USMidstream&MasterLimitedPartnerships(MLPs)LetsTryThisAgain2019OutlookJanuary7,2019SpiroMDounis,CFA212-325-3463spiro.dounis@credit-suisse.comJohnR.Mackay,CFA212-325-6242john.mackay@credit-suisse.comManavGupta212-325-6617manav.gupta@credit-suisse.comDougB.Irwin212-325-6850douglas.irwin.2@credit-suisse.comCharlesBryant212-325-4938charles.bryant@credit-suisse.comDISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.2ExecutiveSummaryKeyThemesfor2019•Weexpectsimplificationswillcontinuein2019withIDReliminationsbeingthefocusasmostroll-upshavebeenannounced.•Thereare13companiesinourcoveragethatcouldaddressIDRs(DCP,PSXP,andSHLXarethemostlikely).WeexpectIDReliminationswillbedoneinarangeof12-17xbasedoffhistoricalmultiples.SimplificationsContinuein2019;FocusShiftstoIDRElimination•Weexpectbroaddebottleneckingbylate2019.WithPermianpipelineoverbuildagrowingrisk,wedon’texpectallannouncedprojectstotakeFID.•GasismostinneedofanotherprojectandcouldseeatleastonemoreFIDin2019(mostlikelyWhistler).•Onthecrudeside,wenotethatMPLXstatedtheyareopentocombiningPGCwiththeXOM/PAAJVpipeline.PermianDebottleneckingontheWay•WoodMackenzieestimateswatermanagementcostsreaching$17blnby2025inthePermianalone.Thispotentialbottleneckcreatesamulti-billiondollarinvestmentopportunityasinactioncouldresultinproductioncuts.•Assuming2-3mmbpdofincrementalPermianoilproductionby2025;weestimatetheneedtoinvest$9-$14blninnewwaterinfrastructuretosupportthislevelofgrowth.Weseeanincreasingneedforspecializedwaterhandlersandpipelines.ProducedWaterDisposalIncreasinglyImportant•Thereis250kbpdoffractionationcapacityscheduledtocomeonlinein2019;notenoughtor...
