UBS-Midstream Natural Gas What Matters the Most This Week-20250728

Sector Thoughts

Many midstream names report 2Q earnings this week: EPD (Monday), HESM(Wednesday), DTM (Thursday), TRP (Thursday), AM (Thursday), and ENB (Friday).

ENB

We expect 2Q EBITDA of $4,578MM, down from $5,828MM in 1Q, driven by seasonalheadwinds (especially on Mainline volumes), partially offset by higher contribution fromGas Transmission due to an uplift from TETCO rate case and Venice extension project.Mainline was fully apportioned in 1Q25, but only apportioned for June in 2Q25, hencelower QoQ volumes and earnings. Mainline is again apportioned in July and we expectthis will benefit ENB. We recently met with ENB's management at the company's HQ inCalgary, where they noted ENB could announce FID on MLO 1 (mainline/market accessoptimization) before YE 2025. This $1.5Bn project will increase capacity by ~150mb/d,with the WCSB needing more egress even at lower gas prices. We will dial in for furtherupdates on growth projects. Furthermore, we believe conversations on data centeropportunities will be topical given ENB recently announced a FID on Clear Fork, a 600MW utility scale solar project. Meta has signed a long-term contract for 100% of therenewable output of the project, and ENB estimates the project will cost ~$900MM andexpects it to be accretive to cash flows and EPS starting in 2027. A high profile customerlike Meta could open the door for more data center related orders in the future, and wewill look for further updates on data center projects and demand. ENB could also talkabout binding Open Season for the Southern Illinois Connector Pipeline, a project aimedat increasing access of Canadian crudes to GC markets.