Pipelines get paid per unit of gas moved, not for the price of the gas, and the second-quarter reporting season just delivered the strongest run of upgrades this group has produced in years. Kinder Morgan, which owns roughly 83,000 miles of pipe and moves about 40% of all natural gas consumed in the United States, told investors on 22 July that adjusted EBITDA rose 12% year on year and adjusted earnings per share 32%, both above budget, and raised full-year guidance. Targa Resources, a Permian Basin gatherer and processor of gas and natural-gas liquids, reported EBITDA of $1.603bn on 6 August, up 38%. Enterprise Products Partners posted a record $2.8bn, up 17%. ONEOK raised guidance for the second time this year. Energy Transfer raised its full-year EBITDA range by roughly $500m to $18.8–19.1bn on record volumes.

The tape went the other way for half of them. Over the 30 sessions to 7 August, DT Midstream fell 8.9%, TC Energy 8.3%, Williams 6.5%, Kinder Morgan 5.0% and Enbridge 4.1%, while Western Midstream rose 6.7%, Energy Transfer 4.6%, Enterprise 3.5% and MPLX 3.3%.

The split is valuation and structure, not geography

The hypothesis going in was that American gas names would hold while Canadian, interest-rate-sensitive names gave ground. That is not what happened. The sort is almost monotonic against price: the two cheapest names on trailing enterprise value to EBITDA — Enterprise at 7.94x and Energy Transfer at 9.51x — both rose; the three most expensive — Kinder Morgan at 12.51x, Targa 15.53x and Williams 15.66x — all fell. The partnerships, which return cash through distributions, advanced; the corporations funding the largest construction programmes retreated. Sector research notes the same pattern industry-wide, with free-cash-flow yields moderating at gas-focused corporations precisely because they are stepping up capital spending to chase liquefied natural gas and power demand.

Does the business explain the move? CONTRADICTS. Operating momentum accelerated across the group in the same month the expensive half de-rated.

Williams: the de-rating has a reason

Williams operates Transco, the largest US gas pipeline by volume, plus about 30,000 miles of pipe and 29 processing plants. Second-quarter revenue rose 10.2% to $3.05bn, operating income 33.3% and net income 51.5% to $827m, with operating margin widening from 32.0% to 38.7%. It also closed a $5.5bn purchase of Momentum Midstream, adding roughly 6 Bcf/d of Haynesville gathering and 4 Bcf/d of take-or-pay pipe, and shares slid on the weekend reports of the deal on financing and leverage concerns.

The contracts behind the growth story are binding, not letters of intent. Its Socrates plant in New Albany, Ohio came into service on time, serving Meta's data centre under a ten-year agreement and not connected to the grid at all, skipping a connection queue that averages five years. It has $5.34bn of outside equity from Blackstone, Apollo and KKR behind five such projects.

The cost shows up in the accounts. Williams trades at 27.9x trailing and 29.1x forward earnings — the forward figure is higher, meaning consensus 2026 earnings of $2.42 sit below the $2.52 already delivered — and its trailing free-cash-flow yield is negative at -0.25%. Leverage rises to 3.9x by year-end against a 3.5–4.0x internal ceiling. Valuation verdict: CONFIRMS the de-rating.

Kinder Morgan and Targa: same direction, different arithmetic

Kinder Morgan is the one that does not fit. It fell 5.0% while cutting net debt to EBITDA from 3.8x to 3.6x, holding a $9.6bn sanctioned project backlog and generating a 5.63% free-cash-flow yield at 12.5x EV/EBITDA. Its two largest projects cleared their last regulatory hurdle when the Federal Energy Regulatory Commission (FERC) certificated the $1.7bn Mississippi Crossing line and the $3.5bn South System Expansion 4 on 31 July, and its $1.8bn Trident line to the Texas Gulf Coast has broken ground for phase one in early 2027. Gathering volumes rose 26%. Verdict: INCONCLUSIVE — the price and the fundamentals disagree, and the valuation does not obviously arbitrate.

Targa is closer to Williams. Record Permian volumes of 7.2 Bcf/d, 25% dividend growth and leverage at 3.4x, but $4.5bn of net growth capital against $5.7–5.9bn of guided EBITDA leaves a 1.05% free-cash-flow yield at 15.5x EV/EBITDA, and management said a meaningful cash-flow inflection waits until late 2027. It also warned that roughly $250m of first-half trading margin will not repeat.

ONEOK, at 14.9x earnings and 11.0x EV/EBITDA, supplied the group's most useful caution: one binding one-gigawatt power supply contract signed, but multiple artificial-intelligence data-centre projects still not sanctioned and commercialisation "taking longer than anticipated."

The partnerships simply worked

Enterprise raised its distribution 2.8% and holds leverage at 3.0x; MPLX guides to 12.5% distribution growth for 2026 and 2027 at 1.3x coverage funded organically, with gathering volumes up 15%; Energy Transfer carries a 9.7% free-cash-flow yield at 12.5x earnings. All three grew and all three rose. Verdict: CONFIRMS. Both cautioned on the margin — Enterprise flagged $200m of non-recurring second-quarter demand and coming export-terminal overbuild.

What the chart adds

The trend picture has barely cracked: eight of twelve names still have their 50-day average above their 200-day, Targa unbroken since 12 December. Only Enbridge, TC Energy — which beat consensus by 11.5% on 30 July — and Williams have softened, and PPL alone is in a downtrend. Gas itself settled at $2.69 per million British thermal units on 5 August against an official $3.37 third-quarter forecast, and the 10-year Treasury yield sat near 4.65% — a rate backdrop that should have hurt the high-yielding partnerships most, and did not.

The setup

Where it stands — Guidance rose across the group while the three most expensive, most capital-hungry names fell; the four cheapest partnerships rose.

Would confirm — Williams' free-cash-flow yield turning positive, or Kinder Morgan adding the promised $1bn-plus to backlog in the second half.

Would invalidate — ONEOK's unsanctioned data-centre projects lapsing, or Targa's second-half EBITDA falling below the $5.7bn guidance floor.

Watch next — Third-quarter results from late October; Targa's Speedway and liquefied-petroleum-gas expansions land in the third quarter of 2027.

Valuation — Enterprise 7.9x trailing enterprise value to EBITDA and Energy Transfer 9.5x, against Williams 15.7x and Targa 15.5x.