The energy sector was already facing an oil supply glut prior to the COVID-19 pandemic, and with businesses closed and people advised to stay at home, demand for oil and gas products has been throttled and storage capacity has reached its limit. This resulted in oil futures tumbling to negative territory recently.
Midstream energy companies face the risk of significantly reduced volumes in their pipelines, as producers adjust production levels in response to reduced demand. However, several factors make Canadian energy giant Enbridge (NYSE: ENB) better protected than its peers in these trying times.
Every pipeline firm aims for predictable, stable cash flows. However, the degree to which the firms manage to achieve that varies significantly. Enbrige has several assets generating pretty stable cash flows. This sets it apart from several of its smaller, more risky peers. Enbridge's key "mainline" pipeline system accounts for roughly 30% of its EBITDA, according to a company update given this month.
Source Fool.com