WFS---- Key Takeaways. Q2 results were slightly above our forecast. Management has increased confidence in achieving the mid-to-upper range of CEQP’s 2020 EBITDA guidance ($520-570MM), given lower than expected shut-in production, resumption of completion activities in the Bakken, and reduced operating / G&A expenses. In addition, a shutdown of DAPL this year seems unlikely.
However, we reaffirm our Underweight rating given risks to 2021+ cash flows related to (1) DAPL’s status in 2021, and (2) ongoing customer bankruptcies (see below). We’re increasing our 2020 DCF/unit estimate to $4.43 from $4.31 primarily to reflect Q2 results.
Q2 Beat. Adjusted EBITDA of $128MM was slightly above our forecast of $123MM and Consensus of $122MM. Q2 DCF/unit of $1.02 was above our estimate of $0.86 and up 13.1% year/year