They are clearly in better shape than NKA, of which Barclay's said the following:
"Barclays downgraded Niska Gas Storage Partners LLC (NYSE: NKA) from Equalweight to Underweight, price target lowered from $15 to $9. Barclays analyst says, "Downgrading to UW due to heightened risk of common distribution safety: NKA's guidance cut during FY 2Q 2012 results announcement indicates a 90-100% coverage on common distribution and 45-50% coverage on all units, including the sub units held by the GP, Carlyle/Riverstone. While the company's plan to suspend the sub unit distribution ensures the common unit distribution is safe for now, lack of longer-term GP indication as well as a further deterioration in storage market fundamentals provides little comfort that common unit distribution will be maintained longer term. Cutting distribution during the subordination period can introduce complicated issues and the uncertainty in the process can create stock volatility, based on past incidents."
This sort of offsets some of your comments.
"PNG has underlying cash flow stability from multi-year contracts and low-cost expansions, enabling it to provide and typically meet quarterly guidance, which is noteworthy in a soft storage backdrop."
"Barclays downgraded PAA Natural Gas Storage (NYSE: PNG) from Overweight to Equalweight with a price target of $19.00. Barclays analyst says, "Challenging gas storage market conditions persist, reducing PNG growth prospects. Combining weak gas storage fundamentals (narrow seasonal gas price spreads and low volatility) and the lack of near-term catalysts, we are downgrading our rating and decreasing our price target." "Our $19 price target is based on a 12-month distribution run rate of $1.43 per unit (previously $1.48) and a target yield of 7.5% (previously 6.4%). While we are lowering our growth estimates, we believe PNG's distribution growth rate will improve gradually post-2012. In addition, PNG has underlying cash flow stability from multi-year contracts and low-cost expansions, enabling it to provide and typically meet quarterly guidance, which is noteworthy in a soft storage backdrop."
You clearly need to do more research on the storage market. The oversupply of gas has driven prices down to the point that winter pricing is not much better than summer pricing. There is very little incentive to store gas and wait for better pricing. The incremental supply is being soaked up by conversion of power plants from coal to natural gas. If pricing spikes, drillers need only go to the Haynesville and frac some of the many incomplete wells. When you can bring on wells in the Haynesville at 20 million a day, even with high decline rates, you can put a serious dent in demand in a short time.
Not if the glut shows no signs of going away. Then the spread between current and future months remains compressed. If the spread is narrow there is less incentive to store the gas.
This snippet is from a yahoo summary of NKA's earnings:
"The company blamed its trouble on a glut of natural gas. It said hot summer weather and refilling of inventories boosted short-term demand for gas, but overproduction -- real and anticipated -- undercut winter prices."
Shouldn't the glut be good for storage? where will they put all this oversupply if not with storage companies? Read NKA Press Release...their decline is primarily based on their decision to invest in product and perhaps without hedging.
NKA announced earnings and suspended the distribution on subordinate units (but not on common units). I didn't hear their call but they probably spoke about difficult conditions in the storage business. Suspect that was part of the reason.