•  
  • AMZ Index     279.56
  • AMZ Net Change     0.43
  • AMZ Net Change %     0.15%
  • AMZ WTD   -1.14%
  • AMZ YTD   -12.10%
  • As of Date   9/22/2017

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Ask The Experts

 

Answer by

The MLP Data Team

Sponsored By MLPData      in   Market Fundamentals

What is CFFO? (Cash Flow from Operations, as displayed in Unit Metrics tab)

Cash Flow from operations or operating activities (CFFO or CFO) is helpful to understanding the amount of cash a MLP generates from the revenues it brings in from regular business activities.

The calculation is cash generated fro

Sponsored By MLP Data      in   Market Fundamentals

It has been noted that DCF calculations can vary materially among MLPs, so it appears difficult to compare MLPs by DCF and related measures. How can we compare firms to get reliable comparison of DCF, DCF growth, DCF per share, etc that are needed to compare and value MLPs?

Sponsored By MLPData      in   Taxation

Do you provide Schedule K-1s for MLP reporting requirements with the IRS?

Sponsored By MLPData      in   Market Fundamentals

Please explain coverage ratio for Distributable Cash Flow?

Sponsored By MLPData      in   Company Focus

On the MLPData Quote screen, what does the "E" displayed next to "Annualized Distribution" and "Annualized Dist. Yield" fields indicate?

Sponsored By MLPData      in   Funds

What's the source of the 3-year forecasted distribution growth rates?

Sponsored By MLP Data      in   Market Conditions

Can MLPs grow distributions when energy prices are weak?

Sponsored By MLPData      in   Market Fundamentals

How do MLPs determine distributions to be made to Unitholders?

Sponsored By AMZA      in   Funds

What are the key factors to consider when buying a fund that invests in MLPs?

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Should Upstream MLPs be a part of an investment portfolio?

Insights

  • Lead Image

    Sep 17, 2017

    MLP Weekly: IPO and IDR's, Will Investors Care?

    Units bounced around this week as the market looked past the short term impact from Hurricane Harvey and Irma.  While the benchmark index is down -11.08 YTD, the majority of large cap midstream units  and actively managed funds are performing much better and are poised to generate strong gains if Q3 Fundamentals follow through with volume and margi…

    Units bounced around this week as the market looked past the short term impact from Hurricane Harvey and Irma.  While the benchmark index is down -11.08 YTD, the majority of large cap midstream units  and actively managed funds are performing much better and are poised to generate strong gains if Q3 Fundamentals follow through with volume and margin increases.  With crude trading above $50 and the prospects of higher rates fading, new investors may be willing to take a fresh look at deploying new cash, if they are able to look some past recent events which continue to cast doubt on management's ability to accurately translate market conditions into financial guidance.           While some ill conceived MLPs are being rolled back into their Sponsors (VTTI is the latest reversal, Star Gas soon to be), three new units are in process of an IPO to raise $450MM of new capital.   These offering appear to be driven by the Sponsor's need for capital rather than being an opportune time to raise cost effective capital.  BP Midstream Partners, the most interesting of the bunch, will receive a lower valuation for their assets than Shell Midstream, which three years ago raised $920MM with an IPO yield of 2.78%, now 4.40%, reflecting an expected 20% distribution growth rate, a change from the "best in class" moniker used at the time of the IPO.     Unit News   BP Midstream Partners filed their S-1 and expects to launch their MLP by the Q4 2017.  Assets will include ownership interests in one onshore crude oil pipeline system, one onshore refined products pipeline system, and one onshore diluent pipeline system, which carry shipments to or from BP’s Whiting Refinery in Whiting, Indiana, together with interests in four offshore crude oil pipeline systems and one offshore natural gas pipeline system that connect offshore production areas in the Gulf of Mexico with the Gulf Coast refining and distribution hubs.     Oasis Midstream Partners plans to price their IPO this coming week between $19 and $21, with a midpoint yield of 7.5%. The Williston Basin midstream assets will include gathering and water processing facilities, which are utilized exclusively by Oasis Petroleum under 15 year dedicated acreage agreements with fixed service fees.  Oasis Midstream Partners will begin to pay Incentive Distribution Rights after it increases the distribution by 15% from the initial rate of $0.375   Howard Midstream Partners filed their S-1, in which they plan to raise $200MM for private Sponsor Howard Energy Partners.  Midstream assets will include natural gas gathering systems in South Texas and Northeastern Pennsylvania, a natural gas processing plant in Webb County, Texas, a deepwater marine terminal in Brownsville, Texas and a condensate and NGL stabilization facility in Live Oak County.     Shell Midstream announced the agreement to sell 10,370,000 common units for a total purchase price of approximately $275 million to funds managed by Tortoise Capital Advisors, L.L.C. in connection with a registered direct offering and sales of common units via their ATM program, for an average weighted cost of $26.55 per common unit.     Midstream Yield to Coverage   The below chart plots the Forward Annualized Yield against the Trailing Twelve Month Distributable Cash Flow Ratio for the constituents of the benchmark index.  The full chart can be accessed here         Top Distribution Growth   Full table can be accessed here       We have just completed several new enhancements to MLPData,  one of which is improved site performance across all our Basic and Premium applications.       Questions, Comments, Suggestions?  Please Reach Us Here      

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    Sep 03, 2017

    MLP Fund Concentrations As of 8/31/17

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 8…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 8/31/17, the below grid displays the top 10 holdings across the largest actively managed funds along with total AUM and 2017 YTD Performance          

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    Aug 27, 2017

    MLP Weekly: Lost Confidence

    A modest bounce back week for Master Limited Partners as Hurricane Harvey hit landfall on the South Texas Coast, throttling Gulf of Mexico production, shutting refineries and threatening to leave behind considerable flood damage.  Investors have also been dealing with the self inflicted damage across large cap, with 2 of the top 4 units suffering f…

