VettaFi’s Stacey Morris sees midstream growth ahead on rising LNG demand and strong free cash flow

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8d ago 5:04

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VettaFi Head of Energy Research Stacey Morris joined Steve Darling from Proactive to share her insights on the outlook for the midstream energy sector as 2025 nears its end. Morris began by defining midstream companies as the “logistics arms of the energy space,” explaining that they are primarily responsible for transporting, storing, and processing energy commodities such as oil, natural gas, and natural gas liquids. She emphasized that midstream operators are typically structured around a fee-based business model, which allows them to generate stable and predictable cash flows regardless of commodity price volatility. Morris highlighted that free cash flow generation remains a cornerstone strength across the midstream sector. This consistent financial performance has enabled companies to return significant capital to shareholders through dividend growth and share buyback programs, reinforcing investor confidence. “The free cash flow theme is very much still intact for this space,” she noted, underscoring the resilience of the sector even amid shifting market dynamics. A major growth catalyst for midstream companies, Morris said, is the rapidly increasing global demand for natural gas. She pointed out that U.S. liquefied natural gas (LNG) export capacity is expected to expand by 80% by 2030, driven by large-scale projects that are already under construction. This export boom is being complemented by rising electricity demand within the U.S., much of which is anticipated to be powered by natural gas—a trend that could further bolster throughput volumes and revenue opportunities for midstream firms. Morris also cited a more favourable U.S. regulatory environment under the current administration as a supportive factor, noting that policymakers appear more receptive to new pipeline construction and LNG infrastructure expansion. This regulatory backdrop is helping reduce permitting hurdles and enabling companies to advance long-term capital projects that can drive growth. For European investors seeking to gain exposure to this resilient part of the energy market, Morris highlighted the American Midstream Energy Dividend UCITS ETF as a potential vehicle. She said the ETF can serve multiple purposes within a portfolio, including providing consistent income through dividends, offering defensive exposure to the energy sector, and delivering diversification benefits compared to traditional European energy majors such as Shell and BP. #proactiveinvestors #MidstreamEnergy #EnergyETF #NaturalGasDemand #StaceyMorris #EnergyInfrastructure #AlerianETF #OilPrices #LNG #InvestorInsights #CommodityMarkets #EnergyMarketUpdate #DefensiveInvesting #ProactiveInvestors

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