Wells Fargo published its Q2 2026 midstream earnings preview, identifying Plains All American Pipeline (NYSE: PAA) and Targa Resources (NYSE: TRGP) as favored names heading into the reporting window, and recommending investors avoid Williams Companies (NYSE: WMB).
The bank anticipates a generally positive reporting season across the midstream space. In its outlook, Wells Fargo expects Cheniere Energy (NYSE: LNG), ONEOK (NYSE: OKE), Sunoco (NYSE: SUN), Targa Resources, and Viper Energy Partners (NASDAQ: VG) to top consensus earnings estimates for the quarter.
Conversely, Wells Fargo flagged Keyera (TSX: KEY) and MPLX (NYSE: MPLX) as potential disappointments relative to consensus. The preview lays out the specific operational and accounting factors the bank believes will drive results for individual companies.
Drivers behind expected outperformance
- Cheniere Energy - Wells Fargo cites wider international spreads and stronger volumes, plus a lighter maintenance schedule that could reduce operating and maintenance costs while increasing effective capacity.
- ONEOK - The firm may benefit from wide Katy-Waha marketing spreads that supported margins through the quarter, although those spreads have narrowed entering Q3.
- Sunoco - Elevated crack spreads are expected to noticeably lift refinery contribution for the period.
- Targa Resources - The bank points to higher volumes, increased liquefied petroleum gas (LPG) exports, and supportive Katy-Waha spreads as reasons Targa could outpace consensus. Wells Fargo also notes curtailed volumes returning and potential record LPG volumes at Galena Park in June, suggesting upside relative to guidance midpoints.
- Plains All American - Plains is likely running above the midpoint of guidance, aided by gas pipeline capacity improvements that have come into service earlier than anticipated.
Areas of concern and possible misses
- Keyera - A change in accounting treatment tied to marketing profits related to the Plains All American acquisition shifts a portion of Q2 profit to Q4, which could lead to a miss versus consensus in the quarter under review.
- MPLX - The company has relatively few new projects coming online in Q2 versus a sizable consensus expectation for EBITDA step-ups, creating downside risk to estimates.
- Kinder Morgan - Wells Fargo highlights a high bar to sustain backlog growth because $500 million to $600 million of projects entered service in Q2, representing a notable increase in the baseline.
Wells Fargo also called out a potentially material positive development for Antero Midstream (NYSE: AM): the firm could receive in excess of $300 million in after-tax proceeds tied to a Colorado Supreme Court ruling on June 23 in the Veolia matter, an outcome the bank views as favorable to that name.
Overall, the preview provides a company-by-company view rooted in volumes, spreads, project timing, maintenance cycles, accounting moves, and capacity changes. Those factors underpin the bank's recommendations to favor PAA and TRGP and to avoid WMB for the upcoming reports.
Bottom line
Wells Fargo expects a mostly upbeat Q2 for midstream results, with select companies positioned to outperform due to stronger spreads, volumes, and earlier-than-expected capacity additions. At the same time, accounting adjustments and a lack of new project additions in some names create risks to consensus for others. Investors should weigh these dynamics as companies report their Q2 results.