Understanding volume risk has become a major concern for midstream operators and their investors as commodity price volatility this year impaired growth expectations among upstream counterparties. Once regarded as relatively safe investments due to contracted volumes and seemingly endless production growth, the midstream industry (loosely defined as the companies that gather, process and transport hydrocarbons) has begun to show its teeth as the overall energy industry has suffered. The S&P Oil & Gas Exploration & Production Index (XOP) dropped by 55% this year and the Alerian U.S. Midstream Energy Index declined by 46%. The selloff in both benchmarks reflects the reality that midstream investments are only as good as the upstream assets they are supported by. Leveraging Enverus’ detailed upstream analysis and midstream-focused products, investors are able to generate a holistic view on the true risks and rewards of midstream assets.
For example, Enverus’ proprietary gatherer algorithm enables users to connect individual well forecasts, drilled uncompleted wells and active rigs across the Lower 48 to gathering systems to generate powerful forecasts for midstream assets (Figure 1). This can help better quantify volume risk and allow for more informed midstream investment decisions.
FIGURE 1 | Wells and Rigs Tagged to Enverus Gatherer
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