    A modest bounce back week for Master Limited Partners as Hurricane Harvey hit landfall on the South Texas Coast, throttling Gulf of Mexico production, shutting refineries and threatening to leave behind considerable flood damage.  Investors have also been dealing with the self inflicted damage across large cap, with 2 of the top 4 units suffering from Management mis-guidance and questionable actions.      Monthly Production numbers from the EIA continued to show increasing volumes in all basins, a positive trend in theory, that has yet to translate into meaningful improvement in fundamentals as overcapacity, low energy prices, and underperforming basins are offsetting any gains from the Permian       The Hurricane forced Plains to hold their Call on Friday afternoon, in which they outlined their plans to "reset" their distribution and balance sheet in order to maintain Investment Grade status.  The Cut, however, was more significant than suggested on their August 7th Earnings Call, apparently due to Management taking a more thoughtful approach to solving their problems and setting a path to re-establish their credibility.  Despite how the market reacts on Monday, they have a long way to go.  The distribution has been reset to $1.20 per year, effective November 2017, from the current rate of $2.20.  The new distribution rate is equal to the rate PAA paid out in November 2004, when units were trading at $36.05, a 78% premium to Fridays close and a $15.86 principal loss to those who held units since 2004.  At the new rate of $1.20, the recently converted Incentive Distribution Rights would be generating just $17MM at the pre-conversion share count , another punch in the gut to LP units who were diluted by the $7.2B Simplification plan.           Management summarized the actions in the slide below       Here are a few noteworthy Management comments to questions posed on the hour long call held on Friday after the market close   On Rating Agency’s feedback on IG status?  "Have had a number of conversations and two (agencies) have PAA on credit watch, and they will have the benefit of our new plan….we do not have any additional information or insight, hard to say they have signed off.  Our belief is they will view is positively, but it is their opinion which counts and they have not completed their process.."   On Higher Coverage over the next 6 quarters?  "Yes, likely Higher than any other MLP out there…fee based underpinned.."   Why the change from $1.80 to $1.20?   "A lot of factors, economic, science, and just plain math…influx of value buyers.  We went through a number of iterations and landed on the 6 quarter period which can be accelerated.."   On S&L Next Year - $100-$300MM range next year, what will materialize?  We don’t have good visibility going forward as we had in the past, for 50 straight quarters we exceeded guidance….back to 2006, our lowest EBITDA level was $249MM and the highest $900MM…we assume it will be at the bottom of the range in our 2018 plan….hoping S&L becomes less of a focus going forward   On Preferred Equity Issuance – "Look to complete between now and end of year (in total).  Using to fund capital and strategy is to avoid dilution.  Likely Prices at 150 bps spread to 10 year.."   On NGL business - "Made sure we don’t have a hole in our boat…the market is very competitive and a lot of our capacity is contracted, We don’t expect to worse next year than we did this year…"   How do you get New Investors comfortable with S&L Mishap?  "When S&L is only 5%, I am hoping everyone is focused on the 95%.."   Is 2018 Guidance at Risk ?  "Biggest challenge is trying to predict when production comes on…legacy pipelines have lowest tariffs, none of it contracted, but are full all of the time.."   Fund Flows   Mutual Funds had their largest outflows recorded this year as nearly $160MM of capital was redeemed from MLP Mutual Funds       Questions, Comments or Suggestions?  Please Reach Us Here      

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    Aug 13, 2017

    MLP Weekly: Plain and Painful

    A tough week for MLP unitholders and overall market sentiment for Master Limited Partnerships.  While most earnings calls have revealed little reason to be optimistic that higher production is having much of an impact of diversified midstream assets, Plains All American reminded investors that commodity prices are still impacting the safety of unit…

    A tough week for MLP unitholders and overall market sentiment for Master Limited Partnerships.  While most earnings calls have revealed little reason to be optimistic that higher production is having much of an impact of diversified midstream assets, Plains All American reminded investors that commodity prices are still impacting the safety of unit distributions, despite all of the remedies applied to address Incentive Distribution Rights' and balance sheet issues.     Just one year ago, Plains completed a Simplification Transaction, which eliminated the Incentive Distribution Rights paid by the LP to the GP, in exchange for $7.2B of new units and debt transfer.  At the time of the transaction, Supply and Logistic's EBITDA had peaked in 2013 at $893MM, or nearly 40% of the aggregate EBITDA of $2,304MM.         Between 2013 and the Simplification transaction of July 2016,  Plains increased the distribution by 16% despite EBITDA trending lower.  The Incentive Distribution Rights benefited from the increasing distributions and new unit issuance, as Plains increased their IDR payment from $99MM per quarter by the end of 2013, to $155MM per quarter, prior to the Simplification.  The $7.2B IDR conversion transaction was based upon an annualized IDR obligation of $620MM when the distribution rate was $2.80 per year.         Presently, unitholders now have to share cash flows with all of the new units (245,000,000) from the IDR swap, but a large chunk of the cash flow (S&L) has evaporated, and management intends to reset the distribution and coverage based upon the predictable fee based business, excluding the S&L segment results.  Management indicates that the distribution rate would be cut to $1.80 using the current 2018 DCF forecast and target coverage rate of 1.1x, an 18% reduction from the current $2.10 rate, and a 35% reduction from prior to the Simplification transaction.  If the IDR's were still in force,  the $1.80 distribution rate would have yielded $128MM in annual payments vs the $620MM just prior to the Simplification transaction.       On their Q1 Management Call, this how CEO Greg Armstrong described their responsibility to manage the S&L exposure "Our job is to look around corners and see problems before they show up. In this particular case, we were either late or, in some cases, didn't see it. And there's been a dramatic increase in exports that's kind of changed the dynamics in some of the regional relationships that affect margins.  Just to put it in perspective, I think first quarter 2017 exports of propane-related products was order of magnitude 1 million barrels a day. That's up 50% over what it was in the first quarter of 2016, and it's up somewhere close to double what it was in the first quarter of 2015.  So, what's happened and, in some cases, we've had situation where we've had inventory that was based on old contract structures and the clearing mechanism was always if you didn't have enough of a warm winter to get it out of that location, you could ship it to a place like Bellevue.  Well the infrastructure was basically full, and we didn't have the ability to get that out of there. So, we ended up basically getting our face peeled off on the margin on that. What we've done already is we've changed the contract structure and put basically floors underneath there. We've given up some upside to do that, but given what just happened, we think that's a good tradeoff. "   "And so, where we can, we're basically going through – in fact in many places already, changed the contract structure so that it won't affect the 2018 season. It's certainly going to affect the rest of summer 2017 just because of some of the dynamics. And then, in addition to that, candidly we'll carry less inventory, and I think the market will be a little bit more at risk and have to put a higher value on our storage assets if it turns out that because we don't carry enough inventory, they can't get all the products that they need. The next season around, that should manifest itself into a recognition of the value of our storage."   "So, at this point in time, we're still kind of feeling like we're around the 500 base when things kind of return to normal. But annually, Brian we're trying to figure out what normal is because normal didn't use to involve three times as many competitors as we have now that have gotten in the business because it's not been as fun to be in natural gas or at least had not been for the last two or three years. "   Plains unitholders have a reason to be upset for overpaying to eliminate IDR's which were based upon unsustainable S&L EBITDA which drove distribution increases, both of which have been rolled back, leaving unit holders with less principal and lower distributions         Q2 Management Comments Below are some noteworthy comments revealed during Q&A   Energy Transfer Partners commented they they continue to expect up to $200MM in commercial synergies by 2019 from the SXL transaction and expect $3.9B net in total Capex, $1.7B of which has been spent, $2.2B for remaining of year net to Energy Transfer   On Midstream Over-Performance - "$30MM related to MVC payments, non recurring, these are demand payments for previous MVC shortfalls"   On Simplification -  "We are looking at all of our options"   On Why the Yield is So High - "the most common thing we hear right now is really the equity-overhang. So we continue to work hard to try to communicate in all the options we have, and feel strong. That's going to be the cure. As these projects come on as the leverage comes down because, remember, our leverage, once again, it's worth repeating. It's not paying down debt it's the EBITDA catching up with 3 years worth of funding of these projects. And so once we get to that over the next, between now and year-end, we feel strong that in that overhang is gone we do feel strong. It's going to be once again a totally different balance sheet and totally different view."   "We've got some proving to do here to the market and you know Dakota Access pipeline was quite the experience. And part of that, we have the Williams transaction. And so now here we are with other projects that are delayed, primarily from regulatory reasons. But it doesn't matter. What matters is that we have an obligation to you guys and our unit holders to deliver. And we hope you're hearing that we are about to get that promise accomplished here. But we got to do that. And so that probably is a factor as well.   On Potential M&A  "We are tired. I mean, it's been a tough year for us, tough couple of years. And we're to get on these projects on line and demonstrating -- creating distributable cash flow for our unit holders. And the future looks really bright for us. I think it's time for us to take a little break on M&A. Again, unless the perfect deal was available to us and -- we would be opportunistic in that case. But I don't see that right now."   On Midstream Strategy  Enterprise Products CEO  "What we're doing costs more money and it's harder to duplicate, pure and simple. We think that from a – Brent, maybe want to chime in on this. But the easiest thing to do is build a gathering system and get a dedication and call yourself a midstream company. What we're seeing is producers and we'll use the Permian as an example. The producer is going to dictate what that gather would does for him, and he is going to dictate whether or not he wants – what kind of segregations he wants. So we're going to fill this pipeline up and we will build out into certain basins, we will do things, like buying the Eagle Ford system from Pioneer, but our focus is, we like things that have a high barrier to entry, and we like things that add to our downstream value chain. "   On Year End Results Tallgrass Energy CEO "So I think another reason for it is I think our companies very transparent and how we report and give guidance particularly with as an example our deficiency in incremental payments on Pony and see our business is highly stable and continues to consistently perform. So I don’t know whether people would rather a sandbag and beat the heck out of stuff all the time or not, but I think we’ve been very transparent and will continue to do so. That means that we just need consensus and so the results will speak for themselves. We do expect the third quarter to be an excellent quarter. In fact, we expect the rest of the year to produce outstanding results."   Unit News   Andeavor, the rebranded name for Tesoro and their MLPs, disclosed "after evaluating many options related to the incentive distribution rights, both Andeavor and Andeavor Logistics preferred approach is to pursue a by-in transaction in exchange for common units. The transactions require approval of the Board of Directors of all three companies as well as the Conflicts Committees of both MLPs.  We believe we will be able to complete negotiations and announce the transaction during this quarter, we view these transactions as incredibly important to enable Andeavor Logistics continued growth plans and further strengthen Andeavor Logistics as a premier customer focus, logistics Company with an enhanced capital structure to better support long-term sustainable growth."   Fund Flows   Recent positive flows turned negative this week as MLP ETF's had $130MM of outflows         Questions, Comments, Suggestions?  Please Contact us Here      

