How would you value a midstream O&G company?

I've searched around the forum for oil and gas related topics and nearly all the posts were concerned with upstream E&P companies.

I am wondering if anyone could share some insight on how midstream companies should be valued. It seems to me that the NAV model is mostly for E&P companies since its based on proven reserves and production - neither of which a mainly midstream company has.

In particular, I am concerned with finding an appropriate method of intrinsic valuation so I am not worried about comps/precedents. I thought about free cash flow DCF, but the company I'm looking at has huge CapEx which would depress free cash flow and give a lot of weight to terminal value. Is this a case where the discounted dividend model might work? I appreciate any help. Thanks

 

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