Investors can expect a free cash flow-friendly approach from midstream companies and MLPs in 2021 as the sector emerges from 2020 in comparatively stronger shape than its upstream cousins, experts said on a recent webinar.

“Regardless of what happens with the macro environment and the movement in oil prices, the midstream space is poised to generate meaningful free cash flow next year,” Stacey Morris, director of research for Alerian, said during a joint webcast with SS&C ALPS Advisors. “That free cash flow is really coming from a combination of stable cash flows and significant reduction in capital spending and capital commitment.”

Even before the COVID-19 pandemic struck in the first quarter, capex was on its way down, she said, and the environment the sector is in today discourages the urge to spend.

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