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Stock Alert : Midstream Stocks Showing Momentum (DCP, ENLC)

The U.S. has more than 2.4 million miles of pipe, making it the largest network of energy pipelines in the world. Pipelines offer a cheaper alternative vs. trucks and trains for transporting oil, natural gas and other hydro carbons to refineries, and consumers.

The companies that own pipeline infrastructure for energy transportation are called Midstream, a link between the upstream companies that extract crude and natural gas from the wells, and downstream companies that refine and process the crude into fuels for consumers. The Midstream companies handle processing, storing, transporting and marketing of oil, natural gas, and natural gas liquids.

Here are a couple of Midstream stocks that closed higher yesterday...

*EnLink Midstream, LLC (ENLC) closed Tuesday's trade at $5.62 up 14.5%

*DCP Midstream, LP (DCP) closed Tuesday's trade at $24.39 up 7.92%.


EnLink Midstream, LLC (ENLC)

EnLink Midstream operates oil and gas infrastructure platforms across premier production basins and core demand centers, including Permian Basin, Oklahoma, North Texas, and the Gulf Coast. Last year, oil producer Devon Energy sold its EnLink assets to Global Infrastructure Partners or GIP for slightly more than $3.1 billion. GIP now owns 46% of EnLink's common units currently valued at $1.2 billion, due to weaker commodity prices.

On Nov 7, EnLink offered its FY20 capex outlook of $275 million to $375 million, representing an approximate 50% shave-off from its projected FY19 capex of $630 million to $710 million, which by the way, it now expects at the lower end of the range.

EnLink's 2020 growth projects are expected to be focused in the Permian Basin, representing up to 75% of expected investment. The company also said it expects growth in the fourth quarter vs. third quarter, while forecasting FY19 adjusted EBITDA to be at the low end of a previously communicated range of $1.07 billion to $1.1 billion.


DCP Midstream, LP (DCP)

DCP Midstream is a Fortune 500 Midstream master limited partnership (MLP) with a portfolio of gathering, processing, logistics and marketing assets. MLPs are not subject to federal corporate taxes.

In line with a growing trend among MLPs, DCP announced last month about simplifying its structure with its general partner (a joint venture of Enbridge Inc. (ENB) and Phillips 66 (PSX)) by eliminating incentive distribution rights and all general partner economic interests in the company in exchange for 65 million newly issued DCP common units. The general partner now owns 57% of DCP's outstanding common units and a non-economic general partner interest.

IDRs typically entitle the general partner to receive up to 50% of incremental cash distributions when the distribution to unit-holders reaches a certain threshold. Although a tool to incentivize the general partner to grow distributions to unit-holders, over time, IDRs can significantly boost the MLP's capital costs.
For the nine months ended September 30, 2019, DCP reported expansion capital expenditures and equity investments totaling $684 million, and maintenance capital expenditures of $58 million.

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