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    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 over…

    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      

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    Jul 19, 2017

    US Shale Production As Of July 2017

    Monthly EIA Oil Production data as of July 17, 2107:  The Below table illustrates the 22.61% increase over the previous August.  Total Shale production overall has increased 1,115,000 bpd since the low reached in September 2016              

    Monthly EIA Oil Production data as of July 17, 2107:  The Below table illustrates the 22.61% increase over the previous August.  Total Shale production overall has increased 1,115,000 bpd since the low reached in September 2016              

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    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 th…

    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        

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    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      

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    Jun 21, 2017

    MLP Fund Concentrations As of 6/15/17

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 6…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 6/15/17, the below grid displays the top 10 holdings across the largest actively managed funds along with total AUM and 2017 YTD Performance  

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    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 benchmar…

    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              

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    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 production…

    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          

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    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 posi…

    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  

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    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 illustrat…

    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

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    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 st…

    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        

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    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 to…

    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          

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    Mar 28, 2017

    IPO Preview: Hess Midstream Partners

    Hess Midstream Partners LP, originally filed for IPO in September 2014, will price next week between $19-$21 with a midpoint yield of 6.00% ($1.20) and expected 2018 Distributable Cash Flow Coverage of 1.15x.  Through 2020, less than 20% of the distributions will be subject to federal tax.  Units are expected to begin trading on Wednesday (4/5/17),…

    Hess Midstream Partners LP, originally filed for IPO in September 2014, will price next week between $19-$21 with a midpoint yield of 6.00% ($1.20) and expected 2018 Distributable Cash Flow Coverage of 1.15x.  Through 2020, less than 20% of the distributions will be subject to federal tax.  Units are expected to begin trading on Wednesday (4/5/17), raising $232MM  from the 22.5% sale of Sponsor's Global Infrastructure Partners (GIP) and Hess interests, with a market cap of $1.3B.  The Sponsor, Hess Infrastructure Partners (HIP), was formed in 2015 when Hess contributed Bakken midstream assets to HIP and GIP purchased a 50% ownership interest for $2.675B, valuing the assets at $5.35B.   Since forming HIP, Bakken crude production has fallen nearly 20%, with the expectation that production will increase from higher energy prices and Hess's 2017 plan to spend $700MM in the Bakken, which includes increasing their rig count from 2 to 6, expected to result in 75 new wells by year end.   Monthly Crude Production - EIA   Monthly Natural Gas Production - EIA     The MLP will own interests in several assets which derive the majority of the cash flows from gathering, compressing, and processing natural gas and fractionating natural gas liquids.  Remaining cash flows will consist of crude rail transport, terminaling and storage services, which will account for 10% of adjusted EBITDA.  The assets have 10 year fee based MVC agreements with Hess, set to expire in 2024, with a 10 year renewal term.  The Tioga Gas Plant is expected to have a turnaround in 2019, resulting in a lower Minimum Volume Commitment as indicated below     Fee Based Agreements       Segment EBITDA Contributions           Incentive Distribution Right payments will reach the first tier after Hess Midstream Partner's increases their Minimum Quarterly Distribution (MQD) by 15% from $0.30 to $0.345 and will reach the top tier payout when the distribution rate exceed $0.45, a 50% increase from the MQD.  Growth will be achieved by dropping down the remaining HIP interests, which after the IPO, will generate a remaining  ~ $250MM of Adjusted EBITDA, with a book value or $2.4B.  Hess also expects to organically add new midstream services and expand third party relationships.                Hess Midstream Partners follows the November 2016 IPO of Noble Midstream Partners, which is up 100.43% from their IPO, on expectations of increasing production in the DJ Basin.  While Hess's Bakken production is more sensitive to lower energy prices due to limited midstream infrastructure and higher operating expense, a modest move up in crude prices could accelerate production and offer significant upside to unitholders.       Hess Midstream SEC Filing Can Be Accessed Here          

