DCP's 2019 Outlook Looks Stronger as Frac Spreads Recover
DCP Midstream reported a solid fourth quarter, yet we remain concerned about the outlook with the prospect of weak processing margins throughout 2019. Frac spreads were below $3 per btu in December 2018 and have rebounded to close to $4 more recently. Any time spreads are below $3, this implies very poor economics for gathering and processors, in our view. More of this type of volatility is not great for DCP, given its exposure to commodity prices via its percentage of proceeds contracts. We pla...DCP Midstream is a limited partnership that owns, operates, acquires and develops a portfolio of midstream energy assets. The company's operations are organized into two reportable segments: Logistics and Marketing and Gathering and Processing. The company's Logistics and Marketing segment includes transporting, trading, marketing and storing natural gas and natural gas liquids (NGLs), fractionating NGLs and wholesale propane logistics. The company's Gathering and Processing segment consists of gathering, compressing, treating, and processing natural gas, producing and fractionating NGLs, and recovering condensate.
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