Reducing DCP's Fair Value Estimate Due to Dimmer 2019 Outlook
We are reducing our fair value estimate for DCP Midstream to $35 from $47 per unit, while maintaining our no-moat rating. Weaker commodity prices have crushed frac spreads, meaning it is much less economic to extract natural gas liquids. DCP is one of the largest G&P players we cover with the majority of its operations exposed to G&P assets, meaning higher commodity price and drilling activity sensitivity. We now model volume declines, reduced product margins, and lower related fees. We ...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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