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    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    

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    Mar 25, 2017

    MLP Fund Concentrations As of 2/28/17

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 2…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 2/28/17, the below grid displays the top 10 holdings across the largest actively managed funds along with total AUM and 2017 YTD Performance    

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    Mar 17, 2017

    EIA Production As of March 2017

    Monthly EIA Oil Production data as of March 13, 2107:  The Below table illustrates the 0.24% Year over Year increase in Shale production, with Permian production up 12.28%, offsetting continued declines in the Bakken and Eagle Ford from the previous April.  Total Shale production overall has increased 500,000 bpd since the low reached in September…

    Monthly EIA Oil Production data as of March 13, 2107:  The Below table illustrates the 0.24% Year over Year increase in Shale production, with Permian production up 12.28%, offsetting continued declines in the Bakken and Eagle Ford from the previous April.  Total Shale production overall has increased 500,000 bpd since the low reached in September 2016             Gas Production    

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    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 glob…

    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          

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    Mar 03, 2017

    MLP Short Interest As of 2/15/17

    The Benchmark index increased 2.4% between January 31st and February 15th  during which time the total number of short shares increased  from 323MM to 332MM.  Below are the units with the greatest change in short sales from February 15th                    

    The Benchmark index increased 2.4% between January 31st and February 15th  during which time the total number of short shares increased  from 323MM to 332MM.  Below are the units with the greatest change in short sales from February 15th                    

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    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          

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    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          

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    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 rat…

    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        

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    Feb 03, 2017

    MLP Short interest As of 1/15/17

    The Benchmark index increased 1.0% between December 30th and January 15th during which time the total number of short shares decreased  from 315MM to 309MM.  Below are the units with the greatest change in short sales from December 30th                

    The Benchmark index increased 1.0% between December 30th and January 15th during which time the total number of short shares decreased  from 315MM to 309MM.  Below are the units with the greatest change in short sales from December 30th                

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    Jan 28, 2017

    MLP Fund Concentrations: 12/31/16

      Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As o…

      Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 12/31/16, the below grid displays the top 10 holdings across the largest actively managed funds along with total AUM and 2017 YTD Performance                

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    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 pro…

    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          

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    Jan 24, 2017

    IPO Preview Kimbell Production Partners

    A new Mineral Rights Master Limited Partnership is expected to price next week to ride the wave of higher crude and increasing Permian activity.  Kimbell Royalty Partners is a variable distribution MLP which owns mineral rights across 3.7MM gross acres, which produced 3,317 boe/pd in the first six months of 2016. About 44% of the acreage is located…

    A new Mineral Rights Master Limited Partnership is expected to price next week to ride the wave of higher crude and increasing Permian activity.  Kimbell Royalty Partners is a variable distribution MLP which owns mineral rights across 3.7MM gross acres, which produced 3,317 boe/pd in the first six months of 2016. About 44% of the acreage is located in the Permian, and 52.6% of the total production, for the same period, was originated from the Permian, Eagle Ford, Terryville and Bakken basins.  In 2015, 63% of revenues were derived from oil sales, 30% from natural gas, and 7% from natural gas liquids       The Partnership will not have any subordinated units or Incentive Distribution Rights, and plans to distribute all operating cash flows, less reserves, on a quarterly basis.  No cash will be retained for future acquisitions.   The variable distribution policy can result in a quarterly distribution of $0.00.  IPO pricing is expected to be $19 -$21 for 5,000,000 units with a forward annualized yield of 7.25% based upon a 2017  pro rated distribution of $1.45.  Through 2019, the company expects that 30% or less of the aggregate distributions received will be subject to federal income tax.       Kimbell will join three other publicly traded MLPs which own Mineral Rights, Dorchester Minerals LP, Black Stone Minerals LP and Viper Energy Partners, which have delivered differing results based upon their respective distribution policy, during a period of declining production volumes and weak energy prices.          With Permian production expected to increase 20% over the next few years, Kimbell Royalty Partners provides investors with a vehicle to benefit from rising cash flows, tempered by limited trading liquidity and wider spreads.     More Details can be found here    

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    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 pr…

    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                

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    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      

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    Jan 13, 2017

    MLP Short Interest As of 12/30/16

    The Benchmark index increased 4.7% between December 15th and December 30th during which time the total number of short shares increased  from 255MM to 315MM.  Below are the units with the greatest change in short sales from December 15th                

    The Benchmark index increased 4.7% between December 15th and December 30th during which time the total number of short shares increased  from 255MM to 315MM.  Below are the units with the greatest change in short sales from December 15th                

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    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 de…

    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        

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    Dec 28, 2016

    MLP Short Interest As of 12/15/16

    The Benchmark index was flat between November 30th and December 15th during which time the total number of short shares increased  from 251MM to 255MM.  Below are the units with the greatest change in short sales from November 30th          

    The Benchmark index was flat between November 30th and December 15th during which time the total number of short shares increased  from 251MM to 255MM.  Below are the units with the greatest change in short sales from November 30th          

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    Dec 25, 2016

    MLP Short Interest As of 11/3016

    The Benchmark index was flat between November 15th and November 30th during which time the total number of short shares decreased  from 254MM to 251MM.  Below are the units with the highest short interest shares outstanding              

    The Benchmark index was flat between November 15th and November 30th during which time the total number of short shares decreased  from 254MM to 251MM.  Below are the units with the highest short interest shares outstanding              

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    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 infrastru…

    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          

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    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 had…

        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      

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    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 dynamic…

      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        

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    Dec 02, 2016

    MLP Short Interest As of 11/15/16

    The Benchmark index gained 1.00% between October 31st and November 15th during which time the total number of short shares decreased  from 272MM to 254MM.  Below are the units with the highest short interest shares outstanding            

    The Benchmark index gained 1.00% between October 31st and November 15th during which time the total number of short shares decreased  from 272MM to 254MM.  Below are the units with the highest short interest shares outstanding            

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    Dec 01, 2016

    MLP Fund Concentrations 10/31/2016

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 1…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 10/31/16, the below grid displays the top 10 holdings across the largest actively managed funds            

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    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 rat…

    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

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    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              

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    Nov 10, 2016

    MLP Short Interest As of 10/31/16

    The Benchmark index fell -3.30% between October 14th and October 31st, during which time the total number of short shares increased  from 270MM to 272MM.  Below are the units with the greatest increase over the period                        

    The Benchmark index fell -3.30% between October 14th and October 31st, during which time the total number of short shares increased  from 270MM to 272MM.  Below are the units with the greatest increase over the period                        

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    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          

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    Oct 27, 2016

    MLP Short Interest As of 10/14

    The Benchmark index fell -1.90% between September 30th and October 14th, during which time the total number of short shares declined  from 279MM to 278MM.  Below are the units with the greatest decrease over the period          

