•  
  • AMZ Index     299.22
  • AMZ Net Change     1.04
  • AMZ Net Change %     0.35%
  • AMZ WTD   0.35%
  • AMZ YTD   -5.91%
  • As of Date   7/24/2017

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News

sl-advisors.com  Apr 28, 2017

Trump Tax Reforms and Impact on Master Limited Partnerships

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forbes.com  Feb 09, 2017      00:00:00

State Filing Requirements for MLP Investors

cnbc.com  Jan 30, 2017      17:26:00

Donald Trump increases pressure on pipeline makers, his latest industry target

bakerbotts.com  Jan 20, 2017      00:00:00

IRS Release Final Rules on MLP Income

blogs.barrons.com  Jan 04, 2017      21:07:19

Marathon’s Drop Down Plan Boosts Its MLP More than Its Stock

valuewalk.com  Nov 22, 2016      00:00:00

MLP Tax Guide: Key Issues And Benefits

bloomberg.com  Oct 20, 2016      00:00:00

US Unleashes the Power of Shale

velaw.com  Aug 28, 2016      00:00:00

Energy Assets, MLP's or REIT's

bloomberg.com  Aug 09, 2016      00:00:00

Investors are Cozying Up to MLPs

Week In ReviewWeek in Review

  • Jul 23

    Jul 23, 2017

    MLP Weekly: Quarterly Catalyst?

    The impact of Increasing US Shale crude production will begin to be revealed this week as 18 units report their Q2 results.  Investors are hoping higher productions volumes will  translate into improving Distributable Cash Flow and Coverage ratios, providing more safety to attractive yields.  While the Year over Year crude production growth is…

    The impact of Increasing US Shale crude production will begin to be revealed this week as 18 units report their Q2 results.  Investors are hoping higher productions volumes will  translate into improving Distributable Cash Flow and Coverage ratios, providing more safety to attractive yields.  While the Year over Year crude production growth is over 22%,  expected August production will be equivalent to production realized in June 2015.   Bakken and Eagle Ford volumes are lower from the same period, while Permian is higher, highlighting the importance of basin midstream exposure for MLP investors.         Alerian, the benchmark index provider for Master Limited Partnerships, was sold to a Chinese firm, ZZ Capital for $582MM in cash and an additional $230MM of potential payout if Alerian achieves certain financial targets (more assets flowing into passive Alerian licensed MLP products) by 2021.  Alerian's indices are directly tied to $18B of AUM according to their website, and the buyer is assuming that passive MLP assets and products will be remain steady, and perhaps grow, over the coming years.  Other likely bidders, established index sponsors such as S&P/Dow Jones, NASDAQ and Bloomberg, must have been less optimistic based upon recent trends.      Units News   Kinder Morgan, which had to unexpectedly cut their distribution in late 2015 to maintain investment grade status after consistently raising the rate, is back to forecasting aggressive long term dividend growth .   After reducing debt by $5.8B and consolidating their MLP assets to a Corporation,  Management is now guiding to a 60% increase in 2018 and 25% growth through 2020, while maintaining leverage of 5.1x and financing all capital expenditures with internal cash flows.  The quarter revealed higher gas transport volumes (3%) but lower gathering volumes (-12%).  Quarter over Quarter Adjusted EBITDA and Net Income were roughly flat     British Petroleum announced they are considering the launch of an Master Limited Partnership to drop down their Midwest and Gulf Coast midstream assets.  If BP ultimately determines to pursue the MLP IPO, an indirect, wholly-owned subsidiary, BP Midstream Partners L.P. (“BP Midstream Partners”), would file a Registration Statement with the U.S. Securities and Exchange Commission to initiate the regulatory process in the second half of this year. If an IPO is completed, BP would own the general partner of the MLP, all of its incentive distribution rights and a majority of its limited partner interests.   Tesoro Logistics Partners has offered to acquire the units of Western Refining Logistics  in an all-stock transaction with an exchange ratio of 0.4906 TLLP common units for each WNRL common unit, a 9.7% premium to closing price of WNRL prior to the Tesoro announcement to acquire WNRL, but a discount to the previous close before the offer to acquire all units.     Viper Energy Partners, a  Permian focused mineral interest royalty MLP , issued 14,000,000 new units at a 9% discount     Q2 Distribution Announcements   Below is a list of MLP's which have increased Quarter over Quarter Distributions for Q2 2017.  The full list can be accessed here     Fund Flows   Fund Flows turned positive this week, through Thursday, as oil recovered prior to Friday's dip.         Q2 Earnings Calendar for the Week of 7/24   Full Calendar can be accessed here           Questions, Comments, Suggestions?  Please Contact Us Here      

  • Jul 09

    Jul 09, 2017

    MLP Weekly: The Big Picture

    Another week of volatile energy prices, concluding with less conviction that sufficient re-balancing will occur anytime soon, pushing out the prospects for $50+ crude. . While the high beta correlation between oil and MLP's appears to be driven by technical factors, low energy prices offer three ongoing concern's for MLP Investors (leaving aside…

    Another week of volatile energy prices, concluding with less conviction that sufficient re-balancing will occur anytime soon, pushing out the prospects for $50+ crude. . While the high beta correlation between oil and MLP's appears to be driven by technical factors, low energy prices offer three ongoing concern's for MLP Investors (leaving aside the impact of Renewable Energy) which continue to pressure unit values while posing limited short term distribution risk.  While many midstream agreements are demand based, the viability of Shale E&P has a psychological and direct impact on Master Limited Partnerships   1. Will the Capital Markets continue to Fund negative cash flow Shale E&P companies who are not creating shareholder value?   Recently, Anadarko's CEO offered these comments, critical of investors demanding growth over  capital efficiency,  while speaking at an investor conference       While E&P's have easily raised fresh capital since the January as investors bet on higher crude prices, equity investors have seen their capital erode by an average of 28% as indicated in the chart below published by SAFE.       Hard to bet against the capital markets continuing to fund Shale E&P, but on a day to day basis, MLP's are exposed to the only transparent variable, energy prices, which directly impact many of their customers.      2.  Are lower break-even costs a function of sustainable technological changes or temporary lower Field Services fees?   Service Providers have seen revenues and margins decline over the past two years, and while production has increased 10%, they have not been able to raise prices.           3.  Will Investors directly and indirectly increase their MLP allocations enough to sustain the necessary equity financing ?  Apart from low energy prices, the MLP story is a challenging investment thesis for new investors, who are a necessary source of fund flows to Managed Funds,         Unit News   Shortly after EQT announced their $6.7B acquistion of Rice Energy, Jana Partners this week disclosed that their group (Jana plus Cohen brothers), which holds a 6% stake, opposes the transaction on the basis of questionable synergies and a long path towards drop down realization.  Instead, Jana argues that EQT should tranfser all of their midstream assets to EQM, creating more value with lower execution risks.     Trafigura announced a long-term agreement with Plains All American which enables Trafigura to receive up to 100,000 barrels of product per day at Corpus Christi.  The commitment will enable Trafigura to buy from producers in the Permian basin and receive crude and condensate for the company's condensate splitters and export terminal in Corpus Christi that is co-owned with Buckeye Partners L.P   Plains All American and Magellan announced an open season to assess customer interest to expand BridgeTex capacity by 10% to 440,000 bpd   Q2 Distribution Scorecard     Units which have reported their Second Quarter Distributions are listed below.  Subscribers can access the complete list by clicking here         Insider Transactions     This week past, Energy Transfer's CEO Kelcy Warren made the largest Purchase amongst MLP management teams over the past 12 months         Q2 Yield To Coverage   MLP yields reflect the safety of the distribution (DCF Coverage Ratio) and the expected Distribution Growth rate, holding all other factors equal.  Below is the current Forward Annualized Distribution yield plotted against the trailing twelve month Distributable Cash Flow Coverage ratio for the Midstream sector.  Subscribers can access the interactive charts here               Questions, Comments or Suggestions?  Please Contact Us Here        

  • Jun 25

    Jun 25, 2017

    MLP Weekly: Diverted Drops

    Another week of market indicators and sentiment that OPEC production cuts are having a limited impact re-balancing the market, sending crude down to $43, the lowest level since April 2016.  With the majority of E&P companies suffering large losses, MLP investors are left pondering whether expected higher production volumes, and cash flows, are…

    Another week of market indicators and sentiment that OPEC production cuts are having a limited impact re-balancing the market, sending crude down to $43, the lowest level since April 2016.  With the majority of E&P companies suffering large losses, MLP investors are left pondering whether expected higher production volumes, and cash flows, are sustainable if crude trades in the $40-$50 range and E&P has little access to new capital.  Below is the EIA's latest take on the situation:     Such headlines have battered low coverage crude exposed MLPs, the table below includes the highest market cap constituents in the Alerian Index       If you have been following MLPs for the past decade, such market action, void of fundamental support, often provides investors with an opportune time to  selectively increase their MLP exposure.   Negative sentiment has usually been attributed to panicked retail investors, but retail ownership has been on the decline, as disclosed at the most recent MLPA conference.   Fund Managers have the greatest exposure to Energy Transfer Partner's, which is the second worst performing MLP amongst large cap midstream units, down -15.23% YTD, on headline induced fears related to DAPL and Rover.         This past week, MLP investors were reminded lower crude is not the only risk for their LP units.  When EQT Corporation agreed to purchase Rice Energy for $6.7B, Rice Midstream Partner's lost access to their Sponsor's drop down assets, halting the high growth trajectory which supported the relatively high unit price and low yield, dropping units over -24% for the week.  EQT now expects to drop the Rice Energy midstream assets into EQT Midstream Partners, sending units up 5.45%.  The larger beneficiary is expected to be EQT GP Holdings, which jumped  15.54% on expectations that these new drop down assets will be financing by issuing more units, resulting in higher Incentive Distribution payments received by EQT GP Holdings.         Other high growth units predicated on Sponsor's drop down assets are included below           Fund Flows   MLP Funds continue to leak assets as nearly $200mm has been withdrawn the last 4 weeks                 Questions, Comments or Suggestions?  Reach Us Here      

  • Jun 04

    Jun 04, 2017

    MLP Weekly: Mitigating Growth

    If you asked an MLP investor at the beginning of the year if they would expect positive returns from their portfolio if OPEC were to maintain production cuts, crude hovered around $50, production volumes increased 11% year over year,  and 10 year rates were near 2.20%, the majority would have said yes.  As we near the midpoint of year, the…

    If you asked an MLP investor at the beginning of the year if they would expect positive returns from their portfolio if OPEC were to maintain production cuts, crude hovered around $50, production volumes increased 11% year over year,  and 10 year rates were near 2.20%, the majority would have said yes.  As we near the midpoint of year, the benchmark index is down -6.12% for the year as large cap units continue to drift lower.  While the industry promotes growth opportunities resulting from an improvement in fracking technology, the benefits to unit holders have been absent to date.  When considering the aggregate midstream sector, actual total distributions (10Q source) increased 6.35% between Q4 2016 and Q1 2017 , but unit issuance increased by 231MM, resulting in a per unit growth rate of only 4.12%.  If new projects are necessary to offset flat, or more likely, declining cash flows from existing assets, MLP's will continue to face further headwinds.  The market is trading as if the impact from second half expectations may be less rosy than expected, and offset by other issues, which could lead to stagnant cash flows. Until organic fundamentals improve from  increasing volumes, MLP's will face a skeptical investor base unwilling to commit more capital.     MLPA Conference The MLP Association held their annual conference, attended by 800+ bankers, MLP management teams,  PM's,  Analysts and a few individual investors, which followed their standard format of Management teams presenting along with an expert Tax and Fund panel, offering trends and insights.    Last May,  one Panel offered this view on the perceived risks for the year ahead:         This year, it appears none of the above would have been the correct answer as two out of the three choices have taken actions beneficial to MLPs, with negative results so far.  A few noteworthy comments from this year's Panel confirmed that retail investors have been reducing their MLP ownership after realizing  midstream volumes, contracts and margins were in fact exposed to commodity pricing, directly in some cases, and indirectly in all. .   In 2009, 11.1MM K-1's were issued compared to only 9MM  in 2016.  In 2015, individual investors comprised 33% of the K1's issued, but only 27% in 2016.  Institutions, including banks and asset managers, have increased their K1 issuance by 5% over the same period, driven in part by swaps issued by banks to enable foreign exposure to MLP's.   Fund flows overall have been flat and in the last several weeks have turned negative as illustrated below.  Active managers continue to outperform the passive industry benchmark, but such results have had little impact on asset conversion or new flows.             Potential changes to taxation were a topic of interest, but the prevailing point of view remains that without a plan, or competing plans, to consider, it is very difficult to assess the risks and predict outcomes.  Nonetheless, it was pointed out that the MLPA is actively lobbying Congress to ensure that the tax differential is maintained and MLPs are not penalized through any Partnership reform.  Shrinking tax differentials are likely not a good thing for MLPs, previous tax changes (2010) which lowered the differential (10% to 7.5%)  did not seem to have an impact on unit prices.     New Fund   In hindsight, long exposure to MLPs , coupled with a cost effective hedge against oil,  would have protected against principal losses suffered since 2014.  Amplify ETF is rolling out a new fund which they claim is designed to "hedge the impact of oil on MLPs while seeking to provide income and professional management of the portfolio".  The Amplify YieldShares Oil Hedged MLP Income ETF presently holds 20 higher yielding and a 35% short position in a WTI July expiration futures contract.         Questions, Comments or Suggestions?  Please Contact Us Here              

  • May 21

    May 21, 2017

    MLP Weekly: Holding Pattern

    With First Quarter Earnings and Management comments behind us, Master Limited Partnership investors are still left wondering when the fundamental picture will benefit from increasing production volumes.  Large Cap Diversified midstream assets are exposed to basins which are growing, flat and declining, as indicated by the most recent EIA…

    With First Quarter Earnings and Management comments behind us, Master Limited Partnership investors are still left wondering when the fundamental picture will benefit from increasing production volumes.  Large Cap Diversified midstream assets are exposed to basins which are growing, flat and declining, as indicated by the most recent EIA productions numbers         However, increasing volumes are still being offset by Minimum Volume Commitments where producers have been paying for volumes below their production levels.  Private Capital,  which has played a large role in the building out excessive midstream capacity across several basins, still appears readily available, threatening margins and new projects returns.  Greg Armstrong,  CEO of Plains All American, offered the following comments when asked about new Permian infrastructure   "Well, there's no question, it's intensely competitive. I think there's probably been three or four announcements of projects to try and move crude from the Permian basin to the Corpus Christi area and in at least a couple of those cases, these are players that aren't really meaningful players today in the Permian Basin. So, clearly, the robust outlook for crude production is attracting other parties in there……What we can't rule out is that somebody basically buys their way into the business by willing to take an unbelievably low return or at risk of almost no return if the volumes don't develop."   All the while investors of high DCF coverage units get paid 5-7% of tax deferred income, betting sustained low energy prices (sub $40) are very unlikely.  MLP investors were not aligned with OPEC in 2014 and suffered principal losses, so hopefully the current OPEC alignment of higher prices will reward unitholders from higher and sustaining shale volumes.             Unit News   Energy Transfer took another step towards simplification by offering to purchase the outstanding units of PennTex Midstream Partners for $20.00, the IPO price from June 2015.  Energy Transfer Partner's purchased the General Partner in November 2016, when PennTex units were trading at $16.50.     DCP Midstream Partners announced they have "High Graded" their assets by disposing of their Douglas Gathering System to Tallgrass Partners for $128MM in cash.     Sponsor Noble Midstream announced they have sold their  CONE Midstream GP and LP interests  to Quantum Energy Partners after splitting with their JV Sponsor Partner Consol  Energy.  Noble has been shedding their Marcellus assets as the company focuses on the DJ and Delaware Basin and their own Noble Midstream Partners   Teekay Offshore Partners disclosed in their Q1 results that they have a received a Termination notice from Petrobas due to maintenance and safety concerns.  The termination of the Arendal Spirit may trigger debt convenant conditions.   Fund Flows   For the first time in over 18 months, fund flows declined for two consecutive weeks ending with $63B in total AUM invested in packaged MLP products, including Closed End, Mutual Fund, Exchange Traded Notes and Funds.           Premium Subscribers:  Please visit MLPData's SCORES, DCF Coverage, and Unit Metrics Tabs to get the latest current and historical metrics on your positions.         Questions, Comments, Suggestions?  Please Reach Us Here          

  • Apr 30

    Apr 30, 2017

    MLP Weekly: Looking for Volumes

    As we head into Q1 earnings, it will be interesting to test the assumption that OPEC production cuts have been offset by increasing Shale production, which should be revealed through improving volumes for crude midstream units.  The market is not certain that OPEC will agree to extend cuts set to expire in June when they meet on May 25th.  Any…

    As we head into Q1 earnings, it will be interesting to test the assumption that OPEC production cuts have been offset by increasing Shale production, which should be revealed through improving volumes for crude midstream units.  The market is not certain that OPEC will agree to extend cuts set to expire in June when they meet on May 25th.  Any positive fundamental signals may be offset by concerns about increasing interest rates and excessive market multiples.  These conflicting factors may be why fund flows have sputtered the last few months and insider transactions have dwindled.  The table below summarizes the latest EIA's Production By Region figures which are released monthly     The Trump Administration announced their Desires for tax reform, which includes a change to partnership pass through income.  Presently, Master Limited Partnership distributions are taxed  on a deferred basis at the individual's tax rate, which could be as high as 39.6%.  Trumps' plan would limit pass through tax at 15%, a meaningful difference in cash flows and still preferential  to C-Corps. Late last year, the Joint Committee on Taxation released their report, summarized below, calculating $4.9B of government revenue is foregone due to partnership taxation over a a 5 year period, which approximates $2.4B of annual MLP distributions.  The proposed tax rate change would increase after tax distributions to $2.76MM, presumably deferred until a sale, which would be a nice tailwind if the Administration's Desires can be converted into legislation.             Unit News   Sunoco Logistics Partners and Energy Transfer Partner's completed their merger, where ETP holders received 1.5 units in SXL. Upon completion of the merger, Sunoco Logistic Partners changed their name to Energy Transfer Partners, L.P and announced their first distribution of $0.535, a 23% decrease from the distribution rate of ETP prior to the merger after adjusting for the 1.5 units.  Units will begin trading on Monday under the ETP symbol with a new Cusip of 29278N103.  Energy Transfer previously disclosed they expect  to be in position to achieve near-term distribution increases in the low double digits and a more than 1.0x distribution coverage ratio, and realize commercial synergies and costs savings in excess of $200 million annually by 2019.   MPLX announced their intent to convert their Incentive Distribution Rights to common units upon completion of all of their drop down assets, which are expected to be financed with 50% units issued to parent MPC and completed by the end of the year.  Management did indicate that they could delay the drops to benefit from a change to the tax plan as outlined last week by the Trump administration.   Antero Midstream GP LP is expected to price this week between $22 and $25 with a midpoint yield of 1.3% structured as a Corporation.       After indicating in January that distributions would be increasing in the next quarter, NGL Energy Partners' Management team again surprised investors by deferring the increase for up to three additional quarters.  Below is the Press Release from January     “This is the fourth and final quarter of the temporary distribution reduction we announced last April,” stated Mike Krimbill, CEO of NGL. “Looking forward to the next four quarters and beyond, our management team expects to recommend a distribution of $1.76 per unit annualized for the quarter ending March 31, 2017 and to grow that distribution to $2.00 per unit annualized during the year. This would be 28% growth in distributions on an annualized basis for next year. Additionally, based upon current market conditions and commodity prices, we would expect to grow our distribution approximately 10% per year for the three years after fiscal 2018, while continuing to maintain our target distribution coverage of 1.3-1.5 times distributable cash flow. At this level, NGL would generate significant excess cash flow that would be re-invested into our business and used to reduce indebtedness. We have made tremendous progress on our projects and our balance sheet and with the successful start-up of the Grand Mesa pipeline and the various other projects recently completed or in progress, we see significant growth in our cash flows with minimal future capital investment required.”   And Now, about three months later, here is Management's new take   "While NGL had anticipated an increase in distributions commencing this quarter, in light of current market conditions, particularly fluctuating commodity prices and their anticipated impact on NGL's results for its quarter ended March 31, 2017, the Board of Directors has chosen to defer this increase in distributions for up to an additional three quarters. Following this deferral, NGL's management anticipates then recommending to its Board of Directors an increase in the distribution policy consistent with NGL's previously announced distribution guidance."     Enbridge Energy Partners announced their Simplification plan, which includes reducing the distribution by 40%, selling their MEP ownership to their GP, and converting Preferred units owned by the GP.  More details can be found here       Q1 Distribution Announcements     Below is the list of units which have increased their Quarter Over Quarter Distribution rate, while those which have cut Distributions can be found here               Questions, Comments or Suggestions. Please Reach Us Here  

  • Apr 16

    Apr 16, 2017

    MLP Weekly: Permian Push

    The majority of Midstream activity continues to focus on Permian assets where a transaction this week may have set the high watermark for midstream valuations.  With the rig count reaching it's highest level since April 2015, MLPs are looking to add Permian exposure to offset expected weakness from other basins.  As the EIA forecast below…

    The majority of Midstream activity continues to focus on Permian assets where a transaction this week may have set the high watermark for midstream valuations.  With the rig count reaching it's highest level since April 2015, MLPs are looking to add Permian exposure to offset expected weakness from other basins.  As the EIA forecast below illustrates, which assumes crude at $109/bbl by 2040, the Permian is expected to increase and sustain production at a faster pace than the rest of the US.             Unit News   NuStar Energy LP made a significant, and potentially transformational, $1.475B acquisition of Navigator Energy Services, the owner of the Big Spring Gateway System, a Permian based set of pipeline, gathering and storage assets, which commenced operations in September 2015.  First Reserve paid $250MM in late 2014 to acquire Navigator Energy, realizing a 6x return on their investment.  NuStar, which expects to close the transaction in May using debt and equity financing, did not provide any EBITDA guidance on the acquisition other than to state that the transaction will results in a "high single digit multiple as volumes ramp up over time".  Some Analysts have speculated that NuStar paid 15x 2018 EBITDA for the assets.  NuStar launched a 12.5MM unit offering at a steep 10% discount, Sponsor NuStar GP Holdings waived up to $22MM of incremental IDR payments over the next 2.5 years, to mitigate the high cost of capital,.  Arguably the Sponsor will provide no real benefit to the transaction which will be financed entirely by the LP's, but yet will receive IDR payments commencing in 2020.   NuStar also took the opportunity to pre-release their Q1 results, highlighting weaker performance from their existing Eagle Ford assets.  Midpoint DCF for Q1 is expected to be $104MM and Net Income $58MM, similar to Q1 2016, in spite of a $93MM acquisition completed in October 2016 and $500MM of capital expenditures.               Q1 Distributions   Distribution announcements, expected to pick up this week, can be accessed here, with Increase and Decrease sorting         Recent Insider Transactions   Insiders have been purchasing less units since the beginning of the year with the following transactions disclosed this past week           Questions, Comments or Suggestions?  Please Contact Us Here

  • Apr 09

    Apr 09, 2017

    MLP Weekly: Reversing Course

    Units advanced this week as the 2017 average crude and natural gas strip price rose above $53 and $3.40 respectively.  Transactional activity was robust as nearly $4.2B of drops down, divestitures, issuance and take outs were announced.   However, the majority of the transactions involved were to move assets out of the Master Limited Partnership …

