2Executive SummaryKey Themes for 2019We expect simplifications will continue in 2019 with IDR eliminations being the focus as most roll-ups have been announced.There are 13 companies in our coverage that could address IDRs (DCP, PSXP, and SHLX are the most likely). We expect IDR eliminations will be donein a range of 12-17x based off historical multiples.Simplifications Continue in 2019; Focus Shifts to IDR EliminationWe expect broad debottlenecking by late 2019. With Permian pipeline overbuild a growing risk, we don’t expect all announced projects to take FID.Gas is most in need of another project and could see at least one more FID in 2019 (most likely Whistler). On the crude side, we note that MPLX stated they are open to combining PGC with the XOM/PAA JV pipeline.Permian Debottlenecking on the WayWood Mackenzie estimates water management costs reaching $17bln by 2025 in the Permian alone. This potential bottleneck creates a multi-billiondollar investment opportunity as inaction could result in production cuts.Assuming 2-3mmbpd of incremental Permian oil production by 2025; we estimate the need to invest $9-$14bln in new water infrastructure to supportthis level of growth. We see an increasing need for specialized water handlers and pipelines.Produced Water Disposal Increasingly ImportantThere is 250 kbpd of fractionation capacity scheduled to come online in 2019; not enough to remove bottlenecks at Mont Belvieu. Solutions will likelyinclude storage and higher than expected ethane rejection in some basins until additional fractionation capacity comes online. On the pipeline front, we expect roughly 1.2 Mbpd of incremental takeaway capacity to Mont Belvieu will be added in 2019. Fractionation Capacity Remains Tight Through 2019; Relief in 2020We believe peak spending is now behind us, allowing for companies to harvest and return cash to investors or de-lever.We expect de-levering to continue to take priority and see room for to cut leverage at least another 0.5x.We don’t expect buybacks to come into broader focus until 2020; however, we highlight KMI (we expect ~$500mm in buybacks in 2019) and PAA(likely increases distribution for first time since cut) as names focusing on capital returns in 2019.Capex Inflection Could Result in Further Deleveraging and Increased Capital ReturnsJanuary 7, 20193Simplification in 2019: IDR Removals Only Game In Town4Simplification Likely Continues Through 2019Investors Continue To Push For Simplified StructuresSource: Credit Suisse Research, Company FilingsJanuary 7, 2019Roll-ups (GP/LP combinations) dominated the 2018 simplifications; with minimal public GP/LPstructures remaining, we believe IDRs will be the focus in 2019.13 companies under coverage have yet to address the IDR burden; LNG/CQP are the only remainingroll-up candidate but this transaction is likely later-dated.What actions will be taken in 2019We believe valuations for IDR elimination will likely range between 12x-17x cash flow based onhistorical deal multiples.DCP and PSXP are the most likely to take action based on management commentary and theexpected high IDR burdens in 2019. At best, we’d estimate IDR removal to be announced in late2019. SHLX could announce in 2019 too.The move to C-Corp conversions may slow; the obvious candidates are likely behind us now. CurrentLP management teams have expressed tax considerations and an unclear valuation benefit as reasonsto remain an LP.What will simplifications look like going forward。。。。。。