The Top 10 Midstream Companies
For the eleventh straight year, Platts ranked 250 of the world's top energy companies. Not surprisingly, the top 10 are all oil and gas companies. Outside of the top 10, however, midstream companies have a significant presence, with five companies placing in the top 100, and 11 in the top 150.
Platts evaluated the world's energy companies using four metrics: asset value, revenue, profit, and return on invested capital. The top 10 midstream performers are listed here:
Overall Platts 250 Rank
Enterprise Products Partners (NYS: EPD)
Plains All American (NYS: PAA)
Enbridge (NYS: ENB)
TransCanada (NYS: TRP)
Spectra Energy (NYS: SE)
Williams Companies (NYS: WMB)
ONEOK Partners (NYS: OKS)
Ultrapar Holdings (NYS: UGP)
Enbridge Energy Partners (NYS: EEP)
There are a lot of familiar names on this list, as eight of the 10 are North American outfits. Russia's Transneft and Brazil's Ultrapar are the only companies in the group from outside of the United States and Canada.
With over $55 billion in assets and a 12% return on invested capital, Transneft is the only midstream company that ranks in the overall top 25. The state-owned Transneft operates 43,000 miles of pipeline and 500 pumping stations, transporting crude oil throughout Russia, Belarus, Kazakhstan, and Ukraine.
Transneft's showing this year is impressive, but perhaps not nearly as impressive as Enterprise Products Partners, which didn't make the Platts 250 at all last year. The Texas-based company is a force to be reckoned with, and sports an impressive $34 billion in assets and an 8% ROIC.
Williams Companies wasn't on the list last year either, entering the list for the first time at 106, the seventh highest ranking in the midstream sector. It also ranked highly on PFC Energy's list that came out this past spring. All told, Williams and its master limited partnership, Williams Partners (NYS: WPZ) may present a compelling opportunity for energy investors.
Plains All American Pipeline ranked 121 last year, but jumped 40 spots in 2012. ONEOK Partners turned in a similar performance, climbing from 158 in 2011 to 110 this year.
Enbridge is the only company appearing twice in the top 10, as both its corporation and master limited partnership entities made this year's list. Enbridge Energy Partners did not get ranked last year, illustrating the increasing significance of these companies in the energy world.
Subsector of choice
Expect to hear a lot more from the midstream business in the future. Though exploration and production companies make a lot of noise in the media, right now it will serve investors well to target the shy, silent midstream outfits.
Horizontal drilling, hydraulic fracturing, and a renewed focus on develop shale oil and gas has set the North American production game on fire. As a result, midstream operators have been running full throttle, trying to meet the needs of E&Ps increased production volumes.
Take a look at five statistics gleaned from veritable energy consultancies that highlight the growth of domestic energy and how it relates to midstream:
- Energy consultancy IHS Cera estimates that tight oil production in the U.S. will grow from 900,000 barrels per day this year to 2.9 million bpd by 2020.
- The energy industry expects to spend $130 billion-$210 billion expanding natural gas infrastructure over the next 20 years.
- Despite rock-bottom prices for U.S. natural gas, production in the Marcellus Shale through the first six months of this year was more than double what it was last year.
- Consultants at Bentek Energy estimate there are more than 1,000 wells drilled in the Marcellus Shale waiting for pipelines to be built before they begin producing.
- Bentek forecasts a 78% increase in production over the next three years as midstream infrastructure catches up with the backlog of wells.
The opportunity for this sort of growth outside of North America is possible as well, though the industry has been slower to realize higher volumes because exploration companies know less about the geology in foreign countries. It is not unreasonable to expect to see more Transnefts and Ultrapars on the Platts list in the next five years.
List are everywhere these days, and when they come from reputable sources like Platts, or trade magazines and industry journals, they often provide a great beginning for investment research.
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The article The Top 10 Midstream Companies originally appeared on Fool.com.Fool contributor Aimee Duffy has no positions in the stocks mentioned above. Click here to see her holdings and a short bio. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy. The Motley Fool owns shares of Spectra Energy. Motley Fool newsletter services recommend Enterprise Products Partners L.P., ONEOK Partners, L.P., and Spectra Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.