    The Benchmark index fell -1.90% between September 30th and October 14th, during which time the total number of short shares declined  from 279MM to 278MM.  Below are the units with the greatest decrease over the period          

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    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          

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    Oct 13, 2016

    MLP Short interest As of 9/30/16

    The Benchmark index gained 5.70% between September 15th and September 30th, during which time the total number of short shares declined  from 312.6.1MM to 278.5MM.  Below are the units with the greatest decrease over the period           

    The Benchmark index gained 5.70% between September 15th and September 30th, during which time the total number of short shares declined  from 312.6.1MM to 278.5MM.  Below are the units with the greatest decrease over the period           

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    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        

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    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 t…

    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  

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    Sep 27, 2016

    MLP Short Interest As of 9/15/16

    The Benchmark index decreased -3.86% between August 31st and September 15th, during which time the total number of short shares remained flat from 312.1MM to 312.6MM.  Below are the units with the greatest increase over the period         

    The Benchmark index decreased -3.86% between August 31st and September 15th, during which time the total number of short shares remained flat from 312.1MM to 312.6MM.  Below are the units with the greatest increase over the period         

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    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 confl…

    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            

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    Sep 23, 2016

    MLP Fund Concentrations August 2016

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 8…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 8/31/16, the below grid displays the top 10 holdings across the largest actively managed funds.          

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    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 cycl…

    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    

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    Sep 13, 2016

    MLP Short Interest As of 8/31/16

    The Benchmark index decreased -1.90% between August 15th and August 31st, during which time the total number of short shares increased from 311MM to 312MM.  Below are the units with the greatest increase over the period       

    The Benchmark index decreased -1.90% between August 15th and August 31st, during which time the total number of short shares increased from 311MM to 312MM.  Below are the units with the greatest increase over the period       

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    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 w…

    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        

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    Sep 08, 2016

    IPO Preview: Noble Midstream is Back

    Ten months have elapsed since the last time Noble Midstream looked to launch their IPO, this time around the company expects to price at a midpoint yield of 7.5% vs the 6.25% from the previous attempt last November. Sponsor Noble Energy is one of the largest liquids producers in the DJ Basin, which started production in 2013 and has since grown vol…

    Ten months have elapsed since the last time Noble Midstream looked to launch their IPO, this time around the company expects to price at a midpoint yield of 7.5% vs the 6.25% from the previous attempt last November. Sponsor Noble Energy is one of the largest liquids producers in the DJ Basin, which started production in 2013 and has since grown volumes an average of 16%.  Noble Midstream's only client is Noble Energy, which has escalating fixed fee dedicated acreage agreements, but no minimum volume commitments.  Here are a few of the changes from the previous prospectus and an update to our article published in November 2015   Issuance:  12.500,000 units with a Minimum Quarterly Distribution of $1.50 and midpoint yield of 7.50% at a $20 offering price vs 6.25% in previous offering   Incentive Distribution Rights trigger the first tier when the distribution exceeds $0.4313 and reaches the 50% split when the distribution exceeds $0.5625, a 50% increase over the minimum quarterly distribution of $0.375   Assets      

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    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.  Wi…

    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          

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    Aug 26, 2016

    MLP Short Interest As of 8/15/2016

    The Benchmark index decreased .015% between July 30th and August 15th, during which time the total number of short shares decreased from 322MM to 315MM.  Below are the units with the greatest decrease over the period along with their market performance over the same period       Below is the performance chart for the units with the greatest d…

    The Benchmark index decreased .015% between July 30th and August 15th, during which time the total number of short shares decreased from 322MM to 315MM.  Below are the units with the greatest decrease over the period along with their market performance over the same period       Below is the performance chart for the units with the greatest decrease in short shares outstanding plotted for the reporting period of July 30th to August 15th      

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    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 vo…

    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      

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    Aug 10, 2016

    MLP Short Interest As of 7/30/16

    The Benchmark index decreased -1.2% between July 15th and July 30th, during which time the total number of short shares decreased from 329MM to 322MM.  Below are the units with the greatest decrease over the period along with their market performance over the same period       Below is the performance chart for the top 3 units with the greate…

    The Benchmark index decreased -1.2% between July 15th and July 30th, during which time the total number of short shares decreased from 329MM to 322MM.  Below are the units with the greatest decrease over the period along with their market performance over the same period       Below is the performance chart for the top 3 units with the greatest decline        

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    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 sl…

    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    

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    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  

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    Jul 27, 2016

    MLP Short Interest As of 7/15/16

    The Benchmark index increased 1.00% between June 30th and July 15th, during which time the total number of short shares increased from 321MM to 325MM.  Below are the units with the greatest increase over the period along with their market performance over the same period          

    The Benchmark index increased 1.00% between June 30th and July 15th, during which time the total number of short shares increased from 321MM to 325MM.  Below are the units with the greatest increase over the period along with their market performance over the same period          

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    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 t…

    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.        

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    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 repai…

    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    

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    Jul 15, 2016

    MLP Credit Yields As of 7/15/16

    MLP bond yields have been tightening over the past 4 weeks despite a fundamental outlook which still projects declining volumes and weaker energy prices.  During this same period, sentiment has improved as a result of equity issuance, healthy asset sale multiples, and a focus on balance sheet improvement at the potential cost of distribution mainte…

    MLP bond yields have been tightening over the past 4 weeks despite a fundamental outlook which still projects declining volumes and weaker energy prices.  During this same period, sentiment has improved as a result of equity issuance, healthy asset sale multiples, and a focus on balance sheet improvement at the potential cost of distribution maintenance and growth.              

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    Jul 13, 2016

    MLP Short Interest As of 6/30/16

    The Benchmark index increased 4.20% between June 15th and June 30th, during which time the total number of short shares decreased from 340MM to 322MM.  Below are the units with the greatest decrease over the period along with their market performance over the same period       Below is the performance chart for the units with the greatest dec…

    The Benchmark index increased 4.20% between June 15th and June 30th, during which time the total number of short shares decreased from 340MM to 322MM.  Below are the units with the greatest decrease over the period along with their market performance over the same period       Below is the performance chart for the units with the greatest declines in short interest between 6/15 and 6/30          

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    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 followi…

    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          

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    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 ro…

    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          

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    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-nego…

    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      

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    Jun 25, 2016

    MLP Short Interest As of 6/15/16

    The Benchmark index increased 1.08% between May 31st and June 15th, during which time the total number of short shares increased from 337MM to 334MM.  Below are the units with the greatest increase over the period along with their market performance over the same period            

    The Benchmark index increased 1.08% between May 31st and June 15th, during which time the total number of short shares increased from 337MM to 334MM.  Below are the units with the greatest increase over the period along with their market performance over the same period            

