Units of master limited partnership Crestwood Equity Partners (NYSE:CEQP) rose an impressive 16% out of the gate on July 17. The midstream energy player's price jump was driven by news released after the close on July 16, in which the partnership announced the date of its next earnings report -- and a whole lot more.
The date of Crestwood's next earnings report (Aug. 14, in case you were wondering) is pretty boring stuff. While it wouldn't be fair to say no one cares, it's certainly not enough to lead to a mid-teens price jump. However, the fact that the partnership maintained its dividend at the same level it paid in the first quarter was a notable bit of information, given that the U.S. energy industry is facing particularly difficult times today.
Even that, though, isn't really enough to back the obvious enthusiasm shown by investors. What was most likely behind the huge rally was the additional comments provided by CEO Robert Phillips:
Based on strong forecasted second quarter results relative to current market conditions, Crestwood is pleased to announce we will maintain our current level of common and preferred distributions, reflecting the stability and resilience of our diversified asset portfolio. Crestwood's better than expected results in the second quarter were driven by lower shut-ins across our G&P [gathering and processing] segment and the immediate value we achieved from the successful integration of the newly acquired NGL assets into our MS&L [marketing, supply, and logistics] segment. We continue to have increasing optimism around the second half of 2020 relative to our revised guidance as limited production remains shut-in on our oil-weighted systems and our largest producers in the Bakken have initiated completion crews to begin completing DUC inventories in the second half of the year.
This was clearly a positive update, though the CEO made sure later in the release to highlight that distributions are reevaluated quarterly. Still, that his words were offered up before the earnings release is a clear hint to Wall Street that it should be expecting solid numbers. Moreover, he laid out the foundation for why the partnership is doing so well, all of which suggests that there's even more good news ahead in the third and fourth quarters.
CEOs don't normally comment on earnings dates and dividend announcements unless there's a very good reason for doing so. Clearly, Crestwood's operating performance is the reason for CEO Phillips' update and the upcoming release will likely be a crowd pleaser. While it appears that much of the good news here might be priced into the units already, investors shouldn't overlook the very positive nature of this update. Indeed, things may not be as bad as some had feared.