    Units advanced this week as the 2017 average crude and natural gas strip price rose above $53 and $3.40 respectively.  Transactional activity was robust as nearly $4.2B of drops down, divestitures, issuance and take outs were announced.   However, the majority of the transactions involved were to move assets out of the Master Limited Partnership structure.  First Quarter Distribution announcements are expected to pick up this week in advance of Q1 results which commence in late April.         Unit News     Sunoco LP announced a strategic shift in their business model, effectively exiting the Convenience store business, while retaining wholesale fuel distribution services to C-Stores.  The first step of their plan is the sale of 1100 stores to 7-Eleven for $3.3B, where Sunoco will continue to provide fuel to the 1100 East Coast and Texas stores under a 15 year take or pay agreement, starting at 2.2B gallons and increasing to 2.7B by 2021.  Management was not willing to divulge the EBITDA multiple of the transaction nor the expected EBITDA run rate post the transaction as they expect to sell the remaining stores, outside of Hawaii, in the next several months, and reduce administrative overhead.  Management commented that the goal of the transaction is to de-lever and provide a simpler, more consistent and predictable set of cash flows on an asset base offering opportunity for M&A consolidation.  This is a dramatic, but necessary shift for Sunoco, which in July 2015 purchased 680 Stripe stores for $1.93B, with about $960MM in new units issued by Sunoco to finance the transaction.  The nearly 23MM of new units generated Incentive Distribution Rights payments to Energy Transfer Partners, which owns the Sunoco IDR's, which will continue to pay ETP for assets now divested.   In November 2015, SUN paid $2.2B to Energy Transfer Partners, at an 8.5x trailing EBITDA multiple, to acquire the remaining Sunoco branded stores along with the the remaining interests in Sunoco LLC.  The company raised $750MM from the private placement of units at $31.00, and financed the remaining $1.5B with debt.  At the time of the acquisition, Management provided the following commentary      Notwithstanding Sunoco's decisions to raise their distribution by 20% since Q3, 2015, their plan did not work out as expected as fuel and merchandise margins declined, leading to increased leverage and lower distributable cash flow coverage, which set the stage for this rather unexpected transaction.  Most expected a SUN distribution cut to address the immediate cash flow problem, which Management now says is off the table as a result of the announced, and expected, transactions.            Although units jumped 21.64% for the week, the forward yield is still 11.22%, as the market is not clear on the bridge to the stated 1.1x DCF coverage and 4.50x-4.75x leverage targets Management outlined in the transaction call.  There is also a tax bill, expected to be in the "hundred's of millions" due upon the sale of the remaining assets.  Also noteworthy is the $150MM Growth and Maintenance Capex, post the transaction, are incentive payments made to current and future distributors.         Tallgrass Energy Partners announced a deal to acquire an incremental 25% of the Rockies Express Pipeline for $400MM in cash, increasing their ownership to 50%.  Tallgrass will receive $75MM from the Ultra Petroleum settlement with REX for their 50% stake, no later than October 30th, 2017.  The purchase price was 10% lower than their previous 25% REX purchase in May 2016 from Sempra.       World Point Partner's Sponsor announced a non-binding preliminary proposal to acquire the outstanding public units for $16.80 subject to 80% of the total units being tendered. Public issuance is approximately 27% with the remainder owned by WPT Inc and affiliates.       Hess Midstream Partners priced 10% higher than the expected midpoint range, and closed 12.56% above the $23.00 IPO price as higher crude and DAPL improved the prospect for higher Bakken production volumes.         Comments, Questions of Suggestions, Please Contact Us Here        

  • Apr 02

    Apr 02, 2017

    MLP Weekly: Higher Oil Higher MLPs

    Units gained some lost ground this past week as crude closed above $50 for the week as OPEC members suggested cuts would be extended past the current June deadline.  Moderate fund flows and stable short interest reflects the positive, but cautious, sentiment as investors await higher volumes for the back half of 2017.  Market conditions continue…

    Units gained some lost ground this past week as crude closed above $50 for the week as OPEC members suggested cuts would be extended past the current June deadline.  Moderate fund flows and stable short interest reflects the positive, but cautious, sentiment as investors await higher volumes for the back half of 2017.  Market conditions continue to be good enough for new issues as two new IPO's are expected, one set to begin trading this coming week.               Unit News   Antero Resources Midstream Management LLC, the entity which indirectly owns the Incentive Distribution Rights for Antero Midstream Partners, filed a preliminary registration for IPO issuance.  The proposed entity will be structured as a C-Corp, expanding the potential investor base once public.   Hess Midstream Partners is expected to price next Wednesday, offering investors a chance to gain direct midstream exposure to potentially increasing Bakken production volumes.     Sunoco LP issued $300MM of Series A Perpetual Preferred shares in a private placement to Energy Transfer Equity, with a 10% cumulative dividend.  The proceeds with be used to lower debt and address leverage concerns.   The issuance compares favorably to Sunoco's fully loaded equity cost of capital of 16.15%       Midstream Distribution Growth Leaders   Midstream LP units with the highest Quarter Over Quarter Distribution Growth have outperformed the benchmark index and large cap units Year to Date         Questions, Comments or Suggestions?  Please Contact Us Here          

  • Mar 26

    Mar 26, 2017

    MLP Weekly: Eyes on OPEC

    Large cap midstream units were mixed again this week as crude traded down while OPEC members plan to meet this weekend to review compliance with the 1.2MM bpd production cut commitments, presently expiring in June.  Early indications are that they group plans to extend the cuts for another six months.  The long view continues to focus on Big Oil's…

    Large cap midstream units were mixed again this week as crude traded down while OPEC members plan to meet this weekend to review compliance with the 1.2MM bpd production cut commitments, presently expiring in June.  Early indications are that they group plans to extend the cuts for another six months.  The long view continues to focus on Big Oil's recent $10B investment in shale expected to produce 1.5MM bpd of new production over the next three to seven years,  a 30% increase to current levels.  The path between now and then will include periods of significant price volatility, which will continue to both boost, and put pressure, on MLP performance as short term oil correlations remain high.              As expected, the Trump administration issued a permit to approve the construction of the $8B Keystone XL pipeline, albeit without the previous conditions that US produced steel must be used in the construction.  TransCanda is expecting to receive Nebraska's approval to construct the pipeline through the state some time in the next 7 months.     Unit News   Genesis Energy Partners quietly issued 4MM new units at a 6.8% discount at $30.65, finishing the week above the issued price at $31.59   Energy Transfer Equity announced a $1B ATM plan with 20 broker dealers   Magellan Midstream announced a New Condensate Splitter Agreement, which will earn a 7x EBITDA return on the $330MM of invested capital, expected to begin commercial operations in June 2017.  Magellan has dismissed it's lawsuit against Trafigura as part of the long term condensate and storage agreement.  Management re-affirmed their previous guidance, due to lower butane prices and margins which account for 13% of their overall margin, offsetting the ~ $20MM of EBITDA expected from the new splitter not previously included in guidance.       Large Cap Yield to Growth   Forecasted Distribution growth rates are less dynamic in 2017 than they were in 2014 with a wide divergence across the large cap midstream units as illustrated below in the Yield to Growth Chart        Funds   As large caps units have offered meager returns to date, active Fund managers have been challenged to generate positive performance in 2017.  Below is a list of Closed End Funds which have positive YTD performance with the majority of yields in excess of 8%.  Our most recent fund concentration list can be found here which illustrate the diverse approach taken by some managers to outperform.             Questions, Comments or Suggestions?  Please Contact Us Here    

  • Mar 12

    Mar 12, 2017

    MLP Weekly: Waiting On Volumes

    Market rebalancing concerns were highlighted after the EIA's report of record setting crude stocks, 528.4MM bbls, and Saudi Arabia's Energy Minister Khalid al-Falih comments that there would be no "free rides" for U.S. shale producers benefiting from the upturn.   While market forecasters continue to highlight future production concerns due to…

    Market rebalancing concerns were highlighted after the EIA's report of record setting crude stocks, 528.4MM bbls, and Saudi Arabia's Energy Minister Khalid al-Falih comments that there would be no "free rides" for U.S. shale producers benefiting from the upturn.   While market forecasters continue to highlight future production concerns due to global investment reductions, the short term process of rebalancing supply and demand invites volatility, offering buying opportunities to those with a longer time horizon.  Most expect midstream MLP's to benefit later this year from hedged production gains continuing through 2018 even if energy prices continue to weaken.       Unit News   American Midstream Partners  up 146% overt the trailing twelve months,, completed their stock Merger with JP Energy Partners    Enterprise Products Partners held their Analyst Day, where management outlined their view that the US market will need to export light sweet crude to balance the market, and the significant NGL opportunity, where supply is expected by grow by over 40% by 2020 to meet gulf coast petro-chemical demand. Project backlog was increased from 6.7B to 7.1B from their previous guidance             Fund Flows   Retail investors continue to add cash to MLP fund products averaging over $200MM per week over the past four weeks         Q4 Results   Seven midstream units reported Year over Year increasing Operating Cash Flow per unit and Distributable Cash Flow coverage,as calculated in our Scores report indicating that most units are still trying to recover from lower volumes and margin.  When screening the universe for DCF coverage  in excess of 1.3x, 17 out of 21 units have a mean YTD return of 9.00%.        Question, Comments, Suggestions:  Contact Us Here          

  • Feb 26

    Feb 26, 2017

    MLP Weekly: Melting Returns

    Snow piles and MLP portfolios have both been melting as the US has experienced the second warmest winter on record, following the warmest winter recorded last year.  Residential power driven gas demand is down over 10% YoY, leaving gas futures down 30% since year end and trading near $3.00 for the majority of 2017 expirations, just in time for new…

    Snow piles and MLP portfolios have both been melting as the US has experienced the second warmest winter on record, following the warmest winter recorded last year.  Residential power driven gas demand is down over 10% YoY, leaving gas futures down 30% since year end and trading near $3.00 for the majority of 2017 expirations, just in time for new production to hit the market in the back half of 2017.   Crude production is on the rise, but still 2% lower than last March according to EIA's most recent report, with Niobrara and Permian offsetting Bakken reductions.     Positive sentiment based upon the assumption that production in the back half of 2017 would improve cash flows from certain basins, is now at risk as MLP investors are reminded that energy prices are still a critical factor of midstream performance.  MLPData's Premium Metrics summarize how large cap midstream units have performed along with their most recent Q4 Unit Metrics, which are collected and calculated daily from reported 8k's, 10Q's and 10k's.          Unit News   Plains GP Holdings announced the sale of 42MM Class A shares for $1.3B at $30.95, which will be used to buy PAA units, the proceeds of which will pay down existing debt.  The offering is expected to close on March 1st.     Tesoro Logistics Partners announced the sale of 5MM units at $56.8, a 4.21% to the previous close, raising $284MM, expected to close on February 27th.     Q4 Notable Earnings Call Comments   Tallgrass Energy Partner's on Rockies Express Contracting:  "With two contracts that extend beyond 2019 both Encana and the Ultra deal, we now have nearly 40% or 700 million cubic feet a day of the west and volumes pre-contracted at average rate of $0.67 per dekatherm. These contracts at a weighted average life of more than five years post 2019. Combined with the fully contracted Zone 3 volumes of 2.6 billion cubic feet a day, we have now re-contracted greater than 85% of REXs original cash flow on a long-term basis. With more than two-and-a-half years remaining before the rest of the western contracts expire, we are confident in our ability to secure additional transportation volumes on REX."   On Incentive Distribution Rights "On IDRs I think if you go back and do a Harvard Business School or whatever Business School you want case study on the MLP space. The ones that have done the best for all the constituencies both LPs and GPs are the ones where you had significant ownership in the GP with IDRs and that is not only just a big corporation and probably not big corporations frankly it's individuals have had huge amount of skin in the game. They've created tremendous value for their LPs and their GPs. I think it's incumbent upon people to decide where they want to invest, if you want to invest at the LP level or the GP level so that's number two."   Energy Transfer on Basin Volumes " We expect the volumes to grow and continue to grow as they have fairly significantly throughout this year. And we expect to play a large role in gathering, processing and delivering the residue and NGLs to market. So, great area for us, will continue to be a huge focus. And we, without a doubt, have the best advantage out there to capture business than any of our competitors."   On supporting Sunoco LP with IDR waivers "To the extent ETE, it's appropriate to support SUN, which is, as you know, you've seen our conduct in the past, that happens frequently from our partnerships. To the extent that that is necessary, that will be provided. I think there's – in my view, there is quite a bit of wood to chop before we get to that. There's some fundamental things that need to improve with SUN and just running the business. And so, we're going to focus on that first. But to the extent that ETE needs to step up, it certainly will."   On Incentive Distribution Rights "We have said recently and we'll say it for everybody here, we think, and it's inevitable, that at some point – not now, but at some point that there will be a complete consolidation of ETE into the family, and how we structure that we don't know. We think it's – we know it's premature for that at this time. We do recognize others have done it. And this sometimes seems to be kind of a herd mentality of what everybody else should do, and that's not what we're going to do."   Sunoco LP commenting on their Financial's  "Let's be clear, leverage and coverage have management's full attention and focus. We will consider and evaluate all options, nothing is off the table. That said, we're not in a position to announce anything at this time, nor will we comment further during the Q&A. We hope to be able to come back to you with a path forward soon."   On the impact of Texas Store Traffic from Higher Rig Counts "I think we'll see increased rig counts but they will be done with significantly fewer people. Just to kind of level set here, while rig counts are up significantly, as we pointed out earlier, given that rig count of over 300 last Friday, still down 60%-some and the guys that are drilling are doing it with lots more automation and a lot fewer employees. I think that's the reality of what we're dealing with."   On IDR Waivers  " So, I think at some point, it becomes just the IDR subsidies are just – become very routine rather than occasionally. I can tell you we've never not done a project because of cost of capital, never once. If a subsidy is required, we offer it. We like that optionality and we also like it because we think ETE is a great acquisition vehicle. We've only done one acquisition involving ETE, that was the Southern Union acquisition, turned out to be really, really great for our unitholders. And we think that we think we can do something like that again. And so, we're open-minded to using that and we're actually back turning in acquisition analysis….I think that the analysis that we have done to-date has been just rolling up ETP and ETE into the same vehicle, therefore reducing the cost of capital, but we haven't looked at SUN. "   Unit Metrics Report for all MLPs available to Premium Subscribers       Natural Gas Yield to Coverage   Midstream units with Natural Gas assets are plotted below comparing forward annualized yield vs Trailing Twelve Month coverage, through the Q4 2016.   Premium Subscribers can access Yield to Coverage details         Fund Flows   New cash has trickled in the last few weeks as only $60MM was allocated to MLP ETF and Mutual Funds this past week vs an average of $193MM the last four weeks           Comments, Questions, Suggestions?  Please Contact Us Here          

  • Feb 12

    Feb 12, 2017

    MLP Weekly: Management Comments

    Fourth Quarter earning calls continued to reveal the lag between drilling expansion and midstream volumes and margins, although the outlook remains very positive for certain MLP assets.  Permian assets should benefit in late 2017, if crude remains stable, while many western assets face fierce competition from excess capacity and falling production…

    Fourth Quarter earning calls continued to reveal the lag between drilling expansion and midstream volumes and margins, although the outlook remains very positive for certain MLP assets.  Permian assets should benefit in late 2017, if crude remains stable, while many western assets face fierce competition from excess capacity and falling production.   Construction began on the final leg of the Dakota Access Pipeline after the US Army of Engineers completed their review and granted the final easement necessary to connect the pipeline underneath Lake Oahe.            Unit News     Tesoro agreed to waive $10MM of IDR payments from Tesoro Partners over 2017 and 2018, which total $138MM in 2016   MPLX and Antero Midstream announced a JV which will expand processing infrastructure at its Sherwood Complex in Doddridge County, West Virginia. The Sherwood Complex began operations in October 2012 and has grown to become the single largest gas processing complex in the Northeast, currently with six cryogenic processing facilities totaling 1.2 billion cubic feet per day of capacity.  MarkWest will initially contribute existing assets to the joint venture consisting of the three processing facilities currently under construction at the Sherwood Complex, as well as associated infrastructure related to the operation of these facilities. Antero Midstream will initially contribute approximately $155 million for its allocated share of processing assets at the Sherwood Complex and ownership of fractionation capacity at the Hopedale Complex.  Antero Midstream will release to the Joint Venture its right to provide processing services on 195,000 gross acres held by Antero Resources in Ritchie, Tyler, and Wetzel Counties in West Virginia, expanding the dedicated acreage to 360,000. .Going forward, it is expected that MarkWest and Antero Midstream will each contribute 50 percent of the future capital investments (expected to be $1.6B) for the joint venture.  Antero Midstream sold 5MM new units to finance the transaction.     Western Gas and Williams Partners announced an asset swap where Western will acquire the remaining 50% non operating interest in the Delaware Basin JV Gathering LLC in exchange for their 33.75% non operating interest in the Rome and Liberty Marcellus based natural gas gathering systems plus $155 in cash.  In addition, Williams Partners has entered into a separate agreement with Anadarko Petroleum Corporation to sell Williams Partners’ 33.33 percent interest in the Ranch Westex gas processing plant in the Delaware Basin for $45 million in cash.   Energy Transfer Equity filed to sell $1B of new units     Earnings Call Comments   NGL Energy Partner's  Opening Comments prior to reporting results on the low end of Guidance "The sector has emerged from the recent challenges and there are significant upside to our business. Obsessing over a quarter's numbers rather than the next three to four years' projected EBITDA just doesn't make any sense."   On Eagle Ford Volumes "We see signs of improvement in the Eagle Ford as well with an expectation that drilling activity will increase as we inch closer to $60 crude prices."   Plains All American on Drilling Lag "As we discussed recently, drilling activities have picked up and there're other very encouraging signs on horizon. But I would note there will be a time delay before our transportation volumes and gathering margins will reflect the benefits of this increased activity. And we anticipate the first six to nine months of 2017 will be challenging"   On Logistics Margins "We just seen a intense amount of competition.  We've probably given 65%, 70% plus of the margin just because of competition out there"   "I don't think there's going to be a large opportunity again for its existing capacity. I think most everybody has tweaked the capacity increases that are available. We think second half of next year of 2017 you could start seeing enough crude. We think by second half of the year, we should start seeing more of a balance between the MVCs and the crude available for, basically for the market."   On a Border Adjustment Tax with Mexico "We think it will have the biggest impact on obviously and these are refiners unless there is an exclusion there, how it affects them will create both opportunities and headaches for mid-stream. But we get paid to move barrels. And whether it's an imported barrel or a domestically produced barrel, I think we’re indifferent   Buckeye Partners Comments On Border Adjustment Tax  "I think a lot needs to take shape before anyone can really give you a precise answer on that. But I think with the work that we’ve done looking at our asset base in our business, I think in the long term it is probably a fairly marginal impact net-net on the business."   On Trafigura's Splitter Termination with Magellan Midstream "we are aligned. We have a great relationship with Trafigura, they are a 20% owner in our South Texas hub and we have worked really well with them and continue to work well with them."     Q4 Distributions Announced This Week       Fund Flows   Mutual Fund flows have remained steady the last several weeks as total flows near $6B over the past twelve months               Questions, Comments or Suggestions?  Please Contact Us Here          

  • Feb 06

    Feb 06, 2017

    MLP Weekly: Simply Smaller

    The march towards Master Limited Partnership Simplification continued this past week removing one of the larger LP issuers from the investable universe, while leaving existing LP unitholders a mixed bag of a 2017 taxable event, a lower dividend, but the potential for future growth.  Incentive Distribution Rights, which over time stress coverage…

    The march towards Master Limited Partnership Simplification continued this past week removing one of the larger LP issuers from the investable universe, while leaving existing LP unitholders a mixed bag of a 2017 taxable event, a lower dividend, but the potential for future growth.  Incentive Distribution Rights, which over time stress coverage ratios and increase cost of capital, is central to the Simplification theme, and is a key driver to the MLP Circle of Life.   An IDR burdened MLP can exist for 20+ years, but M&A can expedite the process, leaving investors with an involuntary, and unexpected, tax event. However, IDRs are associated with high growth units and if fact are imbedded in to all midstream units which have increased distributions by greater than 10% over the past year.  A tough tradeoff for long term investors.         An unintended consequence of the Administration's decision to nominate an existing Commissioner to Chairwoman left FERC with only two members as of Friday to approve new pipeline requests, an insufficient number needed for a Quorum.  Friday afternoon, after a flurry of pipeline approvals (Energy Transfer's Rover, William's Atlantic Sunrise expansion), the Agency issued an order to delegate authority to agency staff in order to reach a Quorum for the next 14 days, providing the  Administration with time to nominate three new Commissioners.       Unit News   ONEOK Inc announced an agreement to acquire the public units of ONEOK Partners in a taxable stock swap, where unitholders will receive 0.985 shares of OKE, a 22.4% premium at the time of the announcement.  While the LP unitholders will be receiving a lower dividend ($3.16 vs $2.46), ONEOK plans to increase the dividend to $2.98 annualized by Q3 2017, and 9-11% annually through 2021.  While unitholders will not receive taxable dividends, ONEOK does not expect to pay any federal incomes taxes prior to 2021 at the earliest.   As a result of the transaction, the Incentive Distribution Rights will be terminated, and ONEOK will cover their expected dividends by 1.2x and will retain their Investment Grade credit.     Vanguard National Resources and Azure Midstream Partners both filed for Chapter 11 Reorganization, an event which may allocate CODI to unitholder's who neglected to sell their units prior to restructuring.       Kimbell Royalty Partners priced below range at $18.00, but closed at $20.64       Enterprise Products Partners - Earnings and Call Comments   On Eagle Ford Production: "We think the Eagle Ford is a sleeper that people aren’t paying attention to and I'll tell you what we like about what we see in the Eagle Ford, one is rig counts were up substantially and people don't realize that they've moved significantly off of their low and continue to add two to five a week. we're seeing smaller players come in. So we think the Eagle Ford is going to be an area where you are going to from a couple handfuls of very large players to smaller players, which is really opposite of what's happened in the Permian.  you're going to see a lag from the time you start drilling and completing to the time the new production comes on.  And that lag is this month's, so call it you know, people projected to be anywhere from 90 to let's say 150 days from the time you deploy rigs, to the time you put that production on. So we're going to see in the Eagle Ford something that’s no sooner than back half of '17 loaded, no sooner than, as far as increases in production."   On MLP Qualifying Income Regulations:  “We believe all or substantially all of the EPD's business activities are qualifying for the final rigs. The question on whether the new rigs are effective or not, pertains to the timing of President regulatory freeze and the dates the final regulations were filed and published in the Federal Register. "   On C-Corp Conversion/Tax Reform:  "We're pretty open from a standpoint of the whether it's to continue in the MLP world as a pass-through or if there's something we need to adapt to going forward, we're pretty open. I think our main focus is to be able to come in and continue to raise capital at an attractive cost. "   Fourth Quarter DCF Compared to Prior Periods         Magellan Midstream -  Earnings and  Call Comments   On Refined Products “We expect base refined products volume to remain relatively flat between years. Even though the commodity environment has improved over the last year, we remain cautious for guidance purposes on demand for distillates in our markets, especially after seeing a decline during 2016."   "The other key component for our refined products pipeline is the average tariffs we charge. You're probably aware that the current FERC indexation methodology is based on the change in the Producer Price Index plus 1.23%. The preliminary change in PPI for 2016 is negative 1%, which will result in basically flat rates for those markets (40%) that follow the index."   On the Use of ATM  "We are in the process of establishing an At The Money  program, but given what we see right now, we do not anticipate the need to use the program until material new organic projects are announced."   On Permian Capacity "We are probably less bullish as a lot of other folks are that we're going to be reaching 100% utilization on existing capacity late this year, early next year."   Fourth Quarter DCF Compared to Prior Periods         Q4 Distribution Announcements           Due to a Technical Glitch, we were not able to Publish the Weekly Article on Sunday and have instead published a limited Update.   Questions, Comments or Suggestions, Please Contact Us Here        

  • Jan 28

    Jan 28, 2017

    MLP Weekly: Trump Pump

    President Trump's Presidential Memorandum issued this week to remove the obstacles necessary for the Dakota Access Pipeline and Keystone pipelines to complete construction, launched MLPs into play as a wider set of investors took interest.   By the end of the week, the benchmark index gave back some of the gains on the poor results and guidance…

    President Trump's Presidential Memorandum issued this week to remove the obstacles necessary for the Dakota Access Pipeline and Keystone pipelines to complete construction, launched MLPs into play as a wider set of investors took interest.   By the end of the week, the benchmark index gave back some of the gains on the poor results and guidance provided by a Canadian sponsored MLP , but still finished the week up nearly 5%.   While these PM actions clearly will enable DAPL to complete their construction, the $8B project economics for Keystone may now be the constraint for development to proceed.. These directives were followed up by a new "condition" that new pipelines must be made with US produced steel, suggesting current plans were to source materials from China.   Nonetheless, the Trump follow through on his pipeline campaign promises propelled 25 units higher by 5% or more as illustrated below.  The market will have to wait to see whether the Administration's new Energy Policies will both stimulate new production while maintaining current energy prices.             Units News     Plains All American, expecting Permian volumes to increase from 2.1MM to 2.5MM bpd over the next few years, announced the acquisition of the Alpha Crude Connector, a gathering and transmission system located in the Northern Delaware Basin, where over $12B of acreage has changed ownership in the last 12 months.  Plains will be pay $1.215B for the midstream asset, a significant multiple over the $300MM invested by Concho Resources and Frontier Midstream, who have agreed to a 10 year term for 315,000 dedicated acres,.  Plains expects the acquisition price to be well below a double digit EBITDA multiple over the next 3-5 years.  In order to finance the purchase, Plains disclosed they have raised $700MM through a Continuous Offering Program since September 2016, and plans to increase their asset sales to $380MM.  Although they plan to finance the balance exclusively with equity, Moody's placed PAA's rating under review for a downgrade, mentioning 5.0x leverage was the target for IG, rather than the 5.5x previous target.      Enbridge announced initial actions from their strategic review, which includes the acquisition of the public units of Midcoast Energy Partners for $8.00, a 5.5% discount to the previous close.  Enbridge Partners will also sell their 99% interest in the Line 3 Replacement project for $450MM, and will fund just 1% of the remaining development costs.  Enbridge Partners will use the proceeds to increase their stake in the Eastern Access project.   In spite of these actions, 2017 DCF is expected to be -12.3% below 2016, which has been supported by a narrow 1.03 TTM DCF payout.   Management included a distribution cut on the list of further actions, and one analyst expects a 40% cut to folllow in the next few weeks.       EnLink Midstream provided their 2017 Guidance which projects a 10% EBITDA increase and DCF coverage equal to or greater than 1.0 through 2018, at which point distribution growth may be viable.       Mineral Rights MLP Kimbell Production Partners looks to price next week, summary can be found here     Q4 Distribution Scorecard   This past week, 13 units increased their distribution, including Noble Midstream Partners, which raised their first distribution 4.7% over their Minimum  Quarterly Distribution, one of the many reasons that units are up nearly 64% since their IPO late September           Yield To Coverage   Midstream Annualized Forward Yields are plotted against the Trailing Twelve Month Distributable Cash Flow coverage.  Premium customers can drill down into the chart for each unit's relative performance and chart against various peer groups.         Earnings Calendar   The following units are expected to report their Q4 results this coming week.           Questions, Comments or Suggestions?  Please Contact Us Here          

