Analyst Note| Stephen Ellis |
We've downgraded Plains' moat to narrow from wide. The challenge for Plains in the aftermath of the OPEC+ breakdown and COVID-19 short-term demand destruction is Permian volumes are going to be highly volatile, with declines expected in 2020 and 2021 before an expected recovery in 2022. In short, Plains' lack of diversity is an issue. We think midstream entities function best with steady, stable volumes where pipeline and asset utilization is reasonably high.