Midstream & Energy Infrastructure: 2Q26 Earnings Preview

Research evidence excerpt

Midstream & Energy Infrastructure: 2Q26 Earnings Preview

Executive Summary

2Q26 Earnings Set-Up: Tailwinds Abound; But Beware of Hedges

We see a handful of competing factors this quarter but generally expect strong results. Volumes should see a rebound following winter

weather disruptions for some last quarter. Commodity is also a tailwind (EPD, ET, KMI, KNTK, TRGP, OKE, SUN, WES) with NGL prices

increasing ~$0.15/gal and Waha spreads widening even further to >$5/mmbtu on average. Crude prices, butane blending spreads, and

more favorable ethane recovery economics are all additional commodity tailwinds, among others. Finally, export volumes should remain

strong with a continued call on US NGLs and SPR releases also likely benefitting US export docks (EPD, ET, TRGP). With all that in mind,

expectations on the quarter were somewhat tempered throughout our preview discussions with an emphasis on the fact that many

companies took the opportunity to hedge out a portion of their exposure earlier in the year. In other words, it’s a strong quarter but don’t

get overzealous with commodity assumptions. Several meaningful first quarter tailwinds also likely abate this quarter. Outsized gains

tied to Storm Fern won’t repeat (WMB, ET, KMI). LPG spreads came back in which could somewhat offset volume tailwinds. Overall,

consensus appears to be well calibrated; on average, our Citi estimates are within +/- 0.5% of consensus on the quarter. EPD stands out

as the most notable potential beat on our estimates.

Still Climbing

While the second quarter could ultimately represent peak commodity prices for the year, we don’t necessarily expect it to represent peak

earnings and still see momentum into the second half.