Midstream Hydrocarbon Express: Getting Ready for Earnings

Research evidence excerpt

Midstream Hydrocarbon Express: Getting Ready for Earnings

Global Research

17 July 2026ab

Midstream Hydrocarbon Express Equities

AmericasGetting Ready for Earnings

Energy

Manav Gupta

DKL Initiation Analyst

We initiate DKL with a Neutral rating and PT of $56. DKL has assembled a unique manav.gupta@ubs.com

combination of Delaware Basin assets, spanning sour gas processing, water +1-212-713 4399

infrastructure, and crude gathering, which we expect to drive EBITDA growth from Sumantra Banerjee

$536M in 2025 to $613M by 2028 (4.6% CAGR). The combined gas, crude, and water Associate Analyst

offering in the Permian Basin has increased DKL's competitive position and built a strong sumantra.banerjee@ubs.com

platform for growth. Key drivers of EBITDA growth are: 1) increased recoveries in the +1-212-713 5104

Permian from well efficiency improvements from producers, 2) sour gas infrastructure Saumya Jain

demand growth, and 3) water gathering growth opportunities. Startup of Permian gas Associate Analyst

long haul pipelines in the next 6- 18 months, would bring incremental gas and oil saumya.jain@ubs.com

volumes and provide growth opportunities for DKL. However, DKL currently has leverage +1-212-882 0089

of ~4.05x, which is higher than Permian peers. Related to this, parent DK has stated its Ivan Scotto

intention to reduce its ownership interest below 50%, which does create an Associate Analyst

idiosyncratic risk and keeps us on the sidelines. We see the stock as fairly valued at these ivan.scotto@ubs.com

levels given balanced risk/reward. Our estimates for 2026/ 2027/2028 are 2-3% above +1-212-713 3137

the Street (click here). Richard DeDios

Associate Analyst

WMB Power JV richard.dedios@ubs.com

+1-212-713 8018