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    Jun 25, 2016

    MLP Credit Yields As of 6/24/16

    Midstream credit yields have been tightening in stride with the rise of crude over the past six weeks. In some names, the credit and distribution yields are near parity        

    Midstream credit yields have been tightening in stride with the rise of crude over the past six weeks. In some names, the credit and distribution yields are near parity        

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    Jun 24, 2016

    Judge Allows Energy Transfer to Terminate Merger

    After the close on Brexit Friday, Judge Glasscock affirmed what Kelcy Warren warned shareholders on their recent conference call, which is that there is no Merger to approve, enabling Energy Transfer to walk away from their merger with Williams Inc with no penalty.  The market was correct to focus on the Judge’s comments about whether Latham &…

    After the close on Brexit Friday, Judge Glasscock affirmed what Kelcy Warren warned shareholders on their recent conference call, which is that there is no Merger to approve, enabling Energy Transfer to walk away from their merger with Williams Inc with no penalty.  The market was correct to focus on the Judge’s comments about whether Latham & Watkins acted in good faith when notifying Energy Transfer and Williams that it could not affirm a favorable 721(a) ruling to allow the transaction to be treated by tax authorities as a tax-free exchange, an agreed upon condition of the merger.    In the Judge’s opinion, he mentioned that he was skeptical of Energy Transfer’s motivations, but opted to focus on the L&W intent in deciding whether the merger could proceed.  Judge Glasscock concluded that Williams had failed to prove that Energy Transfer had materially breached its contractual obligation to undertake commercially reasonable efforts to receive the 721 tax opinion from Latham, and as such, Energy Transfer is entitled to terminate the Merger Agreement.   The most critical events occurred between March 29th and April 16th, during which time Energy Transfer’s Tax Chief and Latham realized that the precipitous drop in ETE units would make the proposed exchange taxable and prevent Latham from offering the 721 non-taxable opinion.   The activity during that period aligns with a considerable move higher in ETE units,, and a widening spread to WMB shares, as illustrated below       The Judge noted that both parties agreed to empower Latham, rather than an independent third party, to provide the 721 opinion, noting that is was against Latham’s reputational interests to first provide a “should” opinion, only to backtrack due to market conditions not contemplated in their initial analysis.  “In fact, it is a substantial embarrassment to Latham and it’s tax partners”, the Judge noted in his conclusion   Also noteworthy is the how the Williams Board approved the merger.  On September 24th, 2015 the board took an informal vote on the Merger which resulted in a 6-7 vote Against.  The board then went to dinner, and the next morning, a new vote resulted in a 8-5 Affirmation of the merger.    Williams in now in the unenviable position of following through with their dividend cut and re-establishing the investment case for William shares, which highlighted many risks in their FOR recommendation, for a vote that at the moment has no binding implications.  Through a press release issued after the Court's ruling, Williams still encouraged shareholders to vote FOR at the June 27th special meeting, the day prior to the Merger date.  Williams plans to take "appropriate actions" to enforce their rights under the Merger Agreement.  At the moment, it is unclear the status of WMB shares which have been pledged through the Election Form, which Williams previously stated could not be traded prior to the effective date of the Merger.      

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    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 wi…

    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.     

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    Jun 15, 2016

    MLP Fund Concentrations June 2016

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 6…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the latest monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 6/14/16, the below grid displays the top 10 holdings across the largest actively managed funds.    

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    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 estim…

    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

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    Jun 11, 2016

    MLP Short Interest As of 5/31/16

    The Benchmark index increased 3.4% between May13th and May 31st, during which the total number of short shares decreased from 353MM to 338MM over the same period. Below are units with the highest level of short interest as of May 31st          

    The Benchmark index increased 3.4% between May13th and May 31st, during which the total number of short shares decreased from 353MM to 338MM over the same period. Below are units with the highest level of short interest as of May 31st          

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    Jun 10, 2016

    Bankruptcy Watch: 6/10/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring   Hercules offshore filed Chapter 11 on Monday in order to liquidate the assets of the company   Midstream Agreements: None   Seventy Seven Energy Inc. filed for Chapter 11 protection in Delaware Tuesday with a prepackaged plan that aims to shed roughly $1.1 billion in debt by handing over equity to lender   Midstream Agreements:  None

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    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 Inv…

    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      

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    Jun 03, 2016

    MLP Bankruptcy Watch: 6/3/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring:   Warren Resources, an E&P producer with operating assets in California and Pennsylvania, filed for Chapter 11 in order to seek a restructuring of their $545MM Debt.   Midstream Agreements:  The Chapter 11 filing did not include any midstream trade debt credits and in their most recent 10k, the company disclosed that all of their California production is sold to the Phillips 66 Refinery in Carson, CA        

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    May 27, 2016

    MLP Short Interest as of 5/13/16

    The Benchmark index declined 2.35% between April 29th and May 13th, during which the total number of short shares decreased from 404MM to 383MM over the period.  Below are the top increases and decreases in short sales since April 29th         DECREASES       INCREASES    

    The Benchmark index declined 2.35% between April 29th and May 13th, during which the total number of short shares decreased from 404MM to 383MM over the period.  Below are the top increases and decreases in short sales since April 29th         DECREASES       INCREASES    

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    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 ju…

    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    

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    May 20, 2016

    Bankruptcy Watch: 5/20/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring:   Sandridge Energy, an E&P producer with operating assets in the Mid-Continent, filed for Chapter 11 where the company plans to swap $3.7B of debt for the equity of the restructured company.     Midstream Agreements:  Below are the midstream providers with outstanding receivables as disclosed in the Chapter 11 filing.                 Breitburn Energy Partners, an E&P Master Limited Partnership with diversified assets across the Permian and Mid-Continent, filed for Chapter 11 relief as they work with creditors to restructure their $2.8B debt.  Breitburn joins Linn Energy as the second MLP to file for Chapter 11.  Breitburn Energy Partners are encouraged to sell their units prior to a debt restructuring, which could result in CODI tax liability on the 2016 K-1.     Midstream Agreements:  Below are the midstream providers with outstanding receivables as disclosed in the Chapter 11 filing.          