  • Jan 22

    Jan 22, 2017

    MLP Weekly: Production Turns

    The benchmark index nudged slightly higher .08% as crude traded unchanged and Natural Gas fell nearly 5% as Winter weather continues to forecast warmer Northeast temperatures.  Rig count increased by 35, the largest weekly gain in five years.  Monthly production estimates from the EIA indicate that all but two basins will have flat or increasing…

    The benchmark index nudged slightly higher .08% as crude traded unchanged and Natural Gas fell nearly 5% as Winter weather continues to forecast warmer Northeast temperatures.  Rig count increased by 35, the largest weekly gain in five years.  Monthly production estimates from the EIA indicate that all but two basins will have flat or increasing production by February, while Year over Year volumes remain 5% lower       The IRS released their Regulations for Master Limited Partnership Qualifying Income, the agency's first set of rules since imposing a pause on the Private Letter Ruling process, the previous method used by prospective MLP issuers to discover how the IRS would regard income associated with energy related assets.  Latham and Watkins will host a Webcast to review the implications, which put at least one MLP, SunCoke Energy Partners, at risk.   The Sponsor, SunCoke Energy. proposed in late October to swap all outstanding SunCoke units for 1.65 shares, at the time with an implied value of $17.80, presently valued at $17.00, a 5% discount to the most recent close.       Unit News     Noble Midstream's Sponsor announced the acquisition of Clayton Williams for $2.7B in cash and stock, adding 71,000 acres from the Delaware Basin.   Viper Energy Partners priced 8.5MM new units at a 7.3% discount, expected to close on January 24th.  Viper also announced volumes have increased 27% from Q3 with average realized total equivalent prices up 10% during the same period.     Sunoco LP announced a strategic process to sell for over 100 real estate assets, which includes company owned locations, undeveloped sites and other excess real estate assets. .   Valero Energy Partners  announced that it has acquired a 40 percent undivided interest in the Hewitt segment of Plains All American Pipeline's Red River pipeline for approximately $70 million.  The Hewitt segment is a newly constructed 138-mile, 16-inch crude oil pipeline with 150,000 barrels per day of capacity.  The purchase also includes a 40 percent undivided interest in two 150,000 shell barrel capacity tanks located at Hewitt Station. .  The pipeline began supplying crude oil to Valero’s refinery in Ardmore, Oklahoma in January 2017.   Tallgrass Energy Partners announced that is has reached a settlement with Ch 11 operator Ultra Petroleum over fees owed to the Rockies Express Pipeline prior to Ultra's Chapter 11 filing.  .  Tallgrass is expected to receive $150MM by October 2017 and has entered into a new 7 year midstream agreement with Ultra, commencing December 1st 2019, which is expected to generate $26.8MM annually for West to East capacity of 200,000 dekatherms per day..     Plains All American Pipeline is expanding the capacity on its Cactus pipeline from McCamey to Gardendale, Texas to approximately 390,000 barrels per day. The expansion will allow PAA to move increasing production volumes from the Permian Basin to Corpus Christi and other delivery points along the system. The expansion includes manifold and metering enhancements at our origination station which are anticipated to be completed in the third quarter of 2017.     Q4 Distributions   The following units reported a Quarter over Quarter increase in their distribution rates.  Premium subscribers can access the Forecast page which provides expected growth rates and total returns.         Questions, Comments or Suggestions?  Please Contact Us Here                

  • Jan 15

    Jan 15, 2017

    MLP Weekly: IDR Out

    Units gave back most of their gains since the New Year as crude had it's first losing week coupled with negative news from from two large cap units.   Incentive Distributions Rights, which reward Sponsors for developing and/or acquiring strong and consistent cash flow assets, which are then dropped down to their Master Limited Partnership, are now…

    Units gave back most of their gains since the New Year as crude had it's first losing week coupled with negative news from from two large cap units.   Incentive Distributions Rights, which reward Sponsors for developing and/or acquiring strong and consistent cash flow assets, which are then dropped down to their Master Limited Partnership, are now in dispose.   IDR payments increase either when new shares are issued and the distribution rates are above the Minimum Quarterly Distribution rate, or Distribution rates increase above the minimum split. The increasing payments, coupled with higher yields, have burdened some IDR linked MLPs by increasing their Cost of Capital, reducing cash flows necessary to sustain and increase distributions.  This past week, Williams Inc became the latest Sponsor to convert their IDR's into LP units, despite signaling prior that no cuts were contemplated until 2018.  Despite the recent actions, there is still a long list of Midstream LP units with Incentive Distribution Rights, each with with a varying impact on the fully burdened Equity Cost of Capital         Williams Inc announced they have converted their IDR rights into 289MM units of Williams Partners, increasing their ownership to 72% of Williams Partners.   To sweeten the IDR swap, Williams Inc increased the dividend by 50% while lowering the Williams Partners distribution by 29%, in order to maintain a DCF coverage greater than 1.1 with an expected 5-7% distribution growth rate.  This plan differs from a set of assumptions Management stated on August 1st, 2016, three days after the Energy Transfer deal was terminated.  At that point, the company summarized their long term plan with the slide below           Unit News   According to a source, Blackstone is no longer considering a rumored $5B stake in from Energy Transfer Partners, which is looking forward to resolving their DAPL impasse post Inauguration Day.  Subsequently, Energy Transfer Equity announced a $580MM PIPE deal to sell 32.22MM units, and in turn, will purchase 15.8MM units of Energy Transfer Partners for $568MM.     Memorial Production Partners reached agreement with creditors which will allow the company to voluntarily file for reorganization under Chapter 11, which may leave remaining unitholders burdened with phantom income due to the Cancelation of Debt Income (CODI).     Fund Flows   Mutual Funds attracted the highest level of inflows since last March as $170MM of new cash poured into MLP funds for the week.             Q4 Earning Release Dates   Kinder Morgan will kick off the Q4 reporting period this upcoming week with Enterprise Products Partners reporting on the 30th.  The full list of earnings release dates can be found here           Questions, Comments or Suggestions?  Please Reach Us Here      

  • Jan 08

    Jan 08, 2017

    MLP Weekly: January Jump

    Units continued their climb during the first week of January as the benchmark index gained 2.5% amidst several MLP announcements targeting simplification.  As we look back at 2016, market fears exceeded reality, offering income and total return opportunities to investors who stayed the course and were rewarded by OPEC's production cuts.  Despite…

    Units continued their climb during the first week of January as the benchmark index gained 2.5% amidst several MLP announcements targeting simplification.  As we look back at 2016, market fears exceeded reality, offering income and total return opportunities to investors who stayed the course and were rewarded by OPEC's production cuts.  Despite declining US production, market sentiment and fundamentals helped to stabilize unit prices, which appear poised to benefit from higher energy prices, production and exports.  A few notable metrics for MLP investors to consider:     Fund Flows -  $5.3B of new cash was allocated to MLP packaged products in 2016,  an 8.5% increase of total Funds AUM.     Short Interest - down 38% between 12/31/15 and 12/15/16   Coverage Ratios - nearly 50% of MLPData's Midstream Scores universe increased per unit Distributable Cash Flow Coverage over the prior year.   Midstream Agreements -  despite the fear of widespread midstream contract re-negotiations after the Sabine ruling only a handful were modified   US Crude Production - Shale production declined 8.7% YoY as of December 2016   US Gas Production - Shale production increased 6.9% YoY as of December 2016     The EIA released their Annual Energy Outlook using a Base Reference case which assumes a relatively steady state of factors and a forward price of $109/b by 2040.  Below are the production estimates under the Reference case     Unit News   KNOT Offshore Partners issued 2.5MM new units at a 7.3% discount to prior close   DCP Midstream LLC, a 50/50 JV between Spectra Energy and Phillips 66, announced that have combined Midstream LLC assets and debt with DCP Midstream Partners, however the JV will continue to own the Incentive Distribution Rights and 38% of the DCP Midstream LP units.  The MLP will be renamed DCP Midstream LP and the ticker will change to DCP on January 23rd. The new entity will be the largest NGL producer and processor in the US and largest MLP G&P.   The JV is committed to maintaining a DCF Coverage ratio equal to or greater than 1.0, and will support the minimum coverage ratio by waiving up to $100MM of IDR payments annually through 2019.  More details can be found here   Global Partners continued to shed assets, the latest being a $17.3M sale to Sprague Partners of their natural gas marketing and electricity brokerage business.   Tallgrass Energy Partners announced the acquisition of Tallgrass Terrminals and the NatGas Operator from Sponsor TDEV for $140MM in cash, an 8.0x EBITDA multiple.  Management commented that 2017 guidance will be provided in February and this drop down was assumed in the previously communicated long term guidance.   Marathon Petroleum, sponsor of MPLX LP, concluded their strategic review and announced they plan to drop $1.7B of EBITDA to MPLX  by the end of 2017 at a 7.0-9.0x multiple, subject to IRS Private Letter ruling approval of the Fuel distribution assets,  The company expects to fund 50% of the acquisition with units, which will be purchased by Marathon Petroleum.  The sponsor also plans to convert their Incentive Distribution Rights into MPLX LP units after the dropdown transaction is completed.  More details can be found here   Antero Resources, sponsor of Antero Midstream Partners, announced 2017 production guidance where the company expects to increase production 20-25% over 2016 guidance.  Antero Midstream anticipates increasing distributions 28-30% through 2020 with 2017 guidance provided below         Q4 Distribution Scorecard   Four units reported this past week, three of which reported a flat distribution, and one with an increase           Questions, Comment or Suggestions?  Please Contact Us Here        

  • Dec 18

    Dec 18, 2016

    MLP Weekly: Follow Through

    Large Cap units gained this week as crude held gains from the Non-OPEC announced production cuts in a calendar month that usually is weak for units.  The benchmark index gained 1.22% advancing the YTD total return to 14.23%.   Cabinet and Agency appointments from the new Administration could not be more friendly and aligned with US energy…

    Large Cap units gained this week as crude held gains from the Non-OPEC announced production cuts in a calendar month that usually is weak for units.  The benchmark index gained 1.22% advancing the YTD total return to 14.23%.   Cabinet and Agency appointments from the new Administration could not be more friendly and aligned with US energy infrastructure, which to date, has had little impact on unit prices since the Election.  Perhaps the market is awaiting to see 2017 guidance and fundamental follow through before they deploy new capital into MLPs.  Other investors may remain concerned about risks, reinforced by the fact that 3 of the 6 largest MLPs have been involved with actions which have reduced distributions or expected growth rates.             Unit News   EQT Midstream announced they expect 2017 Adjusted EBITDA to be in the range of $670MM - $710MM, a 21% midpoint increase over 2016, of which 80% of the revenues are generated under firm reservation fees under long term contracts.  Management expects to increase distributions 15-20% in 2018 and forward for several years.  The GP, EQT GP Holdings, is expected to increase distributions 30-40% for the same period.     Williams Inc announced that Michael Creel, the recently retired CEO of Enterprise Products Partners has been appointed as an Independent Director.  A few months back, Enterprise considered a bid for Williams, fueling speculation that Creel could help facilitate a future transaction.   Energy Transfer extended the DAPL Sale's Outside Termination Date from December 31st  to March 31,2017 in order for the closing conditions to be addressed.     Spectra Energy and Enbridge shareholders approved their merger, which is expected to close Q1 2017.       MLP Taxation   A recent Barrons interview with noted Tax expert Robert Willlens offers insight into the potential impact on Master Limited Partnerships if the pass through and corporate tax rates were adjusted lower, both of which are part of the House plan..       Wood Pellets   The EIA released their survey of wood pellet production, which includes 120 planned or operational facilities with total capacity of 11.4MM tons.  Presently, 3.3MM tons are produced annually with 3.1MM exported to the UK's Drax power plant.     Enviva Partners, an MLP which owns pellet production, transport and export facilities, presently produces 70% of the overall US production, all of which is exported to the UK.  Due to the regulatory nature of the export demand, Enviva has no exposure to energy prices and has outperformed the majority of units over the past twelve months           Questions, Comments or Suggestions?  Please Contact US Here          

  • Dec 11

    Dec 11, 2016

    MLP Weekly: Serious Cuts?

        Not much love again this week for MLP's as the benchmark index gained just 1.07% as crude held last weeks gain on the hopes that Non OPEC producers meeting this weekend will voluntarily cut production.  On Saturday, the non OPEC producers did agree to cut 558,000 bpd of production, starting on January 1st, for at least six months.  Russia…

        Not much love again this week for MLP's as the benchmark index gained just 1.07% as crude held last weeks gain on the hopes that Non OPEC producers meeting this weekend will voluntarily cut production.  On Saturday, the non OPEC producers did agree to cut 558,000 bpd of production, starting on January 1st, for at least six months.  Russia had previously signaled their intent to reduce production by 300,000 bpd, so the new information is that Mexico, Azerbaijan, Kazakhstan and Oman also agreed to cuts.  After the announcement, Saudi Arabia's oil minister commented that "we are going to cut, and cut substantially, to be below the level (486,000 bpd cut) that we have committed to on November 30th" which likely removes uncertainty over the production cuts becoming reality.  Over the past few months, midstream unit prices have been challenged to hold firm in the face of weak energy prices and have not had much upside support as price trends have reversed.  These latest headlines may provided the needed confidence for US producers to commit to new midstream projects, providing MLP's with some real growth visibility rather than the financially engineered transactions which have had not inspired investors.  Given that only one half of 1% ($3B ATV vs $630B market cap) of the aggregate MLP market cap trades on an average day, it does not take much to move the market.    The EIA released their December Short Term Energy Outlook this past week, indicating that crude production will remain flat through Q4 2017.  After the 2016 decline, the first since 2005, the agency is forecasting natural gas volumes to increase 5.8% by the end of 2017.         Unit News   Earlier in the week, the US Army Corp of Engineers deferred their easement approval of Energy Transfer's Dakota Access Pipeline, extending the completion delay likely until the first week of White House transition.  Thousands of protestors left this past week as harsh winter conditions, along with high winds, collapsed many of the tents.     Kinder Morgan, amidst rumors of  Permian and Trans Mountain asset sales, announced their 2017 guidance of $7.2B Adjusted EBITDA, which is essentially flat YoY after spending $9.3B of capex over the past two years.  The forecast assumes $53 average crude and $3.00 natural gas for 2017. Flat EBITDA is partially attributable to the 50% SNG sale to Southern for $1.47B, which will reduce EBITDA by $200MM and improve leverage from 5.5x to 5.3x by year end.   The company expects to spend $3.2B on growth capital expenditures next year, funded by internally generated cash and JV contributions.     OCI Partners has become the latest MLP reversal as Sponsor OCI N.V has offered to purchase OCI Partners in all stock deal where OCIP holders will receive 0.52 shares of OCI N.V. The MLP was first listed in late 2013 and paid out a variable distribution, which for several quarters was $0.    Tallgrass Energy's Rockies Express Pipeline (REX) has announced the expansion project will be operational on December 13th with 200,000 Dth/d of capacity, while the remaining capacity will be used to test the commissioning of the facilities.     USA Compression Partners sold 4.5MM new units at a 9.5% discount with a 13.72% effective yield when considering IDR payments.       Yield To Growth   Below is the Forward Annualized yield for midstream units plotted against the expected mean Three Year Distribution growth forecasts as collected from several sell side analysts.  Premium Subscribers can interactively compare specific MLPs and their peer groups.           Actively Managed Funds     The largest actively managed Mutual Funds are highlighted below, nearly all of which have outperformed the benchmark index on a Year To Date basis.           Questions, Comments or Suggestions?  Please Reach us Here      

  • Dec 04

    Dec 04, 2016

    MLP Weekly: Rates Trump OPEC

      The benchmark index lost -1.22% for the week despite OPEC's announced 1.2MM bpd production cut, which sent crude higher 12.2% for the week.  With OPEC appearing to be more like the UN rather than a Cartel, it is hard to place much faith in lasting production cuts, or the management of OPEC production levels, given the political and shale…

      The benchmark index lost -1.22% for the week despite OPEC's announced 1.2MM bpd production cut, which sent crude higher 12.2% for the week.  With OPEC appearing to be more like the UN rather than a Cartel, it is hard to place much faith in lasting production cuts, or the management of OPEC production levels, given the political and shale dynamics which overshadow such agreements.  The 1.2MM proposed reduction is nearly equal to the production declines from US shale since May 2015.  Units initially responded favorably to the OPEC actions, but reversed course as the market focused of rising rates, which are now near 2.4% for the 10 year Treasury, 34% higher since the beginning of November.  MLP investors must continue to accept the volatility from headline events, and hope that unit fundamentals improve in 2017 from production growth across more than just the Permian basin.     Amongst the large cap MLP's, only Plains All American, which has 18% of their EBITDA exposed to crude prices, was able to hold a gain for the week.          Unit News   The completion of Energy Transfer's Dakota Pipeline continues to be contested by Protesters, despite the US Army Corp's order to vacate the camps on the Corps property.  3500 military veterans are expected to join the protest and rumors have circulated that the National Guard may be deployed, which could further escalate tensions and violence. It is hard to see a resolution which allows construction to be completed which does not involve a concession from Energy Transfer.   Kinder Morgan announced the Government of Canada has granted approval to the $6.8B  Trans Mountain Expansion project. first announced in 2012.  The expansion will increase capacity of the system from 300,000 bpd to 890,000 bpd when it is completed in 2019.   The approval is subject to 157 conditions.         Actively Managed Funds   Investors who have used Active fund managers have been rewarded this year as unit performance has been impacted by many factors.  Two of the largest actively managed funds have achieved +25% YTD total returns with very different portfolio allocations as indicated by the most recently disclosed Top 10 positions summarized below         Fund Flows   Exchange Traded funds gave back $100MM in flows this past week, offsetting the modest gains from actively managed mutual funds, which have added new cash every week since late July 2016.         Distribution Growth   The results to date for units which have targeted and managed top tier distribution growth have been mixed as investors weigh the scenarios which could derail future growth.         DCF Coverage   Through Q3, 26 midstream units have increased their Year over Year Distributable Flow Coverage, which for all but four (MPLX, TOO, BPL, CPLP), had gained at least 10% YTD, outperforming the benchmark index.  Premium Subscribers can access the list under the Scores Tab             Questions,  Comments or Suggestions?  Please Contact Us Here        

  • Nov 20

    Nov 20, 2016

    MLP Weekly: Rigged Up

    Units advanced this week on renewed optimism of an OPEC deal at the end of the month and the addition of 19 more rigs placed into service, 11 of which deployed in the Permian.  The benchmark index rose 2.10% with all but Enterprise Products gaining more than 3% for the week.          According to the latest EIA reports, Production decline …

    Units advanced this week on renewed optimism of an OPEC deal at the end of the month and the addition of 19 more rigs placed into service, 11 of which deployed in the Permian.  The benchmark index rose 2.10% with all but Enterprise Products gaining more than 3% for the week.          According to the latest EIA reports, Production decline rates have been slowing in the Bakken and Eagle Ford, while the Permian continues to moderately increase production, up 1% from the previous year..           Unit News   Cone Midstream will acquire the remaining  25% stake in the Anchor System midstream assets owned by their divorcing Sponsors, Noble Energy and Consol Energy, for $248MM.  The transaction has been financed by the issuance of 5.2MM units to their sponsors along and the balance funded by their revolver.     Plains All American completed their Simplification transaction, which eliminated the future Incentive Distribution Rights in exchange for the assumption of all of their debt and the issuance of 245M units.  Plains GP is now exclusively a C-Corp vehicle which holds Plains All American units, offering investors an alternative for investing in the MLP structure.     Energy Transfer announced they are pursuing legal actions to force the Army Corps of Engineers to approve the easement, which has been delayed again.  According to reports, Kelcy Warren, CEO of Energy Transfer, proclaimed on Friday that they would not re-route the pipeline.     Fund Flows   Positive flows continued for the 7th time in the last 8 weeks, cumulatively nearing $4.1.B in new capital over the trailing twelve months.         Questions, Comments or Suggestions?  Please Reach Us Here

  • Nov 13

    Nov 13, 2016

    MLP Weekly: Piping Hot

    MLP investors were unexpectedly rewarded by an election result of which the financial media opined would send the markets crashing.  Instead, the benchmark index gained 3.46% for the week on expectations that stalled pipeline projects will now be approved along with fewer drilling regulations, potentially leading to an increase in production. With…

    MLP investors were unexpectedly rewarded by an election result of which the financial media opined would send the markets crashing.  Instead, the benchmark index gained 3.46% for the week on expectations that stalled pipeline projects will now be approved along with fewer drilling regulations, potentially leading to an increase in production. With sufficient project returns being the single arbiter for development, Investors can now dismiss recent management comments that Pipe in the ground has appreciated.  Not sure how long the euphoria will last if energy prices do not recover after the November 30th OPEC meeting and interest rates continue to increase, but this week's surge reversed an -8.2% decline since October 20th.  Regulatory and tax changes to the coal industry, coupled with the potential for Mexico to reduce natural gas imports, may also be concerns for midstream assets.           Energy Transfer, which is forging on with the Dakota Access Pipeline project despite protests and a US Army Corp of Engineers request to pause for 30 days. seems to be the greatest beneficiary of the Trump victory.  Politico reported that the Administration will approve the easement plan as early as Monday, although the Administration reiterated no decision has been made.  On their Wed earnings call, the company announced they do expect the pipeline to be operational by Q1 2017, a prepared comment which was more credible by Wednesday morning.     MLP Q3 Results and Trends   We have completed the midstream Q3 earnings cycle with mixed results.  Out of the 54 midstream LPs which we track in our SCORES universe, 26 increased their QoQ Distributable Cash Flow coverage.  Of the that universe. 14 also increased their QoQ Cash Flow From Operations per unit which covered their distribution.   Premium Subscribers can access the SCORES report and UNIT METRICS for all MLPs in our coverage universe.     Unit News   Transocean Partners held a special meeting on November 11th to approve the merger proposal with Transocean LLC, which requires  a For vote from 50.1% of the units not owned by Transocean.  Only 48.6% of the unit holders agreed, and the company adjourned the meeting until November 16th to gain the additional 1.5% consent.   The Energy Transfer complex (Energy Transfer Partners, Energy Transfer Equity, Sunoco Logistics Partners, Sunoco LP and the newly acquired PennTex Midstream Partners) reported their Q3 results with a few noteworthy comments   On the Potential of an ETP/ETE Rollup:  Kelcy Warren commented "It's something we can't hide from.  It's real.  And we will address it in a matter of time, we believe... I think you can read between the lines."  ETE waived $85MM of IDR payments in Q3 to support various transactions.    When Asked if the Army Corp easement approval is the final outstanding item to close the DAPL transaction?  Management "Yes"       Yield To Coverage   With Q3 Coverage ratios calculated, the below chart plots the Trailing Twelve Month Coverage ratio against the annualized forward yield for the top 10 market cap LPs.  Premium subscribers can access the full universe of Yield To Coverage charts here         Questions, Comments, Suggestions?  Please Contact Us HERE              

  • Oct 30

    Oct 30, 2016

    MLP Weekly: Selling Out

    A tough week for MLP's as OPEC negotiations commenced to finalize their previously announced freeze, dropping crude -4.2% and dragging the benchmark index down -3.56%.  Earlier in the week, several deals were announced amongst 6 MLP's to merge or buy GP/LP assets, which did not provide much of a spark prior to the crude decline.  MLP investors may…

