastructure research from 2023 tended to include both timely developments and topics with perennial attraction like natural gas. Today’s note discusses the topics and pieces from 2023 that were of the greatest interest to our investor audience.
M&A: A Key Theme in Midstream and Energy
Our most-read piece in 2023 by a significant margin was our note on ONEOK’s (OKE) acquisition of Magellan from May, OKE Acquiring MMP: Valuation Nice, Taxes Add Wrinkle. This was a blockbuster transaction for the midstream/MLP space and garnered significant investor interest through the deal’s close in September.
More broadly, consolidation was a key theme across energy this year. Our August note, Better Together: Energy Consolidation Continues, recapped energy sector tie-ups and saw strong interest. Notably, the note preceded the announcements of Exxon (XOM) acquiring Pioneer (PXD) and Chevron (CVX) acquiring Hess (HES).
Natural Gas: Always a Crowd Pleaser
Year after year, natural gas research tends to be a top performer. Our most recent coverage, US Natural Gas Prices: Winter Weather, Prices, and Production, discussed the outlook for natural gas into 2024 and 2025 following a lackluster price environment in 2023. For a longer-term perspective, Williams (WMB) and the Golden Age of Natural Gas highlighted structural drivers for growing natural gas demand in the U.S. and overseas as discussed in a fireside chat with WMB’s CFO John Porter.
Global liquefied natural gas (LNG) demand is expected to grow by upward of 60% through 2040 as discussed in Global LNG Market Poised for Long-Term Growth. Of course, the U.S. will play a major role in meeting growing this demand. U.S. LNG Projects Advance Even as Global Prices Slump provided an overview of the incremental LNG export capacity currently being developed in the U.S. Coastal British Columbia is home to a handful of LNG export projects, as discussed in Canadian LNG Projects Advance to Meet Asian Demand. Growing LNG exports from the U.S. and Canada have created growth opportunities for midstream companies.
Natural Gas Liquids: Less Familiar Hydrocarbons Attract Interest
Natural gas liquids (NGLs) tend to be less familiar to investors. But they play an important role in driving growth for midstream. Perhaps that contributed to strong interest in notes on ethane, MLPs and the Fastest-Growing Hydrocarbon You’ve Not Heard Of, and propane, Propane Helps Fuel Midstream/MLP Growth. NGL production has increased alongside growing oil and gas output. And strong international demand for ethane and propane for plastics manufacturing has supported growing exports from the U.S.
Taxes Aren’t Always Boring
An MLP tax primer in April was well-timed for catching the attention of investors. MLPs and MLP ETFs: Not Just Income, but Tax-Deferred Income explained the nuances of taxation for owning an individual MLP vs. an MLP ETF. With the Alerian MLP Infrastructure Index (AMZI) yielding 7.8% as of December 14, investors tend to recognize that MLPs offer generous yields. They are typically less familiar with tax advantages that often come with MLP income, namely the potential for tax deferral.
AMZI is the underlying index for the Alerian MLP ETF (AMLP) and the ETRACS Alerian MLP Infrastructure Index ETN Series B (MLPB).
Top 2023 Research:
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