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    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 th…

    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       

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    May 13, 2016

    Bankruptcy Watch: 05/13/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring:   Penn Virginia Corp, an E&P company with assets primarily based in the Eagle Ford, filed for Chapter 11 relief this past Thursday, which includes an agreement to reduce their $1.6B in debt.  The company has entered into MVC agreements which total $63MM over the next 5+ years and expects to maintain production after the restructuring.       Midstream Agreements:  $17.3MM annually, $12.3MM due to Republic Midstream after the company sold the gathering rights in 2014 for $147MM.  Republic is owned by ArcLight, which has invested $400MM to develop the new gathering and pipeline network.  ArcLight has provided American Midstream with a 50% option to purchase the asset for $200MM, an unlikely scenario for the time being.   LINN Energy filed for Chapter 11 relief to address their $8.3B of debt, marking the first MLP Bankruptcy since the Thanksgiving crude crash.  The E&P producer, which in late 2013 acquired Berry Petroleum in an equity deal, announced a plan to swap debt for equity, 90% of which will be owned by debt holders.  The filing indicated they will seek approval to continue to allow Linn Energy unitholders to convert their ownership into LinnCo shares, to avoid potential CODI tax obligations related to to the debt restructuring.  The current exchange is set to expire on May 23   Midstream Agreements:  No Midstream agreements disclosed in 10K, Archrock Partners LP, DCP Midstream have outstanding trade debts         Chaparral Exploration,  a Mid-continent gas producer with an EOR business, filed for Chapter 11 relief to reduce their debt by $1.2B   Midstream Agreements:  No Midstream agreements disclosed in most recent 10K, no Trade Debt with midstream providers        

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    May 13, 2016

    MLP Short Interest as of 4/29/16

    Total Short Interest for the MLPData universe Declined from 411MM to 404MM shares as of April 29th,  2016.    Below are the top changes (declines on top, increases bottom)  from the previous reporting period of April 15th, 2016          

    Total Short Interest for the MLPData universe Declined from 411MM to 404MM shares as of April 29th,  2016.    Below are the top changes (declines on top, increases bottom)  from the previous reporting period of April 15th, 2016          

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    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 redu…

    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    

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    May 06, 2016

    MLP Credit Yields as of 5/6/16

    Units have traded in a narrower range the last few weeks as we enter the Q1 earnings period.  The below table provides yield change from April 22nd to May 6th, along with the unit returns for the month    

    Units have traded in a narrower range the last few weeks as we enter the Q1 earnings period.  The below table provides yield change from April 22nd to May 6th, along with the unit returns for the month    

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    May 05, 2016

    Bankruptcy Watch: 05/5/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring:       Midstates Petroleum, an E&P company with operations focused on oilfields in the Mississippian Lime play in Oklahoma and the Anadarko Basin in Texas and Oklahoma filed for Chapter 11 relief on Monday.  The company transports their oil production by Truck and has MVC agreements in place for their gas production.   Midstream Agreements:  None disclosed in 10K; no Midstream companies listed as Trade debtors in Ch 11 filing  

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    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, Enterpris…

    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    

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    Apr 29, 2016

    Bankruptcy Watch: 4/29/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring     Ultra Petroleum, the largest Gas producer in Wyoming, disclosed in their 10Q that due to market conditions, "substantial doubt exists that we be able to continue as a going concern" as result of their $3.9B debt. The company also listed a present lawsuit with Tallgrass Development's Rockies Express Pipeline as described below        Tallgrass Development (TDev) also disclosed that Ultra has defaulted on their past and future obligations, and the company is seeking to recover $300MM.   TDev announced this past week that Talllgrass Energy Partners plans to acquire a 25% interest in REX, which some investors believe has significant contracting exposure from the Rockies region.        

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    Apr 27, 2016

    MLP Short Interest as of 4/15/16

    Total Short Interest for the MLPData universe Declined from 443MM to 417MM shares as of April 15th,  2016.    Below are the top changes (declines on top, increases bottom)  from the previous reporting period of March 31st, 2016        

    Total Short Interest for the MLPData universe Declined from 443MM to 417MM shares as of April 15th,  2016.    Below are the top changes (declines on top, increases bottom)  from the previous reporting period of March 31st, 2016        

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    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            

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    Apr 22, 2016

    MLP Credit Yields as of 4/22/16

    Units have surged over the past two weeks and midstream credit yields have also compressed as the market continues to use oil pricing as the proxy for MLP risk.  The below table provides yield change from April 8th to April 22nd, along with the unit returns for the month  

    Units have surged over the past two weeks and midstream credit yields have also compressed as the market continues to use oil pricing as the proxy for MLP risk.  The below table provides yield change from April 8th to April 22nd, along with the unit returns for the month  

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    Apr 22, 2016

    Bankruptcy Watch: 4/22/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring:   Foresight Energy Partners disclosed that the partnership has entered into a Transaction Support Agreement with creditors to support a proposed debt restructuring.  The Partnership previously suspended distributions in December 2015 and was brought public on 6/18/2014.   Midstream Agreements:  None     Peabody Energy, the world's largest private sector coal company, filed for Chapter 11 protection to restructure their $10B of debt.  The filing disclosed the following Trade Debts;  Kinder Morgan $5.5MM       Midstream Agreements:  Kinder Morgan terminal services for export.  In 2016, the total take or pay commitments for terminal exports is $301MM across the US and Australia         Seventy Seven Energy, and oil field services company, announced that they have entered into a Restructuring Support Agreement in advance of a Chapter 11 filing, which will convert $1.1B of debt into a new form of common equity.    

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    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          

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    Apr 15, 2016

    Bankruptcy Watch: 4/15/16

    As banks complete their 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…

    As banks complete their 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, or indicated, they are pursuing some form of restructuring:     Energy XXI filed for Bankruptcy protection after invoking their grace period a few weeks back.  The company has pre-negotiated a plan to reduce the majority of their $2.9B debt in exchange for new equity.  On June 30th, 2015, the company sold the Grand Isle Gathering System (GIGS) for $245MM toCorEnergy where EXXI would continue to operate their main gathering system, in return for an 11 year triple net lease agreement with CorEnergy, with annual minimum rents averaging $40.5MM for the term.   In the Chapter 11 filing, Grand Isle Corridor LP, Exterran LP, and Archrock LP are listed as creditors with undisclosed trade debts with Energy XXI.   Midstream Providers:  CorEnergy, Exterran LP, Archrock     Breitburn Energy Partners announced that it has suspended any further payments on their Perpetual Preferred units as well as a $33.5 million due on their senior notes.  During their grace period, the partnership has retained restructuring advisors to explore strategic alternatives.  The Partnership terminated their common unit distributions in August 2015.  Plains Marketing accounted for 12% of Breitburn's $1.1B of revenue in 2015.     Midstream Providers:  None disclosed in 10k     Goodrich Petroleum disclosed that they have filed for Chapter 11 in a pre-packaged deal where creditors have agreed to eliminate $400MM in debt.  The announcement mentioned that they company expects to pay vendors and suppliers in full under normal terms, before and after the restructuring   Midstream Providers:  None as disclosed in 10k  

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    Apr 12, 2016

    MLP Short Interest as of 3/31/16

    Total Short Interest for the MLPData universe Declined from 470MM to 446MM shares as of March 31st,  2016.    Below are the top changes (declines on top, increases bottom)  from the previous reporting period of March 15th, 2016      

    Total Short Interest for the MLPData universe Declined from 470MM to 446MM shares as of March 31st,  2016.    Below are the top changes (declines on top, increases bottom)  from the previous reporting period of March 15th, 2016      

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    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 openi…

    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

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    Apr 08, 2016

    MLP Credit Yields as of 4/8/16

    The below table provides the yield changes between March 24th and April 8th along with the trailing twelve month coverage ratio, unit yield, and total returns      

    The below table provides the yield changes between March 24th and April 8th along with the trailing twelve month coverage ratio, unit yield, and total returns      

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    Apr 07, 2016

    Bankruptcy Watch: 4/7/16

    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.  …

    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, or indicated, they are pursuing some form of restructuring:       No Reported Restructuring's or Filings       Quicksilver Sale to Bluestone Update:  After seeking to reject the Crestwood gathering agreement in order to complete their $245MM asset sale, Bluestone and Crestwood announced that they have agreed to a 10 year fixed fee and percent of proceeds gathering agreement for their Barnett shale acreage.   The agreements call for all shut in wells to be returned to service by July 2016, and Bluestone will not reduce production through 2018.                      