    A tough week for MLP's as OPEC negotiations commenced to finalize their previously announced freeze, dropping crude -4.2% and dragging the benchmark index down -3.56%.  Earlier in the week, several deals were announced amongst 6 MLP's to merge or buy GP/LP assets, which did not provide much of a spark prior to the crude decline.  MLP investors may also have hoped to find comfort that short interest has declined over 10% since the end of August and new cash flows into MLP fund products has exceeded $1B for the same period, even prior to the reinvestment of Q3 distributions.         Q3 results from a few of the large cap midstream units provided insight into market conditions with a few notable comments   Enterprise Products Partners reported a QoQ net income decline of 2.46% and their lowest Distributable Cash Flow Coverage ratio reported in over 3 years, as the company anticipates new assets to enter production in 2017. Management offered the following comments during their earnings presentation:   On the Williams Deal "we had some discussions along the lines of Williams and one of the things we liked obviously are the long haul natural gas pipelines, ...But one of the the things which excites us more now is seeing more organic projects with darn good returns where we are control from the get go, and while acquisitions are attractive, we are not going to chase them."   On Producer Activity  "we are seeing a significant change in Haynesville new operators...results are exceeding new producer expectations. "  Eagle Ford - largely not drilling, we expect to see acreage change hands in 2017, but larger than Haynesville.  Also seeing acreage turnover in the Rockies which we consider a green shoot.   On Regulation "I think as you look at constructing new pipe,  you hope it is in Texas and Louisiana."   MPLX LP reaffirmed their 2016 growth guidance, projected to be 12-15% for 2017 and double digit distribution growth for 2018.  Sponsor MPC plans to drop down $1B of EBITDA over the next three years, of which $350MM will occur in 2017, potentially funded by issuing a "substantial" amount of units to MPC.     On Takeaway Capacity "certainly REX Zone 3 expansion at the end of the year is going to help a lot.  But it is really going to be opened up dramatically when Rover, NEXUS and Columbia Gas Pipelines come on,,,we are waiting for gas takeaway to fully unload in 2017 and 2018."   On the DAPL Pipeline  "there are closing conditions required to be met before we can close, and we have not yet closed."   Antero Midstream Partners reported increasing Distributable Cash Flow Coverage, their second highest level since their IPO, as water processing margins improved 17% compared to 2015.     On AR Sustaining Cost Reductions " one can do so much more with less rigs and with frac crews.  So we don't see pressure on the service side that there are still lots of rigs and completion crews.  We have been locking in longer term rig rates that are roughly 60% of what they were on our legacy contracts...maybe 10% or so that we could be giving back over the next number of years."     Units News   Buckeye Partners announced they will pay $1.15B to purchase 50% of VTTI BV, the entity which owns the General Partner, Terminal assets and LP ownership in VTTI Energy Partners, for below a 10X EBITDA, realized over the next 4 to 5 years.  BPL issued 7.750MM units at a 6.5% discount to fund $512MM of the acquisition.  Further details can be found here.   American Midstream Partners and JP Energy Partners agreed to a merger in a unit for unit exchange, expected to realize $10MM of run rate operating synergies.  ArcLight Capital Partners, the sponsor of both MLPS,  will combine the General Partners of both companies.     Energy Transfer Partners agreed to pay $640MM to purchase the General Partner of PennTex Midstream Partners, the Incentive Distribution Rights, 6.3MM common units of PTXP and 20MM subordinated units in PTXP.   PennTex owns midstream assets strategically located in the Terryville Complex in northern Louisiana that consist of a rich natural gas gathering system, two cryogenic natural gas processing plants totaling 400 million cubic feet per day of capacity, along with residue gas and natural gas liquids (NGLs) pipelines.   Williams Partners announced the Atlantic Sunrise project will be fully operational in mid 2018, rather than 2017, due to permitting delays and construction constraints.  The $3B expansion of the Transco pipeline will expand capacity by 1.7bcfd     Q3 Distributions   This past week, 15 midstream units increased their distributions and Memorial Production Partners suspended their distributions.           PREMIUM SUBSCRIBERS CAN ACCESS Q3 DISTRIBUTABLE CASH FLOWS AND UNIT METRICS   Questions, Comments, Suggestion?  Please Contact us HERE          

  • Oct 23

    Oct 23, 2016

    MLP Weekly: Yield Focus

    As we enter another earnings period, Master Limited Partnerships have sailed away from the dark clouds, settling into a valuation range where yield, and not total return, will need to be the necessary allure to satisfy current and future investors.  Of the 78 midstream units in the MLPData universe, over 50% have a YTD total return in excess of 20…

    As we enter another earnings period, Master Limited Partnerships have sailed away from the dark clouds, settling into a valuation range where yield, and not total return, will need to be the necessary allure to satisfy current and future investors.  Of the 78 midstream units in the MLPData universe, over 50% have a YTD total return in excess of 20% with one more distribution to be paid in 2016.  Advancing crude, and the expectation that volumes will increase in 2017, have been mitigated by the equal expectations of higher rates in 2017, arguably a less impactful short term risk to cash flows.   This coming week, 19 Management teams will provide their views on market conditions and near term risks and opportunities, against a backdrop of declining crude volumes as of EIA's most recent Basin Production report:         Pipeline Protests, presently targeting the Dakota Access Pipeline, are increasingly well organized and at times violent.  This past week, over 83 people have been arrested, following the arson set to $1MM of equipment to impede the completion of the project. "It was obvious to our officers who responded that the protestors engaged in escalated unlawful tactics and behavior.." said local Sheriff Kyle Kirchmeier, "the protests was intentionally coordinated and planned by agitators with the specific intent to engage in illegal activities."   It has been reported that the Federal Government has told authorities to stand down, despite the criminal activity, leaving DAPL sponsors in a precarious position.  Other Pipeline Projects which may attract similar protests include Rover (Energy Transfer Partners), Constitution (Williams), Algonquin AIM (Spectra Energy Partners), Atlantic Coast (Dominion), Mountain Valley  (EQT Midstream Partners) and SabalTrail (Spectra Energy). During Kinder Morgan's earning call, Rick Kinder offered his views on the pipeline protests "while the protestors tend to get the headlines, it is still possible to build out new infrastructure. This quarter for example Kinder completed an expansion on our Texas Gas pipeline network. Third, and maybe most importantly I think is to distinguish the permitting environment, both geographically and jurisdictionally."  Kinder added  "There is a big difference for example between state permitted projects where eminent domain is a function of state law and the federally certificated natural gas project. Ultimately we realize that the environment is changing and we are adapting by building those changing circumstances into how we budget and plan our projects."     Unit News   Williams Partners and Crestwood Equity Partners both issued a pre-emptive release prior to Chesapeake's Analyst Day disclosure which announced that their Powder River Basin midstream agreements have been renegotiated.  Details of the new agreement were not provided other than the JV expects the restructured 20 year agreement, scheduled to be effective January 2017,  to include minimum annual revenue guarantees which support the transition to a new fixed fee schedule over the next 5 to 7 years.  Chesapeake has been the beneficiary of these new agreements as summarized in their Analyst Day presentation this past week:       Enviva Partners announced a potential drop down of a new pellet production plant to be acquired in a range between $170MM - $180MM, an implied 8x EBITDA multiple.  The asset purchase will include 10 and 15 year off take agreements for the plant's current capacity.  In order to fund the drop down, Enviva Partners issued $300MM 8.5% Senior notes due 2021.     Martin Midstream Partners announced the sale of their Corpus Christi Crude Terminal to NuStar for $93MM, a 7x EBITDA multiple,  as well as a 38.5% decrease in their distribution, which is expected to result in a 1.20 DCF coverage ratio in 2017       Q3 Distributions   Of the 38 units which have announced their Q3 distributions, 15 have increased, 4 have decreased and 19 remained flat.           Q3 Distributable Cash Flow statements and historical Coverage Ratios will be updated upon release and are available to Premium Subscribers.     Weekly SCORES Reports provide Distribution Safety, Growth Forecasts and short term BUY, HOLD, SELL actions.  SCORES Reports are available to Premium Subscribers.     QUESTIONS, COMMENTS, FEEDBACK?  REACH US HERE AT MLPDATA          

  • Oct 09

    Oct 09, 2016

    MLP Weekly: Higher Crude, Lower MLPs?

    Crude advanced this week 3.3 % on the back of the fifth straight week of stock declines and waning production, but MLPs sold off with the rest of the income oriented assets on the expectations the Fed will raise rates before year end.  The benchmark index declined -2.48% as large cap units were hit hard despite, including Enterprise Products, down…

    Crude advanced this week 3.3 % on the back of the fifth straight week of stock declines and waning production, but MLPs sold off with the rest of the income oriented assets on the expectations the Fed will raise rates before year end.  The benchmark index declined -2.48% as large cap units were hit hard despite, including Enterprise Products, down -2.71%.  which may have further downside if rates peak near the March levels as illustrated in the chart below.           The National Gas Supply Association (NGSA) released their 2017 Winter Outlook Forecast, in which they predict residential and commercial gas demand will increase by 4 Bcf/day on average assuming 12% colder temperatures.  Industrial demand will increase by 0.7 Bcf/day, which will continue to rise as 71 capacity expansions and new build projects, estimated to cost $117B,  in the petrochemical and fertilizer industries are completed prior to 2021.  When all of the new projects are completed, annual gas demand is expected to increase by 3.7mm Bcf/day per.  Offsetting these growth expectations is a 3.3 Bcf/day decline in demand from the electric sector as a result of lower fuel switching between coal and natural gas, attributable to higher gas prices this year. Although LNG is often mentioned as a key demand driver, the NGSA expects demand to average 0.8 Bcf/day, about the same demand growth rate forecasted for exports to Mexico.     Unit News   Sanchez Production Partners announced the acquisition of three midstream and production assets for a total of $74.7MM with a capital commitment of $32.3MM for the completion of the Carnero processing asset.   Sanchez expects to sell 8.8MM new units between $16 and $18, a nearly 60% premium to where units traded prior to the announcement.     Vanguard Natural Resources exercised their grace period for the $15MM interest payment due on their Senior notes.  If the payment is not made by October 31st, a default event will be triggered to the Senior Note holders.   Transocean Partners announced that record holders as of September 22 will vote on November 11 to approve the merger agreement.  Transocean has offered 1.1427 shares in exchange for each Transocean Partners LLC share   Sunoco LP filed a $400MM ATM program with 16 banks to distribute shares subject to market conditions       Q3 Distribution Scorecard   Out of the 9 units which have announced,, 4 units have increased their Q3 distributions, however, all doing so at a declining Quarter over Quarter growth rate.   Our Scores Report provides updated Distributable Cash Flow coverage ratios to determine whether growth rates are achieved by lowering coverage or improving cash flows.         Questions, Comments of Feedback?   Please Reach Us Here        

  • Oct 02

    Oct 02, 2016

    MLP Weekly: OPEC Blinks, Maybe

    Since November 27th of 2014, energy and MLP investors have been waiting for OPEC to change course and cap production to allow the market to re-balance at higher energy levels.  Nearly two years later, Saudi Arabia has managed to organize a consensus that production needs to be capped at 32.5/33MM bpd, an 800k bpd reduction of current levels, with…

    Since November 27th of 2014, energy and MLP investors have been waiting for OPEC to change course and cap production to allow the market to re-balance at higher energy levels.  Nearly two years later, Saudi Arabia has managed to organize a consensus that production needs to be capped at 32.5/33MM bpd, an 800k bpd reduction of current levels, with the details to be resolved at the November meeting.  The original decision to let production run sent the benchmark index down 60% to a low of of 203 ,and the reversal to now cap production lifted the benchmark index by a meager 0.59% to 315.64 for the week, about 4% below the YTD high of 324.39.  So what has changed since November of 2014?  First, OPEC has less influence over energy prices as Russia has been expanding production to record levels over the past two years,  Second, marginal production costs have been dropping, leading to higher production even at lower prices.  Third, technology has been advancing yielding higher volumes from new and existing wells.   And finally, demand growth for crude has slowed down, leaving the market with an enormous glut of crude and products waiting to be consumed, all the while production has continued to increase.     The good news for MLP investors is the OPEC announcement likely will provide greater confidence to both drillers and their investors to ramp up production in 2017 which could lead to new new projects which require long term commitments.  Bankruptcy and counter party risks are also in decline, as indicated this week as Fitch reduced its 2016 US high yield bond default rate forecast to 5% from 6% and expects the overall 2017 rate to finish at 3%, below the 4.1% historical average. Crude oil prices stabilizing in the mid-$40s, coupled with improving conditions in the high yield market, contributed to Fitch lowering this year's expected rate. YTD energy defaults total to $37.5 billion, with $32.9 billion pertaining to E&P companies. Fitch's year-end 16%-18% energy default rate forecast equates to roughly $42 billion-$50 billion of volume. If crude oil prices stay in the mid-$40/barrel range, the lower end of the range appears more likely.     Unit News   Shell Midstream Partners paid $350MM, 8.4x 2017 EBITDA, for a 20% interest in the Mars Crude Pipeline and 49% interest in the Odyssey Pipeline, which will be funded by cash and credit revolver.     Sunoco Logistics Partners acquired the Vitol's Midland Basin Crude System for $760MM, a reported 13x EBITDA multiple, which will be supported by Energy Transfer Partners $60MM IDR waiver to be applied over the next two years, beginning Q3 2016.   Sunoco issued 21MM new units at a 7.4% discount and expects to close the transaction before year end.   Rice Midstream Partners announced the a $600MM acquisition of midstream assets made available from Rick Energy's $2.7B acquisition of Vantage Energy, which consists of 30 miles of dry gas gathering and compression assets.  Management extended their 20% distribution growth guidance through 2023.  To finance the acquisition, Rice Midstream announced a $450MM private placement which expected to close on October 7th,    Columbia Pipeline Partners received an all cash acquisition offer of $15.75 by TransCanda, which recently acquired Columbia Pipeline Group.  The MLP was brought public on February 5th, 2015 at $23.00, paid out $1.09 in cumulative distributions, resulting in a -26% loss to those IPO investors.   Ferrellgas Partners announced the replacement of their CEO and the suggested a distribution cut to $1.00 is being considered in order to reduce leverage.  Their Q4 earnings included a massive write down of their Bridger acquisition after the company reached a settlement with Jamex to halt shipping payments, idling the midstream assets they purchased for $837MM just 15 months prior.     SemGroup approves purchase of Rose Rock Midstream Partners, which is now delisted.       Q3 Distribution Announcements   The first two announcements for this quarter was pre announced cuts from Plains All American and their GP.  Keep up to date on distribution announcements and changes here.           Fund Flows   Positive flows surged this week as over $170MM was added the MLP Exchange Traded Funds, the majority of which have outperformed AMLP, which has about 80% of the total AUM in the MLP Exchange Traded Fund universe.           Midstream Yield To Coverage   As we begin to update Distributable Cash Flow tables and Coverage Ratios upon the Q3 release, below is the current relationship between forward annualized Yield and TTM Coverage for Midstream units     Comments, Questions or Suggestions?  Reach Us Here  

  • Sep 25

    Sep 25, 2016

    MLP Weekly: Falling Stocks, Higher Units

    Units recovered their losses from last week as higher crude lifted the benchmark index +4.52% after the EIA reported another weekly decline of crude oil stocks, which was unexpected in light of the reported higher imports and lower refinery runs.  Comments from OPEC members, scheduled to informally meet on Monday, once again offered mixed and…

    Units recovered their losses from last week as higher crude lifted the benchmark index +4.52% after the EIA reported another weekly decline of crude oil stocks, which was unexpected in light of the reported higher imports and lower refinery runs.  Comments from OPEC members, scheduled to informally meet on Monday, once again offered mixed and conflicting statements which erased much of crude's gains by Friday.           As a follow up to the Dakota Access Pipeline directive, the Obama administration announced Friday that they have invited leaders from over 500 federally recognized tribes to participate in a series of consultations, scheduled for October 25th, aimed at modifying the approval process for infrastructure projects.  In addition to the Dakota Pipeline, two other Energy Transfer pipeline projects (Comanche Trail and Trans-Pecos)  which have been approved, will also traverse contested tribal lands, but presently have the Obama administration's public support.       Unit News   Holly Energy Partners agreed to pay $275MM for refinery assets dropped down from Sponsor HollyFrontier.  The assets are expected to generate $32.3MM in 2017 EBITDA, which is an 8.5x multiple of the acquisition price.  The purchase will be financed in part by a $100MM private unit placement to a set of Tortoise Capital Advisor's customers.  HEP expects to increase 2017 distributions by 8%   CSI Compressco LP raised $30MM from a private placement of Series A Convertible Preferred Units which pay 11% PIK     MLP Fund Holdings   Enterprise Products and Williams Partners had the most significant number of top 10 changes between May and August within the largest actively managed MLP funds.  The most widely held positions across the funds, illustrated in the table below,  have performed very well, the majority of which have had structural IDR changes.           Distributions announcements should commence this week, check here for the Q3 Distribution Scorecard         Questions, Comments or Suggestions?  Reach us Here            

  • Sep 18

    Sep 18, 2016

    MLP Weekly: The Long Game

    A crushing week for MLPs as the benchmark index lost -3.61% on lower crude, which slid 6% after the IEA abruptly lowered their demand growth forecasts by 100,000 bpd for 2016. and 200,000 bpd for 2017 due to weaker demand in Asia and Europe.  Master Limited Partnerships are now a long game investment where investors are betting that the energy…

    A crushing week for MLPs as the benchmark index lost -3.61% on lower crude, which slid 6% after the IEA abruptly lowered their demand growth forecasts by 100,000 bpd for 2016. and 200,000 bpd for 2017 due to weaker demand in Asia and Europe.  Master Limited Partnerships are now a long game investment where investors are betting that the energy cycle will reverse before cash flows deteriorate from weakening organic revenues.  A longer energy cycle, which requires production to drop and the supply glut to be consumed by moderate demand growth,  appears to be extending well into 2017 without a real obvious trigger event to expedite the process.  High yields are presently rewarding investors to accept the risks associated with certain assets, but they may head higher if the glut persists from weakening demand growth.      New Pipeline construction has been garnering greater opposition over the years, but the recent US Federal request to voluntarily halt construction of the Dakota Access Pipeline (DAPL) in a contested area has opened up a new front of concern for operators, in this case,  Energy Transfer Partners, Phillips 66, Enbridge, Marathon and Sunoco Logistics Partners.  Despite receiving NWP-12 clearance to build the $4.8B pipeline project to move Bakken crude to Patoka, IL and completing 60% of the project, a joint statement issued by the Dept of the Interior, Department of Justice and the Department of the Army imposes uncertainty about whether the project will be completed in 2016, or anytime in the near future.  It could be there is now a risk that the recent $2B DAPL minority interest sale from Energy Transfer and Sunoco Logistics Partners to Enbridge and Marathon, announced on August 2nd, may not close as expected in the third quarter.       Energy Transfer, which recently untangled itself from a merger with Williams through a tax opinion loophole, now is faced with one of it's largest projects unable to provide cash flows on their expected $2.16B investment (~ $300MM EBITDA), and the inability to reduce their leverage if the minority interest sale is not closed, due to perhaps a loophole that Enbridge and Marathon lawyers may now begin to search for in their closing conditions.           The public was reminded this week about the economic importance of pipeline infrastructure and the role they play in the cost of gasoline prices at the pump.  The Colonial Pipeline, which transports 100MM gallons of fuel each day to 13 states in the Southern and Eastern US, was shut down after a 6000 gallon spill occurred in Alabama on September 9th.  Without the flow, fuel is being transported by barge, tankers and rail, which is expected to increase prices this week by up to  $0.15/gallon.  Shell Midstream Partners owns a 6% stake in the Colonial Pipeline.     Sentiment and Flows   Sentiment continues to remain neutral to positive with  flat short interest through 8/31 and moderately higher fund flows through 9/14 , the latter of which has added $3.5B of new capital to MLP funds over the past year, a third flowing into open end mutual funds.   Last week rewarded those who added to their short positions on Energy Transfer Equity and Sunoco Logistics Partners       IPO Window Opens   Noble Midstream Partners, the midstream assets of DJ Basin producer Noble Energy,  surprisingly priced above the range with strong institutional demand despite the weakening MLP tape this past week.  Units surged 16.7% above the issuance price with a forward annualized yield of 5.71%,  43 bps lower than Enterprise Products Partners.  Below is the Incentive Distribution Rights table, which pays out 50% when the distribution grows to $0.5625, a 50% increase from the $0.375 MQD         Questions, Comments or Suggestions?  Please Reach Us Here    

  • Sep 11

    Sep 11, 2016

    MLP Weekly: Will MLP Math Return?

    After a record draw down of 2.8% of the available US crude supply, attributable to record refinery run rates and lower imports due to weather and port issues, crude surged through Thursday, lifting the benchmark index by 3%.  On Friday, crude slid 4% as the market realized  the draw down will likely be reversed over the next few weeks, ending the…

    After a record draw down of 2.8% of the available US crude supply, attributable to record refinery run rates and lower imports due to weather and port issues, crude surged through Thursday, lifting the benchmark index by 3%.  On Friday, crude slid 4% as the market realized  the draw down will likely be reversed over the next few weeks, ending the week up just 3%, and dragging the benchmark index down -1.05% for week.  The Enbridge acquisition of Spectra Energy was well received by the market, lifting Spectra's shares 18.4% for the week, well above the 11.5% all stock acquisition premium. The related Master Limited Partnerships all gained slightly except for Spectra Energy Partners.     The Enbridge acquisition deck included a chart which ranked the peer group on expected total return, the sum of the current yield plus expected distribution growth.  This MLP math illustration has been the standard chart to project performance to new investors, and worked quite well until November 2014, at which point the assumption that prevailing yield was stable no longer held true.  We take a closer look at how expected performance and actual performance have diverged later in the article.         The most active Appalachian producer, Antero Resources, increased their production guidance by 22% over their original forecast while reducing cash production expense by 6%, illustrating to investors the improving economics and volumes, in spite of flat drilling and completion capital expenditures, of certain basins.  Apache disclosed a 15 billion barrel "game changing" discovery in  a remote Permian strip of West Texas known as Alpine High, where after drilling 9 wells, the company believes it will be economic to produce at $40 crude and $2.50 natural gas on a full cycle cost accounting basis.     Unit News   Enbridge announced a $28B acquisition of Spectra Energy in a all stock tax deferred transaction,  (11.5% premium on 9/2/16 close) expected to close in Q1 2017.  This is the second large acquisition of a US natural gas midstream asset by a Canadian company and follows TransCanada's $13B cash acquisition of Columbia Pipeline Group, which closed in early July.  The news release simply stated that Enbridge Energy Partners and Spectra Energy Partners are expected to continue to be publicly traded partnerships after the closing, and DCP Midstream Partners will continue to operate as a 50/50 JV with Phillips 66.  Spectra gained 18.4% for the week and the related MLPs all advanced slightly except for Spectra Energy Partners.       Williams Partners disclosed that they are considering a sale of their troubled Geismar Olefins plant after acquiring an 83% interest in 2012 for $2.26B from Williams Inc, and has since invested $810MM to expand the plant. during which time an explosion killed 2 people and delayed full production until June 2015.       Enterprise Products disavowed their interest in Williams, which has weakened units since the rumors were first announced on August 18th, by issuing a press release indicating that Williams was not interested nor engaged, and therefore was no longer pursuing a deal.  Some reports suggest Enterprise offered a 10% premium, which implies that Williams is presently trading well above the rumored offer since the bid was first reported.  The Williams board is very sensitive to criticism at the moment and took issue with Enterprise's choice of words in their press release.         Western Refining Logistics paid $210MM for a set of storage and terminal assets to service the St. Paul Park Refinery at an 8.5X EBITDA multiple which is backed by a 10 year agreement with "certain" Minimum Volume Commitments.  The acquisition will be funded by the issuance of 5.25MM new units and their credit revolver.  The company reconfirmed their 16% distribution growth rate for 2016.       Summit Midstream Partners issued 5.5MM new units at 6.6% discount to the Tuesday close to reduce leverage.  Management previously stated in their Q4 earnings call that no new public equity would be required. Apparently their guidance increase provided the opportunity to issue new units while still achieving their coverage targets.           MLP Math   If we look back at the units with the highest distribution growth over the previous year period, and then consider their expected total returns using MLP Math, we find a significant disconnect between the expected and actual returns.  The disparity is a result of risk premiums which have increased yields, even during a time of significant distribution growth and yield compression in the treasury market, where in some cases the yield widened at a faster rate than the distribution growth rate.  The reasons for the yield increase span a spectrum of concerns, including flat or declining future growth, increasing leverage, capital market risks, and declining cash flows and coverage ratios.   Performance over the next 12-24 months will largely be determined by how the crude rebalancing process is resolved, and for the moment, MLPs seem to be trading in a range many consider to be fairly valued, which has improved sentiment and fund flows.  The longer the rebalancing process takes to resolve, the greater risk of yield expansion as contracts roll over and new projects continue to be deferred.           Question, Comments, or Suggestions?  Please Reach Us Here        

  • Aug 28

    Aug 28, 2016

    MLP Weekly: Sideways

    The benchmark index fell -1.45% as crude slid 3% on concerns over high inventories and skepticism of a potential OPEC production cut as a result of an informal September 26th meeting. The market continues to trade in a narrow range, which could last well into early 2017 if the fundamental trends of supply do not accelerate one way or the other.  …

