TD commentsEvent We recently hosted Gibson Energy Inc. (GEI)’s management for investor meetings. Some highlights from our discussions are summarized in this note.
Impact: NEUTRAL
Conclusion
Management meetings reinforced our thesis on the company that the recent acquisition of the South Texas Gateway Terminal (STGT) diversifies GEI away from its maturing WCSB franchise and provides a growth platform for the company that further enhances the stable cash flows generated by a highly contracted Infrastructure segment.
In our view, the competitive advantage from the strategic positioning of STGT and forecast Permian growth should benefit GEI during recontracting discussions for the asset. GEI's targets related to the contractedness of operating cash flows, creditworthiness of counterparties, financial flexibility, capital funding strategy, and sustainable payout ratio, when combined with the company's growth outlook and returns implied by our target price inform our BUY rating.