Since our last report on this industry leader, this company’s stock has outperformed the S&P 500.

After another strong earnings report, investors may be wondering, does the stock still offer upside?

We’re here to reiterate our thesis and answer that question with a resounding “yes.”

Below, we provide an excerpt from our latest Long Idea report. Get the full report a la carte here.

You need a Professional Membership or higher to view all the content on this page.

Already a member?

Learn more about our research here.

This stock presents quality Risk/Reward based on the company’s:

  • position to profit from rising oil & gas production and demand,
  • “toll-taker” business model that profits from volume, not price,
  • growth-driving investments to profit from future demand,
  • strong cash flow generation and yield to investors, and
  • cheap valuation.

U.S. Oil & Gas Demand Continues to Rise

It’s no secret that oil production and demand have grown substantially in recent years. 2025 marked another record for U.S. crude oil production and the eighth consecutive year that the U.S. produced more crude oil than any other country. Production is projected to grow further to an average 13.8 million b/d in 2026 and 14.2 million b/d in 2027, up from 13.6 million b/d in 2025.

U.S. Natural Gas Liquids (NGL) exports have also consistently risen every year since 2010. U.S. NGL exports grew from 194 thousand barrels per day (Mbbl/d) in January 2010 to 3,716 Mbbl/d in June 2026. See Figure 1.

This company profits directly from continued NGL growth as the company’s second largest segment by revenue is its NGL Pipelines & Services segment.

Figure 1: U.S. NGL Exports Between January 2010 and June 2026

Source: EIA

AI and Data Centers Load Up on Natural Gas

Natural gas demand tied to AI data centers has emerged as a near-term demand driver alongside persistent long-term persistent demand for oil and gas.

RBC forecasts data-center related natural gas consumption will rise to 6.1 billion cubic feet per day by 2030, which represents a 20% increase from 2025 levels. Additionally, a significant amount of data centers planned or under construction are being built in Texas, which, perhaps not coincidentally, is the location of a large portion of the Permian basin, where this company is growing volumes. Beyond RBC, the American Action Forum highlights that natural gas’ share of newly planned U.S generation capacity rose from 11.1% in 2024 to 18.1% in 2026.

For this company specifically, its existing Permian operations position it to profit from this incremental gas demand on top of the long-term export and NGL demand noted above.

Consistently Strong Fundamentals

Strong oil and gas demand drives strong sales and profits. The company has grown revenue and Core Earnings by 10% compounded annually from 2016 through the trailing-twelve-months (TTM) ended 2Q26. Core Earnings in the TTM period are the highest of any twelve-month period in company history.

Longer-term, the company has grown revenue and Core Earnings by 2% and 8% compounded annually from 2011 (earliest data available) through the TTM ended 2Q26. See Figure 3.

The company’s net operating profit after-tax (NOPAT) margin increased from 6% in 2011 to 13% in the TTM ended 2Q26, while the company’s return on invested capital (ROIC) improved from 10% to 12% over the same time.

Figure 3: Revenue and Core Earnings: 2011 – TTM ended 2Q26

Sources: New Constructs, LLC and company filings

…there’s much more in the full report. You can buy the report a la carte here.

Or, become a Professional or Institutional member – they get all Long Idea reports.

Interested in starting your membership to get access to more of our research? Get more details here.