Wells Fargo previews Q2 midstream earnings, favors PAA and TRGP

Investing.com -- Wells Fargo issued its second quarter 2026 earnings preview for midstream energy companies, recommending investors hold Plains All American Pipeline (NYSE: PAA) and Targa Resources (NYSE: TRGP) heading into the reporting period while avoiding Williams Companies (NYSE: WMB).

The bank expects another positive earnings season overall. Wells Fargo forecasts Cheniere Energy (NYSE: LNG), ONEOK (NYSE: OKE), Sunoco (NYSE: SUN), Targa Resources, and Viper Energy Partners (NASDAQ: VG) to exceed consensus estimates.

Keyera (TSX:KEY) and MPLX (NYSE: MPLX) could miss expectations, according to the preview.

For Cheniere Energy and Cheniere Energy Partners, Wells Fargo points to higher international spreads and volumes, along with a lighter maintenance cycle suggesting lower operating and maintenance costs and higher capacity.

ONEOK may benefit from wide Katy-Waha marketing spreads during the quarter, though these spreads have narrowed entering the third quarter.

Sunoco could see significantly higher refinery contribution due to elevated crack spreads. Targa Resources may benefit from higher volumes, liquefied petroleum gas exports, and Katy-Waha spreads.

On the downside, Keyera faces a change in accounting treatment of marketing profits related to its Plains All American acquisition, which shifts some second quarter profit to the fourth quarter.

MPLX has limited new projects entering service in the second quarter compared to a large step up in consensus EBITDA expectations.

Wells Fargo highlighted several potential positive developments, including Antero Midstream (NYSE: AM) potentially receiving over $300 million in after-tax proceeds from a Colorado Supreme Court ruling on June 23 in the Veolia case.

Plains All American is likely tracking above the midpoint of its guidance as gas pipeline capacity improvements arrive sooner than expected. Targa Resources may also exceed the midpoint of guidance as curtailed volumes return and liquefied petroleum gas volumes at Galena Park potentially reached a record in June.

The bank noted potential headwinds for Kinder Morgan (NYSE: KMI), citing $500 million to $600 million of projects entering service in the second quarter creating a high bar to sustain backlog growth.

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