AR and RRC recommended by Morgan Stanley - Jan 13

[dan_s]

Note below from Devin McDermott – Morgan Stanley

LPG prices have spiked on the back of economic recovery, colder weather, and
tight shipping capacity. On Friday, we hosted a call with Simon Hill, the COO of
ETAI (Energy Trading Analytics International), a firm that specializes in LPG
(liquefied petroleum gas) insights, events, and fundamentals. LPG prices have
improved significantly in recent months as economic recovery and colder
weather have boosted Asian demand. Meanwhile, tight shipping capacity and
Panama Canal congestion have added additional upward pressure to Asian
prices. Going forward, ETAI expects US exports to remain elevated on this strong
Asian demand pull, while Middle East exports could decline with recently
announced OPEC production cuts. While the medium term outlook for propane
prices is constructive, reduced heating demand could result in some downward
pressure as we move out of the winter.

Benchmarking exposure to LPG prices. Among E&Ps, companies with higher leverage to international LPG prices include Antero Resources (AR) and Range Resources (RRC). On the Midstream side, EPD, ET and TRGP benefit volumetrically through their export terminals as well as through varying degrees of margin exposure on processing contracts.