NYSE:ETRN   Equitrans Midstream Corporation
After years of back and forth regarding the Mountain Valley Pipeline, Equitrans Midstream Corporation (NYSE: ETRN) finally got the green light after the debt ceiling deal. Following the news, ETRN stock made a record gain of more than 40%. Furthermore, OPEC Plus has announced further oil production cuts, increasing global gas prices, which may push ETRN stock even higher.

ETRN Fundamentals

Mountain Valley Pipeline Resumption

Earlier this month, President Biden signed the new debt ceiling deal which is going to suspend the $31.4 trillion debt limit through January 1, 2025. This deal proved to be crucial for ETRN’s future prospects since it will ratify and approve all permits and authorizations necessary for the construction and initial operation of the Mountain Valley Pipeline (MVP).

The 300-mile natural gas pipeline is already 94% complete and will probably be complete by the end of 2023, according to ETRN, which means that ETRN could see a huge increase in its revenue in Q1 2024 if it can get the pipeline up and running by the projected date.

ETRN Future

The new Mountain Valley Pipeline will add more than 2 billion cubic feet (Bcf) per day to ETRN’s existing transmission capabilities of 3.35 Bcf per day, which would be a 60% increase in its daily production. Accordingly, ETRN’s revenues from gas production would increase by more than 60% which equates to an $83 million increase in Q1 2024, given that it reported revenue of $138.9 million from transmission operations in Q1 2023.

ETRN is also expanding its Ohio Valley Connector which is expected to increase its deliverability by 0.35 Bcf per day. It is also worth mentioning that OPEC Plus lowered its oil production by 1 million barrels, which means that gas prices may increase. That can prove beneficial for ETRN, as it is the majority owner and operator of the Mountain Valley Pipeline.

Furthermore, ETRN’s second water storage facility is expected to be placed in service in June and will bring its total water storage capacity to 350,000 barrels, almost a 130% increase from the previous 150,000 barrels. In turn, ETRN can expect to increase its revenue from water operations when the second storage starts operations.

ETRN Financials

In its Q1 2023 report, ETRN’s assets slightly decreased QoQ from $10.44 billion to $10.4 billion, and its cash and cash equivalents decreased 23% QoQ from $67.9 million to $52.5 million. ETRN’s total liabilities slightly decreased QoQ from $8.36 billion to $8.3 billion.

Revenue also increased 9% YoY from $342 million to $376 million. Operating costs increased almost 10% from $146 million to $161 million, which contributed to the operating income increase of 10% YoY from $196 million to $215 million, which amounted to a net income of $106 million – a 7% increase YoY.

Technical Analysis

ETRN stock’s trend is bearish with the stock trading in a downward channel, however, the stock recently broke the channel. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is overbought at 76 and the MACD is approaching a bullish crossover. It is worth noting that there is a gap near $6.15 which the stock might fill in the near term considering that it is yet to retest the upper trend line to confirm breaking the channel.

As for the fundamentals, ETRN stock just witnessed two catalysts in the resumption of the Mountain Valley Pipeline project and the OPEC oil production cut. ETRN stock’s future catalysts will be finishing the Mountain Valley Pipeline and any further cuts in oil production from OPEC. With the stock yet to retest the upper trendline and the RSI overbought, investors could wait for ETRN stock to cool down before adding shares.

ETRN Forecast

ETRN is probably one of the biggest direct beneficiaries of the new debt ceiling deal. After the resumption of the Mountain Valley Pipeline, ETRN is expected to grow its revenues by approximately $83 million in Q1 2024. Meanwhile, the consistent production cuts from OPEC might significantly benefit ETRN if gas prices increase. For these reasons, ETRN stock is one of the energy stocks to watch closely this year.