    The benchmark index fell -1.45% as crude slid 3% on concerns over high inventories and skepticism of a potential OPEC production cut as a result of an informal September 26th meeting. The market continues to trade in a narrow range, which could last well into early 2017 if the fundamental trends of supply do not accelerate one way or the other.  With coverage ratios improving due to both slower distribution growth and new project cash flows, midstream MLP's are in a holding position as it relates to 2017/2018 projects and growth.  The recent rumors that Enterprise approached Williams with an acquisition offer indicates M&A may be the exclusive path to growth over this period, which should not very comforting to unitholders who have experienced the outcomes of previous transactions.     Attempting to time when the energy markets may turn upwards is fraught with challenges of increasing OPEC production and stubbornly higher inventories with a moderate demand response to lower prices.  However, the chart below reinforces that the status quo, at least for OPEC members, will require either a significant structural change to their budgets, and societies, or a more coordinated effort to increase prices and revenues.         Unit News     Williams Inc purchased 6.975MM new units  from Williams Partners in a private placement transaction valued at $250MM.  The units were purchased at $35.84 and will generate nearly $6MM of new IDR payments on an annualized basis.          Valero Energy Partners purchased Marine Terminal assets from sponsor Valero for $325MM at an implied EBITDA multiple of 8x.  The assets consist of tanks for storage of crude and refined products, backed by 10 year agreements with Minimum Volume Commitments guaranteeing 85% of planned throughput.     Phillips 66 Partners announced the acquisition of NGL assets from Chevron for an undisclosed sum, expected to generate $25MM of EBITDA in 2017.  The acquisition wil be funded by existing cash and credit revolver.   Seadrill Partners announced their Q2 earnings in which they provided the following ominous outlook for the offshore drilling market   "However, offshore drilling is a late cycle market and remains highly challenging. There are some signs of increases in tendering activity, albeit from an extremely low base and generally for short term work. There continue to be multiple rigs bid for all opportunities and a significant supply overhang.    The majority of customer conversations continue to relate to “blend and extend” arrangements and other re-negotiations. In some instances rates are being negotiated lower without extending the contract term with cancellation and re-tendering by oil companies as the alternative. "     MLP Scans   For those prioritizing distribution safety, the below scan lists midstreams units with the highest trailing twelve month Distributable Cash Flow coverage as indicated in the TTM Coverage column.  Despite their high coverage, Shell and Valero have under-performed in part due to the equity financing needed to fund future drop down transactions.         The below list represents the best performing midstream units for the month of August         Flows and Sentiment   MLP Sentiment continued to improve as the latest reporting period indicated a 2.00% decline in short interest between July 30th and August 15th.  Through August, fund flow have totaled nearly $550MM in fresh cash, 60% towards Exchange Traded products and the remainder allocated to Open End Funds       Premium Subscribers can Access the Latest Yield To Growth Charts Here   Premium Subscribers can Access the Latest SCORES Rankings Here   Question, Suggestions or Comments?  Please reach us HERE          

  • Aug 21

    Aug 21, 2016

    MLP Weekly: Crude Disconnect

    The benchmark index rose a meager + 0.15% despite the 9.1% surge in WTI crude for the week, which rose on OPEC production cut chatter and a marginal drop in inventories.  Perhaps the market is now focusing on fundamentals, rather than short term crude movements, to determine MLP valuations.  The fundamental picture continues to show declining US…

    The benchmark index rose a meager + 0.15% despite the 9.1% surge in WTI crude for the week, which rose on OPEC production cut chatter and a marginal drop in inventories.  Perhaps the market is now focusing on fundamentals, rather than short term crude movements, to determine MLP valuations.  The fundamental picture continues to show declining US volumes amidst weak energy prices, which are nearly identical to levels from a year ago.          In spite of the current Year over Year parity of crude levels, many units have generated double digit returns         However, the fundamental landscape continues to increase the cash flow risks of assets and units with exposure to Bakken, Eagle Ford and Niobara volumes, in light of the EIA's latest Basin production report.  Some assets in these regions are generating cash flows at Minimum Volume Commitment levels for which the risk or re-contracting at lower rates increase as time elapses at current energy price levels. .            Unit News   Williams Inc announced the election of three new independent members, replacing those who resigned after the Energy Transfer deal was terminated.  Reuters also reported that Enterprise Products Partners approached Williams earlier this summer about a potential acquisition, for which Williams did not respond.      Low Yield Scores   Our Scores report places a focus on Year over Year Distributable Cash Flow Coverage and Year over Year per unit Cash Flows From Operations, two metrics which over time help investors assess the health and sustainability of distribution growth rates.  Below is the list of the lowest yield midstream units and their respective indicators.  Premium Subscribers can access the full Scores report and also receive a Weekly Summary email.       Yield To Coverage   Below is the latest Yield to Coverage chart for the constituents of the Alerian benchmark index.   The chart plots the forward annualized yield against the trailing twelve month Distributable Cash Flow coverage ratio.     Sentiment And Flows     Declining short interest coupled with accelerating fund flows has helped to stabilize units over the last several weeks.  Open End flows reached $156MM this past week, the highest level since March.       Question, Comments or Suggestions?  Please Contact Us Here      

  • Aug 07

    Aug 07, 2016

    MLP Weekly: Corrective Actions

    The benchmark index fell -1.20% for the week after being down nearly -3.5% on lower energy prices earlier in the week.  Despite the otherwise positive news related several Joint Ventures and other strategic announcements focused on reducing leverage and improving balance sheets, Magellan Midstream and Enterprise Products had a curious week, both…

    The benchmark index fell -1.20% for the week after being down nearly -3.5% on lower energy prices earlier in the week.  Despite the otherwise positive news related several Joint Ventures and other strategic announcements focused on reducing leverage and improving balance sheets, Magellan Midstream and Enterprise Products had a curious week, both sliding over -3.75% for the week.  GP Sponsored units with visible EBITDA and healthy balance sheets continued to lag the benchmark index, apparently on their sizeable need to access the equity markets to fund their drop down inventory.             Units News   Energy Transfer Equity disclosed an IDR waiver, which will be effective as of June 30th 2016 through December 31, 2017, where Energy Transfer will waive $720MM of Incentive Distribution Rights payments from Energy Transfer Partners, in return for $1.8B of allocated depreciation, ammortization, depletion or other form of cost recovery over the same period.       Williams Inc  announced they plan to reduce their dividend 68% to $0.80 per year, from Q3 through the end of 2017.  The reduction enables WMB to invest $1.7B in Williams Partners through 2017, and will also help to de-leverage the balance sheet     Transocean announced their intent to purchase Transocean Partners in an all stock deal where RIGP holders will receive 1.1427 shares of Transocean, expected to close in the fourth quarter. Since their IPO on 7/31/2014, Transocean Partners was not able to raise the dividend from $0.36, which resulted in no IDR payment obligations       EnLink Midstream announced a new Joint Venture with NGP focused on the Lobo II expansion project in the Delaware Basin.  The partnership contributed $230MM of assets and a commitment to fund $285MM of new projects and acquisitions, while NGP committed $400MM of capital.  Enlink will retain the option to purchase from NGP their interest at predetermined multiples.     In two related transactions, Energy Transfer Partners, Phillips 66 and Sunoco Logistics Partners announced that funding has been completed for the Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCOP), the former expected to be in service by the end of 2016.  The 470,000 bpd pipeline will transport crude from the Bakken/Three Forks area to midwest destinations, for which capacity is under contract, with some flex volumes,  and the ability to add 100,000 bpd of new capacity.  Subsequently, Energy Transfer and Sunoco Logistics Partners announced the sale of of a minority stake (36.75%) for $2B to Enbridge and Marathon.   A new open season is expected in Q3, at which point Marathon is expected to enter into a long term volume commitment, and rescind their commitments to the Sandpiper Pipeline project.       Q2 Earnings Highlights   Nustar reported higher product volumes offset by MVC revenues on their South Texas Crude Pipeline System   Magellan Midstream Partners reported higher products pipeline margins due to gasoline volumes, but lower crude margins and a $9.2MM reduction in BridgeTex earnings due to customers shipping at their minimum volume commitments.       Plains All American announced a 5% reduction in EBITDA over the previous year, but 5% ahead of their midpoint guidance, on higher Facilities margins.               ONEOK Partners  reported double digit volume increases across all of their SCOOP and STACK assets resulting in a +17.5% in YoY EBITDA.  Management noted that they expect to benefit from ethane recovery in 2017, which have offset to date by deficient MVC.   As a result of restructuring agreements, management reported a 12% QoQ increase in average fees.     The full list of units which reported Q2 results can be found here.  Premium Subscribers have access to the most current, and historical, Distributable Cash Flow, Guidance  and Unit Metrics.     Q2 Comments   Magellan Midstream CEO on shipper volumes "the general answer is that we are seeing volumes migrate to minimum volume commitments. If you look at the differentials, in many cases, product price differentials are below the cost to ship, and people are acquiring barrels to meet their MVC commitments.   On Permian production and takeaway capacity " we believe the thesis that crude prices will rebound to generate the kind of production in the Permian that's not going to have an overcapacity situation on pipe takeaway.  But our working assumption is that there is going to a year or two of overcapacity in the market."     Plains All American CEO on basin volumes "the one area that appears to be the most resilient, if not actually kind of over-performing a little bit is in the Permian."   On Industry consolidation "If you ask me what area we have been consistently wrong, it's in projecting the more consolidation because we see the rationale, the reason for it, but its one of the hardest things to make happen and there is all kinds of issues that get involved in that..a head fake or resurgence in the market that makes everybody feel like we're only thrr or four months away from everybody pulling out of a down cycle, it tends to freeze all discussions.    Genesis Energy Partners CEO on Marine Services: "Additionally, we faced certain challenges on utilization and rates for our inland barges in large part attributable to fewer long voyages from the midwest to the Gulf Coast than we have historically experienced. We believe these conditions may be reflective of certain aspects of the changing dynamics in refining operations which we must continue to monitor in future periods."     Energy Transfer CEO on distribution growth vs improving coverage "It's our intention that ETP should not be hanging around the 1 coverage ratio.  It should be handing around a 1.1x or 1.15x ratio going forward.  Now, that's not to get anybody depressed that we don't have an aggressive distribution strategy.  We do,, but I think our number one focus right now is to get ETP into that healthy zone of coverage.  And then we will resume increases."     Q2 Distributions   This past week, 9 units announced distributions, 5 of which were an increase and 4 were held flat from the previous quarter.  In aggregate, 40% of MLPs have raised their Quarter over Quarter distribution while less than 10% have reported an increase in Distributable Cash Flow coverage for the same period.       Social Media and MLPs   This past week, the CEO of Tallgrass Energy Partners chose to comment on two unique items on their conference call.  First, that within social media, a group (a very small one) of twitter handles have joinkingly created a meaningless game to note the number of times a certain phrase has been used by the Tallgrass management team during their earnings calls.  Second, that the Hedgeye Energy analyst suggested that a major default by a shipper on the Pony Express was on the horizon, for which the CEO alluded to possible legal auction for socializing misinformation apparently.     While it is safe to say that those who opine about MLPs on Social Media/Twitter comprise a very small universe, in the case of Tallgrass, the universe is much smaller, but apparently it is the most visible, and management believes a response is necessary when the banter either becomes personal or misleading in their view.   Kevin Kaiser, the lead Energy analyst at Hedgeye, should be recognized by MLP investors, given his short focus on a subset of units which he believes are overvalued.  In the case of Tallgrass, Hedgeye added TEP to their short list in late May and interest has been building as illusrated below, leading to a 10% decline.  Tallgrass management has opted to address what they believe are false claims, following in the footsteps of Rich Kinder's approach, which certainly did not work out well for those who followed his advice of "you sell, I buy, and lets see who comes out ahead."  Certainly a different set of circumstances and triggers, but engaging in the banter has created more attention with questionable results.          Regarding the BCEI shipper deficiency claims made by Hedgeye, and refuted by TEP, it turns out that despite BCEI's disclosure that it has an obligations to ship $17MM on the Pony Express pipeline, it actually does so through another marketer, which assumes the risk of default, leaving both sides claiming victory.       Question, Comments or Suggestions? Please reach us Here    

  • Jul 31

    Jul 31, 2016

    MLP Weekly: Q2 Earnings

    Units finally were impacted by weaker energy prices as the benchmark index slid -1.95% while WTI crude sank -5.9% for the week and nearly -14% for the month of July on heightened concern about rising gasoline inventories and increasing crude production.  E&P companies reported significant reductions in Q2 margins and refiners have struggled on…

    Units finally were impacted by weaker energy prices as the benchmark index slid -1.95% while WTI crude sank -5.9% for the week and nearly -14% for the month of July on heightened concern about rising gasoline inventories and increasing crude production.  E&P companies reported significant reductions in Q2 margins and refiners have struggled on lower crack spreads from excessive product supplies, the latter of which has impacted MLP's with direct and indirect exposure.           As units report their second quarter performance, investors will be able to better to assess the extent of margin reductions, along with possible volume declines.  Nearly 40% of the units which have reported their Q2 results have raised distributions, many of which at the expense of distribution coverage.  Premium Subscribers have access to our Distributable Cash Flow tabs which provide a current and historical view of Coverage ratios and details of what each includes in their calculation.       Q2 Distributions   In the past week, 38 units announced distributions of which 13 increased the Quarter over Quarter rate, 2 decreased and 23 held flat their distributions. Quarter to date, 30 out of the 79 units have reported an increase in their distributions         Q2 Earnings Highlights     Western Gas Partners announced a 2% increase in natural gas volumes from the DJ Basin and Marcellus, but 15% lower than the previous year.  Crude/NGL volumes were 2% higher than the previous quarter, but only 1% lower than the previous year.  The company raised EBITDA guidance range by 5%         MPLX increased their 2016 midpoint EBITDA guidance by 1.8% on the expectations of higher volumes while reconfirming the 2016 forecast remains unchanged as they expect processed volumes to increase approximately 15% and Marcellus and Utica processing to remain at 80% of capacity through 2016.       Enterprise Products Partners reported a volume increase of 5.2MM barrels across their assets, resulting in roughly the same margin as the prior quarter.  $600MM of new assets were placed in production this quarter, with the remaining $1.4B to be completed this year.     EQT Midstream, with 82% of revenues backed by firm reservation fees, reported double digit increases in gathering, transmission and storage revenues which led management to increase their 2016 EBITDA guidance by 1.8%.  Management expects to increase distributions by 20% in 2017 and at least 40% for EQT GP Holdings.       Phillips 66 Partners announced higher throughput as a result of expanded refining operations and re-affirmed their 2018 EBITDA target of $1.1B.       Notable Comments   Western Gas CFO 'The market continues to be awash in Private capital....bidding up asset prices for assets which have been clearing"   Enterprise Product Partners CEO "The move from $26 to over $40 in crude and natural gas from less than $2 to $3 frankly was an easy call.  The reality is these prices simply don't work and cannot be sustained. "   EQT Midstream President commenting on their thoughts about Water assets "The concern, and maybe its one that we wind up getting over.  But the concern is that it doesn't have quite the annuity features that the MLP investors are looking for in the gathering business."    MPLX CFO on reduced Utica volumes "In the Utica, what is really going on there is sort of the macro environments slowing the rate of growth for the producer customers, they are really motivated by the ultimate net backs up there. And we are still seeing very strong upstream economics for them, but the pace for drilling is really for them focused on the downstream pipeline projects like Nexus, like Rover and some of those things.  So we are hearing good optimism from the producers, but some of those downstream projects need to come online to release some of ducts that are going on in that area. And given all of that, we are still anticipating better volumes towards the end of the year based."     Unit News   Shell Midstream Partners announced an acquisition of a 2.62% interest in the Explorer Pipeline, an 1830 mile products pipeline with an average flow which exceeds 600,000 bpd.  The undisclosed price will be funded by available cash.   Williams Partners announced FERC approval for two Transco expansion projects, expected to be in service by late 2017, fully contracted by National Grid and Dominion Virgnia Power to deliver 365,000 dekatherms per day.     Shell announced that they have deferred their Final Investment Decision for the $12.3B Lake Charles LNG Export project.  The project was expected to generate over $1B of incremental Distributable Cash Flows to Energy Transfer by 2022.  Last November, Energy Transfer included the below illustration in their Lake Charles Analyst Day presentation         Questions or Comments, please Contact us Here  

  • Jul 24

    Jul 24, 2016

    MLP Weekly: Fundamental Focus

    For the third week in a row, the benchmark index advanced higher 0.76% against weakening crude prices, the latter impacted by expanding inventories.  This week, 27 units will report their second quarter results after announcing distributions this past week.  Assets, contracts and counter-parties vary across the universe of MLPs, but regardless of…

    For the third week in a row, the benchmark index advanced higher 0.76% against weakening crude prices, the latter impacted by expanding inventories.  This week, 27 units will report their second quarter results after announcing distributions this past week.  Assets, contracts and counter-parties vary across the universe of MLPs, but regardless of the risks that each management team seeks to mitigate, the head-winds from lower volumes will increasingly challenge margins and distributable cash flows.  The table below , with data provided by the EIA, illustrates the challenges for those with crude exposure to the Bakken and  Eagle Ford basins.         We will be keeping a watchful eye on Distributable Cash Flow Coverage ratios and Cash Flow From Operations to assess the impact these declining volumes are having on the stability of distributions and the outlook for growth.     Q2 Distributions   This past week, 35 units announced distributions with 15 increasing their distributions, 20 holding flat, and no distribution cuts announced.         The below chart plots the forward yield against the trailing twelve month Distributable Cash Flow Coverage ratio for the distribution growth leaders as announced through this past week.  Investors should expect coverage to be maintained for units which are increasing distributions.       Unit News   Kinder Morgan reported their Q2 results, and despite positive trends related to Power and Exports to Mexico, the company continued to forecast EBITDA 3% below their 2016 Guidance, despite less than 0.003% of revenues related to default (the majority from Peabody) and 38% of all Natural Gas volumes carried over their infrastructure.       Genesis Energy issued 8MM new units at a 5% discount to reduce debt while indicating an increase in Gulf of Mexico volumes will improve Net Income.  The company also suggested the future may include lower distribution growth in order to further reduce their debt.     Blueknight Partners announced the purchase of 9 Asphalt Terminals from privately held Ergon for the issuance of 18.3MM Series A Preferred units, while simultaneously selling their General Partner and Incentive Distribution Rights to Ergon for an undisclosed sum.  Blueknight purchased the 13.3MM Series A Preferred owned by Vitol and Charlesbank for $95.3MM   Tallgrass Energy Partners announced a binding open season for additional condensate capacity on the Pony Express Pipeline between Colorado and Oklahoma, concluding on by August 31, 2016.         Premium Subscribers:  Unit Metrics and Scores will be updated upon 10Q filings.        

  • Jul 17

    Jul 17, 2016

    MLP Weekly: Summer of Simplification

    The benchmark index advanced 1.69% as crude fluctuated on increasing gasoline inventories and bearish comments from the IEA, closing the week up 1.19%, the second week in which the benchmark index gained in excess of commodity prices. The credit markets are now open to an expanding set of issuers, while management teams continue to prioritize…

    The benchmark index advanced 1.69% as crude fluctuated on increasing gasoline inventories and bearish comments from the IEA, closing the week up 1.19%, the second week in which the benchmark index gained in excess of commodity prices. The credit markets are now open to an expanding set of issuers, while management teams continue to prioritize repairing their balance sheet, over distribution maintenance and growth, by simplifying their structure through a variety of methods.  Declining volumes and lower energy prices are still expected through the remainder of 2016, but market sentiment has been improving, as indicated by stable and increasing fund flows, declining short interest and improving credit yields.  Second quarter results commence on July 20th, when Kinder Morgan will report their results, providing investors insight into the stability of margin and cash flows, as producers continue to indicate successful (lower rates) re-negotiation of midstream agreements.   Investors who added to their MLP positions at year end, when crude was trading at $37.00, or about 20% below the current front month, have realized outsized returns as indicated AMZI performance attribution table below          Unit News     Plains All American announced their Simplification plan, which eliminates their Incentive Distribution Rights payments and lowers their distribution by 21% starting next quarter.  Further details and analysis can be found here   In February, Williams Inc announced plans to sell their Canadian operations, at which time the market expected a $1B transaction. This past week, Reuters reported the asset sale could fetch up to $2B as bidders enter the final stages of the process.   Perhaps adding to the optimism of a higher bid, CPPIB's Wolf Infrastructure announced plans to buy 50% of Devon's stake in the Access Pipeline for $1.2B USD.   Antero Midstream  preannounced Q2 volumes, indicating 3% to 9% Quarter over Quarter volume increases across their assets.  The partnership also announced a 20% increase in dedicated acreage from their Sponsor as a result of the Marcellus acquisition as well as a 15% purchase of Antero's Stonewall gathering pipeline.   Viper Energy Partners, Diamondback's MLP asset, reported that it will be on low end of their 2016 production guidance as a result of completion deferrals.     EnLink Midstream Partners announced an open season on its Greater Chickadee crude oil gathering system servicing Permian production, which is expected to cost between $70 and $80MM.     Distribution Announcements   This past week, the following units reported their Q2 distributions.  We expect about 25 units to report their distributions this forthcoming week         Sentiment   While fund flows are not driving units higher, they have continued to remain stable and positive, nearing $1.9B over the trailing twelve months across the MLPData funds universe         Short interest decreased 5.2% during the last reported period of 6/15 through 6/30.  The performance of units with the greatest decline are show on the chart below           Comments, Questions or Feedback?  Please contact us HERE    

  • Jul 12

    Jul 12, 2016

    Plain Simple One and Done?

