EMCS changes midstream index composition toward natural gas

The Energy MLP Classification Standard (EMCS) groups midstream companies by the business activity that generated the majority of their cash flow over the trailing four quarters. The standard was introduced about a decade ago. Classifications use public filings, press releases and investor presentations. Companies are assigned a single subsector and there is no “diversified” category.

Two Alerian benchmarks show how EMCS changes index composition. The Alerian Midstream Energy Corporation Index (AMCC) represents North American energy infrastructure C-corporations, while the Alerian MLP Index (AMZ) tracks master limited partnerships. AMZ yielded 6.7% and AMCC yielded 3.5% as of June 26. AMCC’s index rules exclude activities such as marketing, distribution and compression; those exclusions contribute to a larger share of natural gas-focused subsectors in AMCC. As of June 26, natural gas-related assets comprised over three-quarters of AMCC’s weight versus about half of AMZ’s weight.

Valuation differences appear across corporate structures and subsectors. On a weighted basis, AMCC traded at about 11.94x 2027 EBITDA as of June 25, AMZ at roughly 8.89x, and the broader Alerian Midstream Energy Index (AMNA) near 11.56x. C-corporations tend to trade at higher multiples in part because they do not issue K-1 tax forms, follow more traditional corporate governance, and are eligible for inclusion in broader equity indexes.

Subsector business models drive multiple dispersion. Long-haul pipeline operators and liquefaction projects generally operate under long-term, fee-based contracts with investment-grade counterparties, which provide longer cash-flow visibility. Liquefaction projects are often backed by multi-decade sales agreements. Gathering and processing (G&P) assets typically run on shorter contracts, depend on local producer output, and often rely on acreage dedications that commit output from a specific area rather than minimum volumes. Those factors increase volume risk and commodity exposure, and correlate with lower EBITDA multiples for G&P compared with pipelines and liquefaction.

Market performance in 2026 reflected those structural differences. AMNA posted a 25.9% total return through June 26. West Texas Intermediate crude was up about 20.6% year-to-date through June 26. The U.S. Energy Information Administration updated its outlook to expect U.S. oil production to reach a new record in 2027. The G&P subsector led AMNA subsectors on a year-to-date basis, driven by contract structures and shorter-term fees that let operators capture near-term commodity price gains.

Liquefaction companies also recorded strong returns following supply disruptions tied to the Middle East, including closure of the Strait of Hormuz and outages that reduced some Qatar exports. Venture Global, which was about 69% contracted as of February, returned roughly 60.6% year-to-date through June 26. Cheniere Energy returned about 24.3% over the same period. U.S. LNG export capacity is projected to roughly double by 2031, adding about 18.7 billion cubic feet per day, and rising power demand from data centers and other sources could add an estimated 9.9 Bcf/d by 2030. U.S. natural gas demand was about 92.0 Bcf/d in 2025.

The EMCS assigns companies to single subsectors and records the primary drivers of their cash flow. Those classifications are reflected in index weightings, yields and valuation multiples across the midstream sector.