Rice Midstream Partners LP RMP is set to report fourth-quarter 2014 results on Mar 12.
The midstream energy player was formed by Rice Energy Inc. RICE which is involved in oil and natural gas exploration and production activities. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
Rice Midstream generates cash flow by providing midstream services to its parent company and also to third parties. The partnership’s operating assets include gathering and compression facilities for natural gas.
Over the last few years, there has been an excess supply of the commodity in the U.S. With the advent of hydraulic fracturing (or fracking) – a method used to extract natural gas by blasting underground rock formations with a mixture of water, sand and chemicals – shale gas production has been booming in the country. Coupled with sophisticated horizontal drilling equipment that can drill and extract gas from shale formations, the new technology is being hailed as a breakthrough in U.S. energy supplies, playing a key role in boosting domestic natural gas reserves.
The fourth quarter, which was not an exception, might also benefit from midstream activities. This is because the more the supply of the commodity, the greater will be the need for storage and compression activities.
It will be interesting to see whether this excess supply translates into better-than-expected profits for the partnership.
Earnings Whispers?
Our proven model does not conclusively show that Rice Midstream is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: The Earnings ESP stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 14 cents.
Zacks Rank: Rice Midstream carries a Zacks Rank #3 (Hold). However, the partnership’s 0.00% ESP leaves our prediction inconclusive.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially amid negative estimate revisions.
Performance of Other Players
Midstream players that surpassed the Zacks Consensus Estimate during the fourth quarter include EQT Midstream Partners, LP EQM and Cheniere Energy Partners LP CQP.
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