    On Monday, Plains All American announced the conclusion to their Simplification, intended to address the Incentive Distribution Rights payments made by Plains All American, which are about $600MM over the trailing twelve month period as show below.  The Summary of the Simplification process, expected to close in the late 2016,  includes the…

    On Monday, Plains All American announced the conclusion to their Simplification, intended to address the Incentive Distribution Rights payments made by Plains All American, which are about $600MM over the trailing twelve month period as show below.  The Summary of the Simplification process, expected to close in the late 2016,  includes the following   -  Q2 Distribution will remain flat at $0.70   -  Q3 Distribution will be cut 21% to $0.55  (forward yield 7.8%)   -  PAA will exchange 245.5MM units for the termination of the Incentive Distribution Rights, owned indirectly by Plains All American GP, and assume the $593MM of debt for a total   transaction price of $7.2B in a tax free transaction   -  PAGP will remain a publicly traded company with indirect ownership of 100MM units of PAA   On the call held on Tuesday morning, Management provided the following additional details   -  As a result of the IDR termination, the company will reduce distributions by $320MM per year   -  Minimum Distributable Cash Flow target Coverage will now be 1.15x, distribution will be held flat until target is met   -  Company expects PAGP will not pay corporate tax for 10+ years  and will be a C-Corp vehicle for PAA shares   -  Management suggested the distribution level has been reset to support (1.0x coverage) the most pessimistic scenario provided during the Analyst Day   -  Company plans to use ATM to reduce leverage    -  Preferred holders opted not to convert to equity as part of this process, receiving $0.10 less than unit holders   -  Mgt Expect Rating Agency's to consider the transaction with positive implications; Agencies did not receive sign off, but were briefed       Plains also reaffirmed their 2016 Guidance, despite their expectations and forecast assuming 2016 Crude prices will average $47.50 and $67.50 in 2017 with a volume decrease of roughly 5% as indicated below       Guidance History as Provided by Management          

  • Jul 10

    Jul 10, 2016

    MLP Weekly: Distributions Ahead

    After the July 4th Holiday, units withstood a 7.3% decline in crude as the benchmark index slipped just -0.16% for the week. Crude fell sharply after EIA reported a lower weekly draw on supplies, slightly offset by the employment report released on Friday. Perhaps a good sign that MLP commodity correlations have been reduced from the .60x 5 year…

    After the July 4th Holiday, units withstood a 7.3% decline in crude as the benchmark index slipped just -0.16% for the week. Crude fell sharply after EIA reported a lower weekly draw on supplies, slightly offset by the employment report released on Friday. Perhaps a good sign that MLP commodity correlations have been reduced from the .60x 5 year rolling average since the crude crash of November 2014, at least between the $40 and $50 trading range, which many expect to persist through late Fall   Top Index Constituent Performance   Bottom Index Constituent Performance       On July 1st, the US Court of Appeals issued a decision in regards to a case filed by shippers which contested whether FERC rates should consider Income Tax Allowances when Master Limited Partnerships own controlling interest in the FERC regulated assets. In 2005, FERC allowed Income Tax Allowances to be included in the cost of service calculation if the public utility can demonstrate that their owners have an income tax liability. The shippers argue that Master Limited Partnerships have no such obligations, reducing the rates by excluding these allowances.  The rates which are being contested do not apply to Market or Negotiated Rates, which are the majority of rate structures contracted by Master Limited Partnerships. The Court's ruling does not bind FERC to make any modifications and it could take up to a year for FERC to formulate any changes.  Commercial exposure to ITA related rates is likely to be a topic on upcoming earnings call     Q2 Distributions   The coming week should include a number of distribution announcements, including Antero Midstream and Plains All American, the latter of which may provide the market an indication of the status and results of their Simplification analysis. Below are the announcements released to date       Enterprise Products followed through on their 5.3% guidance with a 1.27% Quarter over Quarter increase, the lowest increase since 2014. The chart below illustrates the increasing Yield as a result of the declining growth rates, amongst other fundamental concerns described below     Investors also need to consider the direction of the Distributable Cash Flow, which shows a weakening trend for Enterprise Products, as Net Income has remained relatively flat, but with an increasing rate of distributions. The relatively high DCF coverage has offered investors a safety buffer in the case of weaker cash flows, unlike other units which are projecting distribution growth with coverage ratio below 1.1x for 2016. MLPData updates DCF and Unit Metrics upon the release of company earnings and 10Q     Unit News After the failed merger with Energy Transfer, some members of the William's board were seeking to replace CEO Alan Armstrong. When that did not occur, Six Directors resigned last Friday with some noteworthy comments indicating the level of discord which has been festering for at least the two years.  Below is the resignation letter from Eric Mandelblatt, who's Soroban Fund owns $300MM of Williams shares       The company on Friday announced that they will hold their Annual Shareholder meeting on November 23rd, 2016, setting July 18th as the date for Board nominations.  Since the Merger termination, Energy Transfer has gained 12% while Williams is up only 3%     Energy Transfer filed a new prospectus to market $1.5B of new units through 20 sales agents, lifting shares in Energy Transfer Equity, the beneficiary of incremental Incentive Distribution Right payments upon the issuance of new ETP units   NGL Energy Partners said Thursday that, due to additional shipper interest, a second binding open season begins today for its Grand Mesa crude oil pipeline. Grand Mesa pipeline will flow 150,000 barrels per day (BPD) of crude oil from the Denver-Julesburg Basin in Weld County, Colorado, 550 miles southeast to NGL's storage terminal in Cushing, Oklahoma   Funds   When selecting an ETF, in addition to fees and liquidity, MLP investors should take a close look at the index composition, which can lead to a wide spectrum of performance. The Tortoise North American Pipeline Fund, which leads the group's YTD performance, allows for General Partners and C-Corp pipeline companies to be part of their index, while the ALPS Alerian ETF excludes such companies          

  • Jun 26

    Jun 26, 2016

    MLP Weekly: Brexit Safe Harbor Over Here

    Units withstood the Friday carnage from the Brexit vote, sending the benchmark index down -3.3% while finishing the week positive 1.51%. At the moment, midstream cash flows with no currency exposure appear to be a desirable alternative and an attractive premium to the 10 year Treasury yield, which fell to 1.57%.  Fears of midstream contract re-…

    Units withstood the Friday carnage from the Brexit vote, sending the benchmark index down -3.3% while finishing the week positive 1.51%. At the moment, midstream cash flows with no currency exposure appear to be a desirable alternative and an attractive premium to the 10 year Treasury yield, which fell to 1.57%.  Fears of midstream contract re-negotiations and bankruptcy shut ins have subsided as recent acreage transactions by healthier balance sheet operators suggest that volumes will expand as prices stabilize and move higher.  Just this past week it was reported that Shell plans to acquire Shale acreage after improving their drilling efficiency by 50% over the past three years and streamlining their workflow to reduce costs.  Also Marathon Oil announced they will buy PayRock's STACK acreage for $888MM and QEP Resources announced their acquisition of 9.400 acres in the Permian for $888MM from an unnamed seller.        The Merger   After the close on Friday, Judge Glasscock released his opinion that Latham has acted in good faith while arriving at their conclusion that they cannot provide a 721 opinion. If they are not able to do so by June 28th, Energy Transfer can terminate the Merger Agreement.  Further details and analysis of the Court's decision can be found here.  Williams plans to pursue additional legal actions to force the merger to close and will hold their special meeting on Monday to confirm a FOR majority vote to proceed with the original merger terms.  It their appeal is unsuccessful, which is likely to be the case, they will need to resolve their previous intent to acquire Williams Partners, and determine how best to deal with the $428MM of paid in full IDR waivers which improved Williams Partners coverage ratios as illustrated below.           Unit News   Emerge Energy announced the sale of their Fuels business, which generated $3.3MM of Adjusted EBITDA last quarter, to Sunoco LP for $178.5MM.   Enterprise Products announced plans to build a new cryogenic natural gas processing facility and associated natural gas and natural gas liquids pipeline infrastructure to service their Delaware basin operations.  The project is backed by one anchor sponsor and is expected to be operational by mid 2018.     Midstream Yield To Coverage   The below chart illustrates the variation across the midstream segment when plotting the forward distribution yield against the trailing twelve month Distributable Cash Flow Coverage, just one of many ratios investors should consider when selecting a Master Limited Partnership,  Premium subscribers can access the real time chart by clicking here.           SCORES is Now Available to Premium Subscribers.  Each Wednesday you will receive an email with updated indicators.            Comments, Question or Suggestions?  Contact MLPData Here      

  • Jun 19

    Jun 19, 2016

    MLP Weekly: Enter Judge Glasscock

    Several MLP's opportunistically tapped the equity markets with mixed results, similar to the previous week, while the benchmark index lost - 0.81% for the week and is 6.08% YTD. Monday the market will be focused on the Williams Inc - Energy Transfer court hearing, scheduled to begin on June 20th in Delaware's Chancery Court.  Judge Sam Glasscock …

    Several MLP's opportunistically tapped the equity markets with mixed results, similar to the previous week, while the benchmark index lost - 0.81% for the week and is 6.08% YTD. Monday the market will be focused on the Williams Inc - Energy Transfer court hearing, scheduled to begin on June 20th in Delaware's Chancery Court.  Judge Sam Glasscock will be hearing the case and is expected to render a ruling prior to the Merger vote on the June 27th.  If the merger closes, Energy Transfer has communicated they will suspend their dividend and if the merger does not close, Williams has announced they will cut their dividend immediately, a confusing choice to those who have not followed closely how this merger has evolved.  Adding further doubt to the merger logic, Williams was forced to amend their proxy statement to include the previously dislosed notice that Energy Transfer's synergy benefit of $2B,  touted at the time of the merger announcement,  should not be relied upon, as a revised bottoms up analysis concludes only $126MM of cost reductions would be realized at current energy prices.  MLP and Midstream Fund managers have avoided exposure to both Energy Transfer and Williams with only two funds reporting either in their most recent Top 10 Holdings         Proxy Advisor ISS announced their recommendation to Williams shareholder's to approve the Merger based upon their view that "stockholders will benefit from the enhanced longer term value prospects, while securing value certainty in today's volatile energy market through the cash component of the transaction consideration".  Williams declared a special $0.10 dividend to shareholders if the merger is completed, payable at some future date after the close   Williams shareholders need to finalize their election by 5:00PM EST on June 24th, which consists of an all cash, all stock, or combination election.  Given the $6.05B cash cap, it is expected that  shareholders who elect all cash will receive $8.00 in cash and the remainder in newly issued ETC stock.  Once the Form of Election has been submitted, shareholders will not be able to sell Williams stock prior to the merger date, which if modified, would continue to restrict any transactions until a conclusion is reached.   Shareholders might be wise to hold off submitting their election forms until the 24th on the hope that Judge Glasscock will render a decision prior to the close of the election period.   Williams cautions that the market may not be liquid after the election form deadline as other shareholders may have submitted their election form and reduced the shares available to be traded, a very likely scenario with 84.5% of WMB shares owned by institutions.    Our view is that the Court will force Energy Transfer to complete the Merger, which will lead to either a renegotiated all stock deal with a condition that the dividend is maintained or a negotiated termination fee, the latter more beneficial to Williams shareholders.     Unit News   Western Refining Inc's acquisition of Norther Tier is expected be completed by June 24th.   As oil was peaking, Hi-Crush Partners offered 4.5MM new units at market price, pushing units down 5.7% from the offering announcement.   Anadarko sold 12.5MM units of their Western Gas Partners stake at a 7.8% discount and units closed the week down -13.65%     Fund Flows   A very strong week for new cash flowing into MLP funds as Exchange Traded Funds added $336MM through Wednesday, the highest level of new ETF cash since the beginning of the year.             SCORES is Now Available to Premium Subscribers.  Each Wednesday you will receive an email with updated indicators.     

  • Jun 12

    Jun 12, 2016

    MLP Weekly: Higher Prices, Higher Volumes?

    Units traded with crude this week, rising as crude advanced early in the week, only to give back gains after a higher rig count was reported, sending the benchmark index down -0.18% for the week.  Although the market continues to react to rig count changes, short term midstream fundamentals more importantly will be impacted by how many of the…

    Units traded with crude this week, rising as crude advanced early in the week, only to give back gains after a higher rig count was reported, sending the benchmark index down -0.18% for the week.  Although the market continues to react to rig count changes, short term midstream fundamentals more importantly will be impacted by how many of the estimated 1000, out of 3500, Drilled but Uncompleted (DUC) wells are fracked as a result of higher energy prices, for which production volumes may lag 90 -120 days.  Each DUC has variable fracking costs, which can be as high as twice the cost of drilling, adding a high level of variability to any incremental production forecast derived from DUC wells.  Some believe activity is accelerating as frac sand producer Emerge Energy gained 105% WTD on the assumption that demand for their spot inventory is increasing.       Genscape Table     The Merger   The FTC provided their approval to the Equity Transfer- Williams merger subject to the divestiture of the Gulfstream Natural Gas system within 180 days of the merger.  Williams reminded investors that if the Merger was not completed, they would need to immediately cut their dividend to an an undisclosed level for an unknown period.  The trial scheduled for 6/20, a week before the Merger vote, will attempt to address whether Williams or Energy Transfer has violated terms of the merger agreement, as both have charged, with their respective actions.       Unit News   Tesoro Logistic Partners issued 5.5MM units at a 4.5% discount, which traded 2.7% higher by the end of week.   Rice Midstream issued 8MM units at 8.4% discount, which traded 4.9% higher by the end of the week.   Ferrrellgas Partners disclosed that Delta Airline's Monroe Energy unit is seeking to terminate their 65 Mpbd Crude By Rail agreement which is set to expire in 2019   Shell Chemical announced formal plans to build a multi-billion dollar ethane cracker plant in Pennsylvania, expected to be operational in 2020.  There are eight additional cracker plants in construction along the Gulf Coast, the first of which is expected to be operational next year.  The plant will consume 105,000 Bpd of ethane, which will be supplied by Antero Resources, Ascent Resources, Consol Energy, Eclipse Resources, Hilcorp Energy, Noble Energy and Penn Energy Resources.     EnLink Midstream announced plans for a new crude gathering system expected to cost between $70MM an $80MM and be operational by late 2016.  The project is backed by long term fee based agreements with producers who will dedicate 35,000 acres currently producing 100,000 bpd   Yield to Growth As the 10 Year Treasury yield continues to decline, this week closing at 1.63%, the lowest level in over three years, high coverage MLPs may look very attractive to income investors.  Below is the Forward annualized Yield plotted against the trailing twelve month Distributable Cash Flow Coverage ratio for the constituents of the Alerian MLP index     Short Interest   Short interest declined 5.6% between 5/31 and 5/13 with Energy Transfer and Williams Inc topping the largest increase and decrease                 SCORES is Now Available to Premium Subscribers.  Each Wednesday you will receive an email with updated indicators.            Comments, Suggestion or Questions?  Please contact us here

  • Jun 05

    Jun 05, 2016

    MLP Weekly: Conference Chatter

    The benchmark index advanced 2.90% while Crude fell 1.4% for the week after Baker Hughes reported the rig count increased by 4, perhaps as a result of higher prices.  The Master Limited Partnership Association (MLPA) held their annual investor conference in Orlando, where attendance appeared 15% lighter than previous years, yet well attended by…

    The benchmark index advanced 2.90% while Crude fell 1.4% for the week after Baker Hughes reported the rig count increased by 4, perhaps as a result of higher prices.  The Master Limited Partnership Association (MLPA) held their annual investor conference in Orlando, where attendance appeared 15% lighter than previous years, yet well attended by Investment Bankers, Legal and Tax Advisors, and Institutional investors.  The tone of the conference was certainly focused on risk management and adjusting to uncertain volume expansion as a result of weak prices and still questionable capital market access and investor interest .  While energy prices are on the rebound, the pain and suffering inflicted on individual investors who owned upstream units, frac sand units and even some midstream units, will have an enduring impact towards enticing new capital and investors to the asset class.  Although the mood was more upbeat from last year, the benchmark index has lost 30% since last year's conference, while gaining 7.14% since the beginning of the year.  At the September midpoint between the two conferences, Investor concerns were voiced at our MLPData Conference, when the market was searching for equilibrium.  In our view, MLP investor seek stability where distribution cuts are not a quarterly concern and investment goals are aligned with steady income rather than highly leveraged 15-20% annual total returns.  At the moment, risk headlines still dominate the sector which will not subside until a few situations play out, including the Plains All American plan for simplification and of course the Dr Jekyll and Mr Hyde Merger between Energy Transfer and Williams, which is affecting 3 of the top 6 MLP units by market capitalization.   The industry is in need of some self help along with more favorable market conditions to reposition the MLP structure and attract new investors.  Latham and Watkin's recognized the need for change with their Make MLPS Great Again hats, although the conference was attended by some participants who conceived, structured and sold many of the units which have caused investor damage and stained the MLP structure.  Great slogan and a sought after item in Orlando, so props to the marketing team.           With over 66 units participating, including several which have suspended distributions,  the Conference provided an opportunity to consolidate Management feedback on several themes which have been the source of investor speculation:   How Will the MLP Model Evolve:  While some have suggested the MLP model will no longer be a viable structure to attract capital, the conference participants and audience offered a constructive framework to evolve the model to reduce the level of risk,  which had increased as a result of the  shale boom buildout over the past three years. Higher DCF Coverage, lower leverage, IDR rebates and further asset development by Sponsors were a few of the suggestions noted by a panel of fund sponsors.  Of course, these suggestions will come at the expense of current distributions for some units, and lower growth for others.  It is worth noting that as of Q1, only 4 units have maintained or increased both their per unit DCF coverage and Cash Flow From Operations year over year.    Midstream Contract Renegotiation's Inspired by Sabine Ruling:  Surprisingly, we did not hear much concern on this topic as most midstream units focused instead on counter-party credits and their relative health.  As we have been reporting in our Weekly Bankruptcy Watch, forward MVC cash flow exposure from Chapter 11 filings has been rather insignificant, as most midstream units have  protected themselves from receivables exposure by modifying payment and credit terms prior to filings.  While there are certainly weaker suppliers using the Sabine judgment to pressure their midstream suppliers, the exposure from such situations appears to be baked into forward guidance, given the visibility of producer duress over the past year.    Slower Growth and Consolidation:  Midstream capacity has clearly exceeded demand, limiting the interest and need for new infrastructure.  Excess capacity was noted by several speakers (not just Plains), raising suggestions that desperate operators may start tariff wars to market underutilized capacity.  While MLP's have been building out new assets, it has been less transparent to understand how existing assets have been performing.  As further organic projects either take a pause, or enter a hiatus, some units will not be able to offset weakening cash flows from certain assets, and will need to consolidate to achieve more diversified and synergistic mix of business.     The Role of Incentive Distribution Rights:  While those who have IDR's defended their role, some investors voiced concern that IDR's were not conceived to have uncapped eternal life, particularly when the GP is no longer incubating and financing the development of new assets.   The circle of life for public GPs and IDR's will be quite different if the need for new projects continues to decline.     Volume Reductions Impacting Midstream Cash Flows:  Each month, US production and rig counts have been in decline, but the reductions have not yet been evident in the quarterly cash flows for many units.   Capex reduction must also lead to lower volumes, although production efficiencies may reduce and delay the impact.  Most management teams do expect a sharp decline in volumes over the back half of the year.   In other news, the Natural Gas Supply Association (NGSA) released their 16th annual Summer Outlook assessment, which should give midstream investors some confidence that power generation trends are clearly impacting demand .  Below is a excerpt from their release       Jekyll and Hyde Merger   Friday seems to be the preferred date for disclosures related to one of the most bizarre mergers investors have likely experienced.  Williams started the day with the new disclosure below, which says that irrespective of whether energy prices return to levels prevailing when the merger was announced in September 2015, the synergy number is still only 25% of what was used to justify and sell the deal initially.   Apart from what this says about the the methods and motivations related to the original number, it is shocking that both parties agreed to such a statement, without any further explanation.     And if the above disclosure was not enough to motivate Williams shareholders to vote No, they also added the below paragraph, essentially putting shareholders on notice that the new securities will likely fall in value after the distributions are cut     Later in the day, Williams released a revised Schedule A, which updated the Summary Deck outlining the merger.  It is a lengthy effort to summarize how this deck has transformed since the Merger was announced on September 28th, 2015, but the changes are substantial with each party seeking a different outcome.  It must have been a painful process to reach consensus between companies on how to portray a merger which can no longer be justified, but we look forward to hearing the real story once the agreement is completed one way or the other.       Fund Flows and Lower Volumes   A favorable trend of increasing fund flows picked up pace this pace week as $189MM of new capital flowed into MLP packaged products, with over $1B added over the past twelve months.  Total Fund AUM is roughly $55B, or 9.5% of the total market cap of the MLPData universe.           While flows have been increasing moderately, unit turnover has been waning, suggesting that existing investors believe higher energy prices have reduced some of the fundamental risks associated with lower production volumes.                 SCORES is Now Available to Premium Subscribers.  Each Wednesday you will receive an email with updated indicators.      Comments, Suggestion or Questions?  Please contact us here      

  • May 22

    May 22, 2016

    MLP Weekly: REX Ahead

    Midstream units surged higher this week as the benchmark index advanced 4.37% as crude gained 3% on supply disruptions and falling production.  While the last few months have restored some confidence in the future performance of MLP's,  the benchmark index is still trading 43% below the high reached on  August 29th, 2014 when the index yield was…

    Midstream units surged higher this week as the benchmark index advanced 4.37% as crude gained 3% on supply disruptions and falling production.  While the last few months have restored some confidence in the future performance of MLP's,  the benchmark index is still trading 43% below the high reached on  August 29th, 2014 when the index yield was just 5.14%.  The fundamental outlook is less certain than it was in August 2014, only a few months prior to the Saudi declaration of no cut in production, which ignited the Thanksgiving crude crash. Enterprise Products, the largest MLP in the index, tells the story of how the market has adjusted to the uncertainty.   In 2014, the Year over Year distribution growth rate was about 80bps higher than the current year's guidance of 5.2%,  however the downward trending Distributable Cash Flow coverage has increased the yield from 3.68% to the current quarterly average of 5.82%.  The +200 bps increase in yield reflects the higher risks from lower prices, volumes and declining cash flows coupled with organic projects generating lower returns.  So while the recent performance has reduced investor stress and offered double digit returns for new capital, longer term investors in both direct units and packaged products are still hoping for a sizeable rally to to pare losses.           High Growth Units   Large cap diversified units have gained against their previous TTM losses, but many high growth units have lost ground this year as indicated in the table below.  This past week, Shell Midstream offered 10.5MM new units at an 8.6% discount, which did not prevent investors who were allocated shares from dumping them the next day.           Unit News   Tallgrass Energy Partners, which recently completed the purchase of a 25% interest in the Rockies Express Pipeline (REX) from Sempra Energy, provided an update and forward guidance for the bi-directional natural gas pipeline.  Originally built to move up to 1.8 Bcf/d Rockies gas from West to East, REX was modified by Tallgrass Development to transport 1.8bcf/d of gas from the East to West.  The original West to East contracts are all above market rates and the majority are set to expire in 2019.  The company held a conference call this week to address the market's concern about the overall EBITDA profile post 2019.  The major announcement made by TEP is that Encana agreed to extend and expand their Take or Pay commitments in return for lower fees as illustrated in the chart below.  The company's distribution growth guidance of at least 20% through 2018 is supported by the contracted cash flows and the company expects not to exceed 4.0x leverage while generating sufficient cash flows to pay down debt.         Shell Midstream Partners announced a $700MM purchase of additional interests in the Zydeco, Bengal and Colonial Pipelines at 8.8x forward EBITDA multiple, slightly higher than the 8.6x multiple paid for assets purchased in November 2015.   The report on Plain All American's Line 901 leak was released this week along with a federal indictment covering dozens of criminal charges, including four felonies.  Plains will be holding their Analyst Day next week, where investors will be focused on the companies plan to simplify, which could lead to the merger of their GP and LP entities, or alternative remedies to address a recent Moody's downgrade, which threatens their Investment Grade status.   A few weeks back, Memorial Production Partners bought their GP from Memorial Resource Development for $750,000, a curious move at the time.  The Range Resources acquisition of Memorial Resources announced this week suggests that Range did not want to have any obligation, or potential benefits related to MEMP, and required the GP sale prior to closing.       Bankruptcy Watch   Breitburn Energy Partners and Sandridge Energy announced information this past week.  Further details can be found here       COMING Next Week :  Our new real time Score Tab and Weekly Score email will be launching soon for Premium Subscribers.  This new feature summarizes several key metrics to determine the level of distribution risk and trading opportunities.  A preview of the Scores tab can be found below.  Note:  The data presented below is for illustration purposes only and does not represent the values which will be published upon launch    

  • May 15

    May 15, 2016

    MLP Weekly: Bankruptcy Begins

    Crude advanced 3% this past week which only modestly lifted units as the benchmark index gained +0.30%.  E&P Bankruptcy headlines continued as three more filed for Chapter 11 relief, including the first Master Limited Partnership, Linn Energy, which should act as a Stop sign to any future plans by IBs and a Warning Sign to Financial Advisors…

    Crude advanced 3% this past week which only modestly lifted units as the benchmark index gained +0.30%.  E&P Bankruptcy headlines continued as three more filed for Chapter 11 relief, including the first Master Limited Partnership, Linn Energy, which should act as a Stop sign to any future plans by IBs and a Warning Sign to Financial Advisors that hedge books are not stable long term cash flow assets.   With the exception of Memorial Production Partners, all Upstream MLPs have now cut their distributions to zero and are struggling to generate free cash flow to service their interest expense and drilling programs, let alone repay their debt.  Prior to the crude crash, these units primarily have been marketed to retail investors, attracted by the high tax deferred yields,  who were not prepared to assess the risks under different crude pricing scenarios.  As a result, Retail ownership of the MLP sector is down in large part due to the disintegration of the Upstream sector, leaving all MLP issuers with fewer alternatives to raise new capital.         Unit News   Linn Energy filed for Chapter 11 relief seeking to restructure their $8.3B of debt.  Unitholders are urged to take the company's offer to convert Linn Energy units to LinnCo shares in order to avoid CODI pass through gains once the restructuring is complete.  The present offer is set to expire on May 23rd, but Linn suggested they will ask the Bankruptcy court to extend the conversion period.   Plains All American disclosed in their 10Q that the total cost of the Line 901 leak, which occurred on May 19, 2015 spilling 140,000 gallons of oil into the Santa Barbara County coastilne,  will be $269MM, or about 16% of their Trailing Twelve Month Distributable Cash Flow.     Williams Inc filed a new suit asking the Court to prevent Energy Transfer from terminating or otherwise avoiding their obligations under the Merger Agreement.  Energy Transfer's stance is that the Agreement cannot be consummated due to a required tax opinion, and there can be no vote by the Jun 28th deadline.  Williams previously filed litigation asking the Court to void the recently issued Convertible Preferred issuance, which protects ETE insiders against the expected distribution cut, if the merger is completed.       Bankruptcy Watch   Linn Energy, Chaparral Exploration and Penn Virginia Corp announced information this past week.  Further details can be found here     Fund Flows   Positive fund flows have not been the reason for the recent upward trend in unit prices.  The below chart continues to illustrate that new cash continues to trickle in to ETF and Mutual Funds, which now total about $1B over the past 12 months, or about 2.8% of total AUM in packaged products excluding Closed End Funds     About $6.5B of cash distributions were paid during Q1 2016 to all unitholders, of which ~ 10%  is redistributed through fund products, leaving about $5.8B of cash in control of retail and institutional owners who may be reinvesting in their positions.  Some hedge funds have increased their MLP exposure, most notably Appaloosa, which purchased 11MM units of ETP for $522MM, as disclosed in their most recent 13F filing.   The Commonwealth of Pennsylvania Public School Employees Retirement System also continues to add to their $1.3B MLP exposure by increasing their WMB and EPD positions.     COMING SOON :  Our new real time Score Tab and Weekly Score email will be launching soon for Premium Subscribers.  This new feature summarizes several key metrics to determine the level of distribution risk and trading opportunities.  A preview of the Scores tab can be found below.  Note:  The data presented below is for illustration purposes only and does not represent the values which will be published upon launch         Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter       

