Western Gas Partners, LP (WES) is expected to see 15% annual distribution growth as it continues to acquire midstream assets from its corporate sponsor, Anadarko Petroleum Corporation (APC), says Elvira Scotto, Director at RBC Capital Markets.
“Western Gas Partners is a drop-down story. Anadarko (APC) is Western Gas’ corporate sponsor, and we expect Western Gas to acquire midstream assets from Anadarko about every six to eight months, which we believe provides visibility into future growth,” Scotto said.
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Scotto adds that Western Gas Partners‘ limited commodity-price exposure as well as the company’s organic growth projects will drive additional distribution growth up to 15%.
“Importantly, the majority of Western Gas’ margins are fee-based, so there is very little commodity-price exposure. Western Gas also has organic growth projects that can drive additional distribution growth. For Western Gas, we are expecting annual distribution growth of about 15% over the next couple of years,” Scotto said.
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