  • May 08

    May 08, 2016

    MLP Weekly: Q1 Results

    Over 60 units reported their Q1 results this week, giving investors a chance to map the US production declines to specific assets and basins.  By the end of the week, the benchmark index was down -2.18% in line with WTI's -2.7% fall, which rebounded after a massive fire in Canada shut down oil sand production and pipelines.   Backlog and capex…

    Over 60 units reported their Q1 results this week, giving investors a chance to map the US production declines to specific assets and basins.  By the end of the week, the benchmark index was down -2.18% in line with WTI's -2.7% fall, which rebounded after a massive fire in Canada shut down oil sand production and pipelines.   Backlog and capex reductions were prevalent across diversified midstream units, along with weakness in Eagle Ford volumes.        Distribution Scorecard     This past week, of the 12 units which reported Q1 distributions, 5 increased, 3 decreased, 3 remained flat, and one (Atlas Resource Partners) suspended their distributions.  Since the beginning of the year, 37 of the 98 units (38%) which have reported have increased their Quarter over Quarter distributions.  The highest QoQ distribution growth amongst midstream units are show below       Out of the above group, only Tallgrass Energy Partners, Valero Energy Partners and Enviva Partners have increased their Distributable Cash Flow coverage from Q1 2015 compared to Q1 2016.   The below chart plots the annualized forward yield against the Trailing Twelve Months of Distributable Cash Flow ratios for these high growth units.       Unit News   Energy Transfer Partners reduced their 2016 Capex budget 34% to a midpoint o $2.8B as a result of higher cost of capital and lower project returns.  The company raised $324MM of new capital using in Q1 from their ATM program and sponsor Energy Transfer Equity plans to waive IDR payments of new units issued in 2016, 2017 and 2018  after the proposed merger with Williams, which the company claimed cannot be consummated due to the inability to receive the necessary tax opinion.   Energy Transfer's CEO, Kelcy Warren, suggested a renegotiated deal could get ccompleted only if the cash component of the offer was removed.     Plains All American announced a 4% reduction to their 2016 EBITDA Midpoint Guidance, even after achieving a 9% increase over their Q1 target,  as a result of projected lower volumes from declining producer activity.  Their original guidance was based upon crude averaging $57 bbl in the second half off the year .  Management mentioned they are evaluating simplification alternatives between PAA and PAGP and are actively engaged with the three largest owners of PAGP.  Although management did not provide any timeline, they are likely targeting to complete their analysis prior to the upcoming Analyst Day on May 25th. Phillips 66 Partners announced a $775MM drop down which includes the Standish Products Pipeline and the remaining 75% interest in a new NGL Fractionator and Storage Cavern.  The company issued 11MM new units at 52.40, a 7.2% discount from the previous close, indicating that the public markets are still not very receptive to new units.  The company re-afffirmed their 5 year 30% distribution growth rate through 2018     Tesoro Logistics Partners reported higher West Coast demand for refined products, reconfirming their 2016 guidance while cutting 2016 capex by 45%.  Half of the cut is related to Bakken and Rockies gathering projects which are not attractive due to low prices and uncertain volumes.     Magellan Midstream Partners slightly increased their 2016 DCF guidance as a result of higher energy prices, although much less than the company suggested based on current energy prices.     Williams Partners reported 16% QoQ EBITDA due to higher volumes on new projects moving into production.  Earlier this year the market focused on Chesapeake volumes associated with the Access Midstream assets, which are now represented in the Northeast G&P segment, increased 12% year over year       Bankruptcy Watch   Midstates Petroleum announced information this past week.  Further details can be found here             COMING SOON :  Our new real time Score Tab and Weekly Score email will be launching soon for Premium Subscribers.  This new feature summarizes several key metrics to determine the level of distribution risk and trading opportunities.  A preview of the Scores tab can be found below.  Note:  The data presented below is for illustration purposes only and does not represent the values which will be published upon launch    

  • May 01

    May 01, 2016

    MLP Weekly: Market Avoidance

    Following the double digit advance from the previous week, MLPs traded lower this week, as 23 units reported their Q1 results.  The benchmark index declined -0.65% as Year to Date performance hovered around 3%.  Despite the recently improved market conditions, MLPs continue to avoid the public markets for equity issuance.  This past week,…

    Following the double digit advance from the previous week, MLPs traded lower this week, as 23 units reported their Q1 results.  The benchmark index declined -0.65% as Year to Date performance hovered around 3%.  Despite the recently improved market conditions, MLPs continue to avoid the public markets for equity issuance.  This past week, Enterprise Product  Partners, MPLX and Tallgrass Energy Partners disclosed they have raised nearly $2.7B of new capital through At The Money issuance, Private Placement of units, and Preferred Convertible issuance.  Ironically, an MLP which has suspended distributions, Hi-Crush Partners, did announced a public offering this week for 6MM units, for which the market responded by sending units down 14% for the week.  There is no doubt the yield seeking retail base of 2013/ 2014 has been damaged by the unexpected performance and actions by Kinder Morgan and other MLP's, and their level of participation going forward in new deals is very much an open question.  At the same time, project backlogs are shrinking due to less attractive project returns, so the need for a broad investor base certainly has peaked and is in decline.  This forthcoming week should give us a better idea as to the state of the public markets for new unit issuance as 67 units will report their Q1 results, including Plains, Magellan, Energy Transfer and Williams.  Below is a chart of Midstream unit's current Trailing Twelve Month DCF coverage plotted against the annualized forward yield of the latest distribution announcements.  These charts are updated on a daily basis for Premium subscribers.       Unit News   MPLX announced a $1B issuance of a newly authorized 6.5% Series A Convertible Preferred unit at a price of $32.50, a slight premium to the common units.  The company expects this new round of capital to fund their growth capex requirements through 2017.  Investors include Stonepeak Infrastructure Partners, Magnetar Capital, Kayne Anderson Capital and The Energy & Minerals Group.   Enterprise Products reported a slight decline in gross operating margin due to weakness in all segments other than NGL Pipeline and Services, which increased 12.8% YoY as system wide volumes increased 14% during the same period.  The company did report a slight increase in Adjusted EBITDA and Distributable Cash Flow, resulting in 1.3x coverage.   Their recently filed S-3 for $1.75B is not for any specific purpose, according to management, but rather is a routine filing to provide the option of further At The Money unit issuance.  Management commented that they expect natural gas rig counts to bottom out in Q2 and continue to see strong NGL demand and lower LPG margins for the remainder of the year.         Tallgrass Energy Partners announced strong results in the Crude Oil and Transportation segment as a result of higher volumes from assets placed into service in June 2015.  The Natural Gas segment experienced a decline in contracted capacity from 1,485 MMCf/d vs 1,609 in Q1 2015 and 1,462 in Q4 2015.  Pony Express volumes averaged 299k bpd vs 291k bpd committed.  The pipeline is running at full capacity of 300k bpd, but the company has the option to expand capacity if the market warrants.  Tallgrass also announced that TDev has agreed to assign to  Tallgrass Energy Partners their previously disclosed plan to purchase an additional 25% of REX from Sempra for $440MM.  In order to fund the transaction, TEP also announced a $90MM private unit placement with Tortoise, at at implied unit purchase price of $37.24, as well as $47MM of ATM issuance, and does not expect to issue any additional units.   TEP plans to provide EBITDA guidance for REX prior to an acquisition to address concerns about the stability of the the west to east contracts.     Antero Midstream increased their 2016 EBITDA Guidance by 7.7% on higher water volumes and reconfirmed 30% distribution growth for 2016,  the high end of their guidance.           Distribution Scorecard   This past week, 37 units announced distributions for the first Quarter of 2016, of which 11 increased Quarter over Quarter, 5 decreased and 21 remain unchanged.  Of the 86 units which have reported their Q1 distributions, 32 have increased their distributions.  Tallgrass Energy Partners continues to lead the group with their 10.16% QoQ increase.             Bankruptcy Watch   Ultra Petroleum and Tallgrass Development  announced information this past week.  Further details can be found here         COMING SOON :  Our new real time Score Tab and Weekly Score email will be launching soon for Premium Subscribers.  This new feature summarizes several key metrics to determine the level of distribution risk and trading opportunities.  A preview of the Scores tab can be found below.  Note:  The data presented below is for illustration purposes only and does not represent the values which will be published upon launch             Premium Subscribers be the first to access Q1 DCF Trends, Risk Metrics, updated 2016 Guidance and Distribution Forecasts   Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter    Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here    

  • Apr 24

    Apr 24, 2016

    MLP Weekly: Fundamentals in Rear View

    So much for predicting No Deal at Doha would send units falling this past Monday.  Crude soared 8% and took MLP's along for the ride  to levels not seen in 5 months as the benchmark index gained 10.49% for the week.   While MLP investors are likely to feel more confident, the market fundamentals revealed this week describe a midstream market which…

    So much for predicting No Deal at Doha would send units falling this past Monday.  Crude soared 8% and took MLP's along for the ride  to levels not seen in 5 months as the benchmark index gained 10.49% for the week.   While MLP investors are likely to feel more confident, the market fundamentals revealed this week describe a midstream market which still has moderate cash flow risks from declining volumes.  Kinder Morgan announced they will be lowering their EBITDA guidance by 3%, in part, due to weaker gathering and processing volumes in the Eagle Ford and Rockies, and also canceled their $3B Northeast Energy Direct pipeline project after being unable to secure sufficient power generation commitments.  NGL Energy Partners also lowered their guidance by 5.5% from just several weeks ago, when energy prices were much lower, likely due to weaker volumes.   MLP investors looked past these potential warnings and aggressively purchased units with the assumption that rising energy prices will drive greater cash flow stability.  This week's rally generated $3B of daily dollar volume for several trading sessions, a sustained level we have not seen for over a year in support of higher price levels, for which fund flows and MLP distributions were not a catalyst.         Unit News   Energy Transfer disclosed that they may be unable to meet one of the merger conditions as outlined below, which is that they receive a Tax Opinion (Rule 721) confirming that the transaction with Williams would be tax free.  Apparently their advisor, Latham and Watkins, is not able to provide such an opinion given current market conditions.  To further dissuade Williams shareholders from approving the deal, Energy Transfer also released projections that if the deal were to close, the new ETC units, which would be exchanged for Williams units, would not  pay a distribution through March 31st, 2018, or 7 quarters from the expected closing date.     The accumulation of these threatening filings has increased the probability that Merger will not happen, lifting units of both Williams and Energy Transfer       Crestwood' Equity Partners announced that they have entered into a Strategic JV with Con Edison where the Partnership will move its prime assets into a JV, and in return will receive $975MM which will be used to pay down down their debt.  Con Edison will receive an extra 10-15% of the EBITDA over the first three years of the JV before it reverts back to 50/50.  As a result of EBITDA split, the partnership reduced their distribution by 56% for likely the next several years.     NGL Energy Partner's Strategic Review concluded with the partnership agreeing to issue $200MM in 10.75% Convertible Preferred to Oak Capital Management in order to de-lever their balance sheet.  Their review also resulted in a 39% reduction to their distribution to $1.56/unit, NGL's yield dropped from 23% to 11% as a result         Q1 Distributions   To date, of the 49 units which have announced Q1 distributions,  21 have increased Quarter over Quarter, 3 have decreased and 25 have been unchanged.  The table below represents all units which have increased their distributions for the first Quarter.  Tallgrass Energy Partners continues to top the list with their 10.16% increase, but also has the fourth highest yield in the group at 7.21%.       Looking at the above list another way, the following Yield to Growth chart plots the units which have increased their Q1 distributions.  The chart compares the forecasted growth rates, as provided by management and a subset of analysts consensus, against the forward annualized distribution yield.         Fund Flows    Our data indicates that new cash flowing into MLP packaged products has been modestly increasing, but  is not a significant driver to the sectors recent appreciation.  The chart below illustrates that fund flows have lagged the rally (which is not unusual), and are likely to increase in the following weeks as investors react to double digit fund returns.           Bankruptcy Watch   Foresight Energy Partners, Seventy Seven Energy and Peabody Energy all announced information this past week.  Further details can be found here     Units on the Move   The following table screens midstream units which are within 22% of their 52 week high           COMING SOON :  Our new real time Score Tab and Weekly Score email will be launching soon for Premium Subscribers.  This new feature summarizes several key metrics to determine the level of distribution risk and trading opportunities.  A preview of the Scores tab can be found below.  Note:  The data presented below is for illustration purposes only and does not represent the values which will be published upon launch                     Premium Subscribers be the first to access DCF Trends, Risk Metrics, updated 2016 Guidance and Distribution Forecasts   Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter    Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here            

  • Apr 17

    Apr 17, 2016

    MLP Weekly: Production Declines

    Crude advanced 1.6% for the week ahead of the OPEC Doha meetings, which as of Sunday afternoon appears to be ending without a freeze agreement, while the MLP benchmark index moved up 1.11%, mostly on unrelated news.  The impact of No Deal at Doha may be mitigated by the 7000, out of 13,000, Kuwaiti oil workers who started a pay strike this weekend…

    Crude advanced 1.6% for the week ahead of the OPEC Doha meetings, which as of Sunday afternoon appears to be ending without a freeze agreement, while the MLP benchmark index moved up 1.11%, mostly on unrelated news.  The impact of No Deal at Doha may be mitigated by the 7000, out of 13,000, Kuwaiti oil workers who started a pay strike this weekend.  Earlier in the week, the EIA reported another weekly decline in US production to under 9MM bpd, and Shale basin production expected to decline most significantly in the Eagle Ford.  As these lower volumes fuel the expectation of higher prices, the upcoming Q1 results will refocus midstream investors on how these lower volumes will impact cash flows, and whether Minimum Volume Commitments will have been renegotiated in light of producer distress.       Distribution growth, along with a healthy balance sheet and strong distribution coverage, has been thought to be protection against negative investor sentiment.  Not so much this year as 11 of the 12 units which have raised their distributions a minimum of 4% QoQ have yet to generate a positive YTD total return.  The below table selects Midstream LP units with the highest Quarter over Quarter distribution growth.         Unit News   In the ongoing subversive battle between Williams and Energy Transfer to scuttle their merger, but minimize their penalties, Williams received notice that a Delaware Judge will expedite their motion to terminate the Private Placement previously announced on March 9th by Energy Transfer Equity.  This hearing will take place prior to the Williams shareholder vote in late June and a ruling in favor of Williams will put further pressure on Energy Transfer to find a way out of the deal.   As the chart below illustrates, the proposed deal has been a horror for investors, during a time when the majority of midstream units have recovered from their losses earlier in the year.     Under the proposed Merger, Williams Partners would remain an MLP paying Incentive Distribution Rights , a portion of which is  funded by the 22% of EBITDA related to Chesapeake.  This past week, Chesapeake announced creditors have re-affirmed their $4B credit revolver through 2017, along with more lenient covenants, in return for additional assets pledged by the company.     Southcross Holdings, which owns the GP of Southcross Energy Partners,  announced a bankruptcy judge approved their plan to restructure $700MM of debt and receive a $170M cash infusion from EIG Global Energy and Tailwater Capital, two Private Equity sponsors with previous exposure to the company.    Teekay's credit rating was cut by Moody's after the rating agency concluded that the company will continue to have a weaker liquidity profile from lower than anticipated cash flows from their MLP's (Teekay Offshore Partners, Teekay LNG Partners) and limited funding options   Memorial Production Partners announced that their credit revolver has been reduced by 21% by their 28 banks and the partnership's new covenants would prohibit a distribution in excess of $0.05 for Q1 2016, based upon their current cash.     Distribution Announcements   Tallgrass Energy Partners announced a 10.16% Quarter over Quarter increase to their distribution, the highest increase in the MLPData universe.  Management has previously commented that their minimum annual average 20% growth targets, through 2017, may not be evenly distributed across each quarter.  Below are the units which reported distributions this past week  (Note:  GEL reported a 2.7% QoQ increase and should be included in the list below):       Bankruptcy Watch   Energy XXI, Southcross Holdings, Goodrich Petroleum and Breitburn Energy Partners all announced information this past week.  Further details can be found here       Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts   Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter    Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here          

  • Apr 10

    Apr 10, 2016

    MLP Weekly: Role Reversal

    Units ended the week higher as rising crude prices and capital market access helped to reduce some of the market's angst.  Crude rallied 8% and tge benchmark index gaining 1.87% heading into the Q1 distribution period, where investors will be realizing attractive payouts and improving YTD total returns.   Although the credit markets have been…

    Units ended the week higher as rising crude prices and capital market access helped to reduce some of the market's angst.  Crude rallied 8% and tge benchmark index gaining 1.87% heading into the Q1 distribution period, where investors will be realizing attractive payouts and improving YTD total returns.   Although the credit markets have been opening to high quality midstream refinancing's, raising equity is still punitive when LP is the part of the name, so Sponsors are using their own ability to raise capital to pass through funding to their LP's.  Spectra Energy followed this path, where SE raised $420MM of equity, and then in turn, purchased $418MM of Spectra Energy Partners in a private placement deal.  The two companies have nearly identical yields of 5.40% and Spectra Energy will receive an incremental $4.3MM in annual Incentive Distribution Rights from SEP's private placement  issuance of 9.1MM units. The MLP model is supposed to work the other way around, where the MLP is able to raise funds at a lower cost of capital, but the more plentiful C-Corp investors are what is available to the market at the moment, as fund flows continue to tapper off the last few weeks.           Unit News   Williams Inc commenced litigation against Energy Transfer Equity to hold them in breach of their merger agreement and unwind the recently announce private Convertible offering, which provides ETE insiders with preferential treatment of their units.  Both companies are positioning to make the deal unpalatable to each but each other, while maintaining their respective termination penalties.  Each week, the situation becomes more toxic and it seems almost incomprehensible that a merger can be consummated between Williams and Energy Transfer.   Plains All American announced they expect to liquidate $500-$600MM of assets in 2016, which will be offset against an announced $150MM acquisition of Spectra's Westcoast Energy Inc, a Canadian based NGL business, for a 5x EBITDA multiple.  In January,  Plains announced asset sales to be in the $200-$400MM range, which when coupled with their flat distribution announcement for Q1, and their decision to make a Payment In Kind interest payment on their newly issued Convertible Preferred, suggests their DCF Coverage objectives may be more challenged.   Enterprise Products announced that they have raised $1.58B from ATM, DRIP and insider unit sales since the beginning of the year.  The 60MM of new units represents approximately a 3% increase in units outstanding.   If LP investors needed a reminder of the power the General Partner holds over the fate of the Limited Partners, a Delaware Judge dismissed a suit against Energy Transfer Partner's acquisition of Regency Energy Partners in 2015.  The plaintiffs asserted they were not properly informed about the details of the merger, but the Judge ruled that the Partnership agreement extinguished the common law duty of the disclosure and displaced it with only one disclosure requirement, which was satisfied when Regency simply provided a summary of the merger agreement prior to the special meeting.  Further details can be found here, which should remind LP investors that they are governed by Partnership agreements which may include provisions detrimental to the LP interests.     Bankruptcy Watch   There were no new filings or announcements this past week, but the Quicksilver Bluestone transaction was completed without rejection of the Crestwood midstream agreements.  Further details can be found here.       Q1 2016 Distribution Scorecard   Plains commenced the Q1 distribution announcements this past week by keeping their rate flat over the previous quarter as expected.  As we await other units to report, the below table lists units which increased their Q4 distributions over the previous quarter, in ascending date order from this past week.               Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts   Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter    Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here

  • Apr 02

    Apr 02, 2016

    MLP Weekly: Bankruptcy Headlines

    Units climbed early in the week until doubting OPEC freeze comments sent crude lower by Friday.  The EIA reported that imports, which have increased nearly 10% since last year due to the collapse in the WTI discount to Brent and high transportation costs of shipping to East Coast refineries, dropped 7.6% the past week.  Crude inventories continued…

    Units climbed early in the week until doubting OPEC freeze comments sent crude lower by Friday.  The EIA reported that imports, which have increased nearly 10% since last year due to the collapse in the WTI discount to Brent and high transportation costs of shipping to East Coast refineries, dropped 7.6% the past week.  Crude inventories continued to build as 2.3MM barrels were added, expanding total storage to 534.8MM.  Magellan Midstream held their Analyst Day this past week, and included the below image which shows the Cushing storage assets owned by each the major players     While tanks continue to fill and new capacity is being added, storage location makes all the difference for stable MLP cash flows.  This past week, World Point Terminals disclosed that  several customers canceled contracts in 2014 at their Galveston terminal, leaving the company with 580,000 barrels of excess capacity.  In 2015, the company contracted 518,000 of the storage on a month to month basis.  The company warned that the spot contracts may not be renewed in 2016, and those contracts set to expire, may also be at risk.   Unit News   Valero Partners announced the acquisition of McKee Terminal services business for $240MM from their sponsor Valero at an 8.5x EBITDA multiple. The assets include 75 storage tanks which hold 4.4MM barrels to service the refinery under a 10 year agreement, expected to generate $28MM in EBITDA over the next twelve months.  Valero Partners financed the drop down by issuing $36MM of units to Valero and the remainder with their credit revolver and reiterated their 25% distribution growth guidance through 2017.   Azure Midstream Partners disclosed that they will not be able to meet their financial covenants and will need to restructure to remain a going concern.  Additionally, the company disclosed that one of their customers, Associated Energy Services, was not able to meet their minimum volumep payment commitments to Azure.   Tallgrass Development (TDEV) announced an incremental 25% acquisition of the Rockies Express Pipeline for $440MM from Sempra, raising their interest to 75%, with the remaining 25% owned by Phillips 66.  The 1,712 mile long  gas pipeline is one of the largest natural gas pipelines in the country and recently has expanding shipping from Appalachia to the midwest markets.  The purchase increases the potential drop down EBITDA from Tallgrass Development to Tallgrass Energy Partners.  If the company is able to issue new units to the public markets to fund incremental dropdown, Tallgrass Energy GP stands to benefit from their Incentive Distribution Rights, which will be higher from both the issuance of new units and an increase in distributions.  Before the deal is completed in the second quarter, Phillips 66 will have the option to buy 50% of the 25% interest, which could reduce TDEV's ownership to 62.5%   Vanguard National Resources announced a $280MM sale of assets to Titanium Exploration Partners to help pay down their debt.   PBF Logistics sold 2.5MM units to the public, sending units down -6.12% for the week.   While not a Master Limited Partnership GP, Sun Edison, a sibling with a Yieldco LP structure, looks to be the first sizable structure to collapse due to a heavy debt load, a failed acquisition, and an increasing cost of capital.  It has been reported that the company is in the process of filing for bankruptcy protection.  The company's two Yieldcos, TerraForm Power and TerraForm Global, which rely on SunEdison for future asset drops downs and operational services, will not be part of the bankruptcy.       Magellan Midstream Analyst Day   The company hosted their 2016 Analyst Day and reviewed their Refined Products, Marine Storage and Crude oil segments.  The company plans to spend $900MM on 16 Crude and Refined Products projects through 2017, with an average realized EBITDA multiple of 7x.   The company reiterated their Guidance, based upon the assumption of an average $35 bbl crude for 2016.  Each $1 increase in crude would result in a $3MM increase in DCF, so long as the relationship between crude and gasoline remained constant, which the company noted has not been the case.   Magellan has outperformed their midstream peer group on a year to date basis by returning +0.18% through 41/2016       Bankruptcy Watch   As we near the conclusion of the Spring re-determination, the process where banks calibrate their credit levels for producers, the squeeze of 10-30% reductions are being felt as a growing number of producers have delayed their 10k reporting due to pending credit agreement defaults which need to be resolved in order to continue as a going concern.  This week the following companies have announced they are pursuing some form of restructuring;  Black Ridge, Sandridge, Goodrich Petroleum, Post Rock and Seadrill Ltd.    Details can be found in our Bankruptcy Watch article         Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts   Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter    Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here

  • Mar 27

    Mar 27, 2016

    MLP Weekly: Funding Fits

    Despite the lack of any short term fundamental connection, crude and the benchmark index moved in tandem this week, with both falling nearly 5%.  Weekly the market reacts to changing rig counts, storage numbers, and production estimates, each of which are volatile given the high number of drilled but uncompleted wells and diverse producer…

    Despite the lack of any short term fundamental connection, crude and the benchmark index moved in tandem this week, with both falling nearly 5%.  Weekly the market reacts to changing rig counts, storage numbers, and production estimates, each of which are volatile given the high number of drilled but uncompleted wells and diverse producer economics.  The big picture has not changed much, which is that low prices will remain until there is a trend line which shows that supply is shrinking, attributable to lower production rather than higher demand.  This past week the EIA reported natural gas stocks stood at 2.493 trillion cubic feet, which is 40.9% higher than last year, and expected to grow further as the Spring brings on warmer weather.  Crude stocks also grew by 9.4 million barrels to a record 532.5 million barrels, so the question is how much longer will supply increase?  According to Wood Mackenzie, 2016 capex has been reduced by $91B across 121 firms, and in their chart below, forecasts that crude production will decline and turn negative in 2017.        As weekly statistics are revealed, in some cases, either not supporting or contradicting the expectation of a production decline, MLP investors will experience further volatility from short term crude sentiment.  When midstream units begin to report their Q1 results in late April, investors will be able to calibrate the real impact of higher crude ($41.86 average 2016 strip price) and lower 2016 Shale capex on volumes and cash flows.  To the extent that US shale producers can react to higher prices, investors may want to pay attention to Diamondback COO Michael Hollis's response when asked if the US could play the role of swing producer:     Unit News   The public market for common units was tested this past week as two issues were brought to market.  Antero Resources, the GP and Sponsor of Antero Midstream Partners, sold 8MM of their units at $22.40, a 10% discount to the previous close, which sent units down -12.8% for the week, despite that these were units transferred from Antero's ownership to the public market.  Antero still retains 62% of the common and subordinated units of Antero Midstream.  Shell Midstream issued 11MM new units (upsized from 9.775MM) at $31.75, a 6.7% discount to the prior close, with units ending the week higher at $33.60.  For the majority of midstream MLP's, the public equity markets still appear to be unattractive and likely unavailable.  For those units which still have unbalanced 2016 budgets, the search for funding alternatives will continue, albeit with an improving credit market.     While E&P and Proppant MLPs will taint the reputation of the asset class for a long time to come, even a savvy investor, like Leon Cooperman's Omega Advisors, was left holding units trading for pennies, as in the case of Atlas Energy.  While the SEC reportedly has been investigating Omega's trading of Atlas from several years ago, Omega continued to add to their Atlas position (chart below) either to inspire confidence for other investors to maintain or add to their position, or on the basis of a very bad read of the expected fundamentals.   NYSE suspended trading in Atlas on 3/18/16.     Bankruptcy Watch   As we near the spring re-determination date of March 31, 2016, the squeeze is being felt as a growing number of producers have delayed their 10k reporting due to pending credit agreement defaults which need to be resolved in order to continue as a going concern.  This week the following companies have announced they are pursuing some form of restructuring; Southcross Holdings and Emerald Oil.  Details can be found in our Bankruptcy Watch article   Yield to Coverage   Units with higher Distributable Cash Flow coverage have seen their yields decrease since the beginning of the year.  However, there is still a very wide disparity across midstream units relative to the Coverage Ratio and Forward Annualized Yield as illustrated below             Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts   Comments or Questions?  Please Ask Here or email Data@MLPDATA.com    Breaking News and Instant Analysis? Follow Us on Twitter    Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here

  • Mar 20

    Mar 20, 2016

    MLP Weekly: M&A Continues to Punish LP Investors

    The crude rally continued this past week, lifting the Master Limited Partnership index 5.2%, despite some troubling signs.  The average crude and natural gas strip for the remainder of 2016 are $42.69  and $2.35 respectively, up considerably from when guidance was issued for many units 45 days ago.  When screening the MLPData universe for…

    The crude rally continued this past week, lifting the Master Limited Partnership index 5.2%, despite some troubling signs.  The average crude and natural gas strip for the remainder of 2016 are $42.69  and $2.35 respectively, up considerably from when guidance was issued for many units 45 days ago.  When screening the MLPData universe for Midstream Limited Partnership units sorted by market capitalization, only four units closed Friday with a negative return in 2016, three of which have been involved with a significant acquisition or merger         The latest midstream LP to be impacted by M&A is Columbia Pipeline Partners, which sank -18.69% after TransCanda announced the $13B acquisition of Columbia Pipeline Group, which owns the General Partner,  46.5% of Columbia Pipeline Partner's units,  and a 85.4% interest in the entity which owns the assets available for drop down to CPPL.  Some investors are skeptical of TransCanada's commitment to retaining the high growth plan for CPPL, as well as the risk of the merging their existing MLP, TC Pipelines, in the future.  Fueling that concern, the Merger agreement calls for a 17.8% distribution rate through Q1 2016, which is below previous guidance.  The Columbia Pipeline Partners IPO on February 6th, 2015 offered investors a high growth plan, predicated on friendly capital markets, and priced above range at $23.00, On Friday,  units closed at $13.01, a 43% drop from just 54 weeks ago .  Once again, LP investors have been negatively impacted by M&A, which has been a far greater risk to principal than weak energy prices so far in 2016.      Exposure to Bakken Production continues to increase, particularly units with Crude By Rail assets.  An indication of the pain was revealed when Dakota Plains reported a 55% reduction in Bakken transloading fees despite a 10% increase in volumes.  This week's approval of Energy Transfer Partner's proposed Dakota Access Pipeline, will certainly add more downside to CBR assets once Minimum Volume Commitments roll off in the next 36 months.     Unit News   Targa Resources announced that their 9.5% Preferred offering subscription has increased from $500MM to $1B after Blackstone, Energy Capital Partners, and Tortoise Capital Advisors decided to join StonePeak Infrastructure Partners, The offering will include around 20MM new warrants, the majority of which with an exercise price of $18.88   Western Gas Partners also announced a $449MM issuance of 8.5% Perpetual Convertible Preferred's purchased by First Reserve and Kayne Anderson, to provide funding for the $750MM Springfield Pipeline acquisition from Anadarko   MPLX announced the completion of the Marine assets from their sponsor Marathon for $600MM at a 5x forward EBITDA multiple.  The assets represent 18 towboats and 203 tank barges servicing the Catlettsburg, KY refinery. Noteworthy is the level of support required by Marathon to transfer the $120M of EBITDA to MPLX, in order to sustain their growth guidance.  Aside from the low 5X multiple, Marathon purchased all of the units at $26.09, and will not receive distributions or IDR payments associated with the new units for Q1 2016.     New Source Energy Partners announced they will liquidate their East Central Oklahoma assets in a Chapter 7 filing.     Foresight Energy Partners, OCI Partners and Southcross Energy Partners announced the need to restructure their debt and in advance of Chapter 11 filings.       Insider Transaction   Summit Midstream's Sponsor Energy Capital Partners continued to support their LP by acquiring $7MM units this past week, and Leon Cooperman's Atlas Energy Partners failed investment is nearing liquidation as the company announced NYSE de-listing on Friday.           Bankruptcy Watch     As we near Spring redetermination, energy restructurings are on the increase, which can impact midstream cash flows.  MLPData provides a weekly roundup of filings, which can be accessed here.       Fund Flows     New cash continued to flow into MLP Mutual funds wth nearly $900MM of new capital invested over the past 4 weeks           Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts     Breaking News and Instant Analysis? Follow Us on Twitter      Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here            

  • Mar 13

    Mar 13, 2016

    MLP Weekly: Contract Focus

    Crude prices continued to advance this week, but some investors were focused on the recent judgment which has allowed a bankrupt producer, Sabine,  to terminate several gathering agreements related to uneconomic production, raising concerns that producers will increase their negotiating leverage, where applicable.  The market also is trying to…

    Crude prices continued to advance this week, but some investors were focused on the recent judgment which has allowed a bankrupt producer, Sabine,  to terminate several gathering agreements related to uneconomic production, raising concerns that producers will increase their negotiating leverage, where applicable.  The market also is trying to figure out what is going on with the Energy Transfer/Williams merger, after Energy Transfer converted insider shares to a new Preferred Convertible instrument, reducing the cash needed for distributions, but without Williams consent.  Enterprise Products held their annual Analyst Day, where they focused on their long term strategic plan of providing infrastructure for the expected increase in exports.  In 2016, the company forecasts export volume to increase 32% by Q1 over the 2015 average daily rate, the majority of which from LPG.  Also disclosed was that the construction company for the new PDH plant was terminated in December, and the ROI will drop from mid teens to high single digits.   During their presentation, they reminded investors that the futures markets are not an accurate predictor of forward prices, as illustrated in the chart below.         Unit News   TransCanda, the sponsor of TC Pipelines, is rumored to be in advanced discussions to acquire the Columbia Pipeline Group, which is also a sponsor to Columbia Pipeline Partners.  Such a deal may change the growth trajectory for CPPL, which fell -20.8% for the week, after the news was disclosed.       In another indication of firms looking to find out a way of of unattractive midstream commitments, Arc Logistics disclosed a current dispute between Uni USA and a Kinder Morgan controlled terminal provider, Gulf LNG Holdings,  which is partially owned by Arc Logistics.  Uni is essentially seeking to terminate their agreement due to the changes in the US Natural Gas market, which render these facilities unusable.     In order to help finance the $6B cash payment associated with the Williams Inc merger, Energy Transfer Equity insiders converted 31.4% of the outstanding units which they control, to a Series A Convertible Preferred unit.  The new preferred units will receive only $0.11 for each quarterly distribution prior to the WMB merger, and will defer the remaining payments  (and all of the payments after the WMB Merger Date) at least through 9 quarters, commencing on March 31st, 2016, saving the company $225MM per year.   Energy Transfer initially planned to offer the conversion opportunity to all unit holders, for which Williams advised it would need their consent, which they were not willing to provide.   The wording from the 8k stated the Energy Transfer did not believe consent was required for either the public or private issuance, and proceeded with the private issuance without any consent from Williams.       Ferrellgas Partners dropped their 2016 EBITDA guidance -10.5% as a result of the warm winter season, despite the strength in their midstream operations.           Fund Flows   Open End funds flows ramped higher this past week, a good sign that much needed capital is returning to the MLP sector.  Over $325MM of new cash was added to the MLPData universe of funds,  The chart below are the flows over the past 30 days for open end funds         Management Growth Estimates   As we near the end of the Q4 reporting period, MLPData has updated the forward guidance as provided by Management.  The chart below plots the relationship between the 3 year distribution growth rate and the current forward yield, for the midstream sector.                   Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts   Breaking News and Instant Analysis? Follow Us on Twitter      Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here  

  • Mar 06

    Mar 06, 2016

    MLP Weekly: Down is Up for MLPs

    MLPs had another ripping week as higher oil prices and E&P equity issuance attracted new capital propelling the  benchmark index higher +7.21%, and a  -8.72% YTD loss.  Crude rose 10.2% for the week as lower production numbers were reported by EIA (table below) which seemed to trump the higher crude storage reported, along with more…

    MLPs had another ripping week as higher oil prices and E&P equity issuance attracted new capital propelling the  benchmark index higher +7.21%, and a  -8.72% YTD loss.  Crude rose 10.2% for the week as lower production numbers were reported by EIA (table below) which seemed to trump the higher crude storage reported, along with more cooperative comments from OPEC members and Russia.  The reality of lower crude production has been good news for MLP's, despite what those lower volumes may mean for some midstream assets         The declining production has helped advance the average crude strip price to $40.24 for the remainder of 2016.  Below are a subset of the assumptions for the average strip price underpinning each MLP's respective guidance (Premium Subscribers can access MMP Guidance, PAA Guidance DPM Guidance, ENLK Guidance, SMLP Guidance)         Fund Flows   Open End funds added nearly $200MM of new capital this past week, as funds have pared losses from the beginning of the year.  Over the trailing twelve months, $749MM of capital has flowed into MLP funds, which currently manage $44B of AUM across Exchange Traded Funds and Notes, Mutual Funds and Closed End Funds.           Unit News   After market close on Friday, Vanguard Natural Resources announced the suspension of their common and preferred distributions and an expected 10-15% production decline for 2016, after reducing capital expenditures by 44% for next year.  The preferred distributions will continue to be accrued and must be paid back prior to any distributions to the common units.   Enterprise Products Partners updated their investor deck, which included their exposure to risky producers increased to 6.4%, from their previous estimate of 2.4%, as a result of credit downgrades since their earnings call on January 28th.  The company also disclosed that they expect to load and export 13MM barrels of crude in the first quarter of 2016.   Energy Transfer and Williams seemed to benefit from the 80% rise in Chesapeake's stock price, despite the record low natural gas prices, which will likely be tested with warm weather entering the northeast this week.  Williams also announced that a flat dividend, with a forward yield of 13.37%         Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecasts   Breaking News and Instant Analysis? Follow Us on Twitter    Master Limited Partnerships have begun reporting their  Q4 Earnings and their Outlook for 2016.  Many midstream investors have sold out their positions based upon volatile market activity rather than for fundamental reasons, leading to further principal losses as units have bounced back after fundamentals have been updated.  Subscribe to MLPData's Premium Service for access to the most timely current and historical unit metrics, cash flow coverage details, and forward guidance to support your buy, hold or sell decisions.   Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here  

  • Feb 27

    Feb 27, 2016

    MLP Weekly: Closing the Spigot

    Investors received new information to chew on this past week as 42 units reported their Q4 performance with many offering guidance for 2016.   Shale producers continued to slash budgets and Banks increased their energy loan reserves in advance of the Spring redetermination.  Much of this negative news did not get in the way of higher oil prices,…

    Investors received new information to chew on this past week as 42 units reported their Q4 performance with many offering guidance for 2016.   Shale producers continued to slash budgets and Banks increased their energy loan reserves in advance of the Spring redetermination.  Much of this negative news did not get in the way of higher oil prices, even after some dour comments from the annual IHS CERAWeek Energy Conference, which lifted the benchmark index 3.75%, and pared YTD losses back to -14.86%.  While there is much to report on this week, a few notable comments stood out.  During the IHS conference, a panel which discussed midstream overcapacity, offered quotes from two of the sure hands of the Midstream operators, Greg Armstrong CEO of Plains All American and Jim Teague, CEO of Enterprise Products Partners, who opined with some language that was certainly less tempered from their recent earnings calls.   "History tells us at some point we are going to come out of this. People keep calling it a cycle but I call it pure hell," said Jim Teague, CEO of Enterprise Products Partners.  Asked about potential defaults by shippers, Teague said: "We work with our customers very closely, we understand their needs, we work with them to try to help them and that's all youre gonna get out of me."   "Every basin is currently overbuilt or will be overbuilt, " because of work already underway, said Plains All American Pipeline CEO Greg Armstrong   While the message is not news to the market, the tone of their comments provides insight into the pain and concern they are experiencing from the market conditions,  Midstream investors are increasingly focusing on counter-party risks, which continue to evolve, and may come to a head from the pending Sabine Oil case, which held a hearing this past Friday.  Relying on Investment Grade metrics for exposure is challenged by the downgrades of Shale producers, who continue to slash their budgets.  Whiting Oil this past week announced they will stop well completion operations beginning in the second quarter of 2016, and plan to cut their capex by nearly 80% .  In their 10K,  it was disclosed that in 2015, the company was not able to produce enough volumes in certain regions to meet their MVC commitments, and realized a $15MM  deficiency charge.  With 9% lower volumes expected in 2016, and escalating MVC minimums in the out years, this deficiency will likely increase significantly.  Chesapeake also reduced their capex by 57%, lowering production by up to 5%, also revealed a re-negotiation of a midstream agreement with Energy Transfer Partners, lowering their expenses by $50MM (speculated to be on the Tiger Pipeline), by extending terms and adding additional services, perhaps a good swap if Chesapeake remains a producer of similar scale over the next few years.      The first LNG tanker left Cheniere's Sabine Pass Export facility this week, beginning a new chapter for gas flows and an outlet for the excess capacity locked within the US.  The tracking of the ship can be followed here for those interested.     Unit News   As Sponsors continue to develop creative approaches to sustain credit, coverage and distributions, this week extended the boundaries to a transaction which has a future valuation trigger to pay for assets which will be dropped down today.  Summit Midstream Partners and their Sponsor, Energy Capital Partners, embarked on a strategic review process which ended in December with no buyer, opted to drop down $1.2B of assets to the LP, for an initial cash payment of $360MM, and a future payment of $800-$900MM, a 6.5X of the prevailing EBITDA in 2018, payable in either cash or units.  The transactions aims to eliminate the need for any future financing and improve the coverage ratio in or to maintain and moderately grow the distribution through 2020, as well as raise cash to address their leverage.  Energy Capital Partners has also been supporting SMLP by way of open market purchases, which they increased this past week by purchasing $6MM of units.     Energy Transfer Partners held their Q4 earnings call, and only mentioned that they planned to proceed with the Williams transaction, and had ample financing in place to complete the deal, which they now expect will close in Q2.  Management provide flat distribution guidance for 2016 as the company will prioritize coverage and liquidity going forward.  When asked about their CFO departure, Kelcy Warren said  "We need to make a move, and we did", leaving investors guessing as to what precipitated the need to make the move.  Later in the day, a NYTimes article suggested that Energy Transfer is trying to extricate themselves from the deal at all costs, sending both Williams and Energy Transfer on a wild run and a brief halt in trading.   Western Gas Partners provided a 10% distribution growth target for 2016, with 1.1x coverage, and 20% for their General Partner, Western Equity Gas Partners, despite the capex reduction by Anadarko and their recent credit downgrade.   Premium Subscribers can access the latest Current and Trailing Twelve Month Coverage ratios, Guidance, Unit Metrics and Forecasted Distribution Growth for all units which have reported to date.      Insider Buys       Yield to Coverage   As Units report Q4 results, MLP Data updates the current and Trailing Twelve Month Distribution Coverage ratios.  The below chart represents the TTM coverage ratios plotted against the annualized yield for those midstream units which have reported through this past week. Premium subscribers can drill down into the charts and filter by tickers or categories.           Premium Subscribers be the first to access DCF Trends, Risk Metrics, 2016 Guidance and Distribution Forecastsâ??   Breaking News and Instant Analysis? Follow Us on Twitter    Master Limited Partnerships have begun reporting their  Q4 Earnings and their Outlook for 2016.  Many midstream investors have sold out their positions based upon volatile market activity rather than for fundamental reasons, leading to further principal losses as units have bounced back after fundamentals have been updated.  Subscribe to MLPData's Premium Service for access to the most timely current and historical unit metrics, cash flow coverage details, and forward guidance to support your buy, hold or sell decisions.   Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here      

  • Feb 21

    Feb 21, 2016

    MLP Weekly: Moving Metrics

    On Wednesday, Master Limited Partnerships surged on the disclosure that Buffet’s investment management team added to their Kinder Morgan position in the fourth quarter, but by the end of the week, units gave back some of the gains on lower oil and credit downgrades, finishing the week up 10.39% and down -17.94% for the year.   Over the past 7 days…

    On Wednesday, Master Limited Partnerships surged on the disclosure that Buffet’s investment management team added to their Kinder Morgan position in the fourth quarter, but by the end of the week, units gave back some of the gains on lower oil and credit downgrades, finishing the week up 10.39% and down -17.94% for the year.   Over the past 7 days, there have been several announcements suggesting that some Institutional investors are increasing their MLP exposure, while retail and fund investors continue to sell when units decline.  For a market which often trades on the fears of what could be, a small vote of confidence is enough to bring buyers back to the market, and flush out the short positions.   With low commodity prices, the market is seeking equilibrium now using EV/EBITDA multiples (we have seen up to 5 different calculations of this ratio), but with a wide range of coverage ratios, growth capital requirements, and leverage. Further adding to the complexity is the overhead of IDR’s and each sponsor's ability to adjust these payments if necessary.  With all of these factors being applied to a diverse set of assets, finding a risk adjusted market multiple will take time with plenty of volatility along the way.  If energy prices break out, the market will need to reassess the importance of growth, requiring a new set of calibration.  Analysts continue to lower price targets, not on fundamental changes, but rather EV/EBITDA multiple changes, which seem to be using the same approach as raising targets when multiples were expanding.  Some retail investors continue to pay attention to these Price Target changes, and sell on the headlines.  While we do not know what the correct market equilibrium should be, nor the relative premiums of discount, it is obvious that wild swings offer attractive trading profits for those who adhere to a baseline set of relative metrics.  To illustrate, consider Enterprise Products Partners, which has little supply side production exposure, or counter party risk, over the short term.  The company reported their 2015 results on January 28th for which the they expect to grow distributions by 5.2% with a healthy coverage ratio.  Between the earnings date and this past Friday, EPD’s unit price has traded within a 17% range.  During this time, there has been no material change in market fundamentals nor any company specific information, other than fluctuating energy prices, which do not have a linear impact on the fundamentals or guidance.         Miller Howard recently published a very insightful report which provides several illustrations and explanations that help to frame the recent volatility within the MLP Sector:  The chart below from their report provides an historical range of valuations across 8 assets classes, The forward 2016 Estimated EBITDA, often provided by Management's guidance, is trading at the lowest EV multiple over the past 10 years, which implies either the Guidance is suspect or the sector has been oversold relative to the historical relationships.       Merrill Lynch provided another illustration of relative valuations over the past 10 years between MLPs, REITS, Uilities, and Oil Services, indicating the narrowest spread between Utilities and MLPs observed since 2005         We have multiple sets of metrics which do not uniformly apply to all units, with a wide set of historical ranges, being applied to a diverse set of fundamental expectations, subject to the duration of the lower for longer scenario.  Coupled with a de-leveraging set of investment products and high retail ownership, the search for equilibrium will continue to be volatile and uncertain, until the fundamental outlook either significantly worsens or improves over the next 9 months.   Unit News   26 units reported their Q4 results this past week and 42 will be releasing their next results next.  Below are a few of this past week's highlights:   Phillips 66 Partners LP announced that they are purchasing an interest in a Sponsor entity, which owns gas storage and a Fractionator asset, for $236MM.  The purchase will be paid by issuing $24MM (430,000 units) of new PSXP units, and a $212MM note payable to Phillips 66, their Sponsor.   PSXP paid 9.4x EBITDA with an obligation to fund $7MM of future growth capex.  The drop down transaction supports the 30% annualized distribution growth target the company has set through 2018   Tallgrass Energy Partners reported a 13% increase in Pony Express volumes over the previous quarter and trending higher in January and February with 85-90% of their revenues derived from counter-parties who are BB- or above.  Of those actually rated, 63% are Investment Grade,  TEP re-affimed their minimum 20% growth rate through 2017 with target coverage of 1.05 to 1.15.  The company also announced that Tallgrass Development has initiated a $100MM unit purchase program.   After completing the merger, Targa Corp raised $500MM of new capital from a 9.5% Series A Preferred issuance purchased by Stonepeak, which will also receive around 7MM warrants at $18.88 and 3.3MM warrants at $25.11.  Although more attractive than the issuing equity with a 17% yield, this is a pretty expensive source of capital.    Williams Partners announced their Q4 results, which were in line with estimates, along with 1.0x coverage, excluding the IDR benefit they are receiving as a result of the Williams acquisition breakup.  The company also reduced their 2016 capex by 32% and indicated that they will not need to access the public markets in 2016.  The market continues to speculate that a restructuring by Chesapeake (20% of WPZ EBITDA) could result in a threat of a Ratings downgrade of Williams Partners, to below Investment Grade, putting the distribution at risk   Enviva Partners, the wood pellet export producer, announced Q4 results which exceeded their guidance and set a 2016 distribution target of at least $2.10, which is 19% higher than the 2015 equivalent.  Their sponsor, John Hancock Life Insurance Company, continues to develop new wood pellet production and export facilities, which will be available as future drops downs to Enviva.   EnLink Midstream Partners provided their 2016 guidance, which projects flat distribution growth and 1.0x distribution coverage if crude and gas average $43.75 and $2.50 respectively over 2016     Bankruptcy News   It was reported this past week that Stampede Energy is the shipper who has defaulted on take or pay agreements made on the BridgeTex pipeline for 10% of the nameplate capacity.  Both Plains and Magellan, the co-owners of the pipeline, disclosed this deficiency in their calls, and have included the non performance in the forward EBITDA assumptions.  Stampede has yet to file for Chapter 11, but we will provide further details from their petition once it is filed.     Credit Downgrades   This past week Moody's made the following adjustments to E&P and MLP credit ratings, which will require MLP's to update their counterparty statistics with some big shall producers now moving to junk status   EQT Corporation - affirmed IG EQT Midstream - affirmed IG Pioneer - affirmed IG Western Gas Partners - changed to Junk from IG Anadarko - changed to Junk from IG Continental - changed to Junk from IG Murphy Oil - changed to Junk from IG Hess - changed to Junk from IG Southwestern Energy - changed to Junk from IG     Yield to Growth   As Management provides 2016 and forward guidance, MLPData updates the 1 and 3 year growth estimates on a daily basis.  The below chart represents the latest revised growth rates for those midstream units which have reported through this past week. Premium subscribers can drill down into the charts and filter by tickers or categories.           Breaking News and Instant Analysis? Follow Us on Twitter    Master Limited Partnerships have begun reporting their  Q4 Earnings and their Outlook for 2016.  Many midstream investors have sold out their positions based upon volatile market activity rather than for fundamental reasons, leading to further principal losses as units have bounced back after fundamentals have been updated.  Subscribe to MLPData's Premium Service for access to the most timely current and historical unit metrics, cash flow coverage details, and forward guidance to support your buy, hold or sell decisions.   Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfolio Income Here   Premium Subscribers can access Guidance and Forecast Changes Here   Do You Want to Become a Premium Subscriber?  Please Register Here