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    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

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    Mar 31, 2016

    Bankruptcy Watch: 3/31/16

    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.  …

    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, or indicated, they are pursuing some form of restructuring:   Seadrill reportedly has hired advisors to help restructure their $11B of debt.   The company operates a fleet of 68 rigs which are contracted under long term commitments.  Seadrill Partners LLC, which has purchased a select number of rigs, and their associated long term agreements, will likely have less access to potential asset drop downs, increasing their cash flow risks as existing contracts roll over.     Sandridge Energy confirmed that the company has hired advisors to assist in restructuring their $3.6B of debt.  The company operates oil and gas producing assets in the Mid-Continent region, and has developed midstream assets to support their drilling and production programs.  In January 2016, the company terminated a 30 year MVC treating agreement with Occidental by paying $11M in cash, and transferring all of their producing assets related to the treating agreements.  The company had accrued $34.9MM of liability associated with the treating agreements prior to the agreement to terminate.     Midstream Exposure:  None as disclosed in 2015 10k     Black Ridge Oil and Gas, a Bakken and Three Forks focused producer, confirmed that the company has restructured with the senior lender.   Midstream Exposure:  None as disclosed in 2015 10k     Goodrich Petroleum confirmed that they plan to file for bankruptcy in the coming weeks after reaching a restructuring deal with creditors.  The company operates assets in the Eagle Ford and Tuscaloosa Marine across 43 fields in eight states spending $4.6MM on transportation and processing.  After a sale of the Eagle Ford Trend property, the company does not have minimum volume commitments outstanding   Midstream Exposure:  None as disclosed in 2015 10k   Magnum Hunter, which last week filed a motion to reject their midstream agreements with Eureka Pipeline LCC, was told by the Judge that the company needed to file suit to terminate the agreement, due to the impact on the Chapter 11 filing.  The gathering and processing agreement the company is seeking to reject require a minimum fee of $570,000/mo through 2026, representing $68MM in liability.  The company previously rejected a midstream agreement with Boardwalk's Texas Gas Transmissions, where the company agreed to terminate in lieu of a $15MM claim made against the estate.   Post Rock Energy announced that plan to file Chapter 11 in order to liquidate all of their assets.  The company operates oil and gas assets in the Cherokee Basin, where they own and operate 250 wells with nearly 2200 miles of gas gathering lines.     Midstream Exposure:  None as disclosed in 2015 10Q        

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    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 economics…

    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

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    Mar 26, 2016

    MLP Short Interest as of 3/15/16

    Total Short Interest for the MLPData universe increased from 464MM to 470MM shares as of March 15th, 2016.  Over the past 5 weeks, total short interest has increased 12%.  Below are the top changes from the previous reporting period of February 29th, 2016   Top Increases     Top Decreases  

    Total Short Interest for the MLPData universe increased from 464MM to 470MM shares as of March 15th, 2016.  Over the past 5 weeks, total short interest has increased 12%.  Below are the top changes from the previous reporting period of February 29th, 2016   Top Increases     Top Decreases  

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    Mar 26, 2016

    MLP Credit Yields as of 3/24/16

    Rising Crude has helped some MLP credit rebounds from February as Genesis, Targa and Summit led the Midstream group both in credit and unit appreciation between February 28th and March 24th  

    Rising Crude has helped some MLP credit rebounds from February as Genesis, Targa and Summit led the Midstream group both in credit and unit appreciation between February 28th and March 24th  

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    Mar 23, 2016

    Bankruptcy Watch: 3/23/16

    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 restru…

    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 Energy:  Ticker SXE  The parent company, Southcross Holdings LP, which owns the General Partners, units of of Southcross Energy Partners and gas processing assets, announced it has entered into a Restructuring Support Agreement with creditors in advance of a Chapter 11 filing for only the Holding company.  Southcross Energy Partners, an MLP which provides natural gas gathering and processing services to acreage in South Texas, Alabama and Mississippi, will continue to operate with interruption.  Southcross Energy Partners suspended distributions on January 8th, 2016 and has yet to file their 2016 10k, but did indicate that they will achieve the upper end of their 2016 EBITDA Guidance of $25MM           Emerald Oil Ticker: EOX Emerald is an independent exploration and production company focused on Williston, Bakken and Three Forks shale formations.  On March 23rd, the company announced they have filed for Chapter 11 and have a non binding offer to purchase essentially all of their assets.  As indicated in their September 30th 10Q, the company has MVC agreements for which they realized a $1MM deficiency fee in Q3.  Further details of their midstream agreements are described below:       Midstream Providers:   There were no midstream providers disclosed in their most recent 10k or in the Creditors list in the Ch 11 filing        

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    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 Midstream…

    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            

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    Mar 17, 2016

    Bankruptcy Watch: 3/17/16

    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 restru…

    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:   New Source Energy LP Ticker: NSLP filed for Chapter 7 Liquidation on Tuesday.  This is the first MLP in recent times which failed and resulted in a liquidation   Midstream Providers: Blackstone Minerals (BSM), DCP Midstream (DPM) are on the creditor list, but without any further details     Linn Energy Ticker: LINE exercised their grace period in regards to their $60MM interest payment due 3/15/16, and is working towards a restructuring.  In their 2016 Annual Report, they disclosed the following midstream agreements, three of which are generating deficiency payments due to volumes lower than their MVC commitments.  Linn owns the gathering systems for all of their operating acreage.   Midstream Providers:  Kinder Morgan, Tallgrass Development (Sponsor of Tallgrass Energy Partners)       Energy XXI Ticker: EXXI, an oil focused production company with assets focused in South Louisiana and the Gulf of Mexico shelf, announced its intent to exercise its grace period on their interest payment and Notes due on March 15, 2016.  On June 30th, 2015, the company sold the Grand Isle Gathering System (GIGS) for $245MM to CorEnergy where EXXI would continue to operate their main gathering system, in return for an 11 year triple net lease agreement with CorEnergy, with annual minimum rents averaging $40.5MM for the term.      Midstream Providers:  CorEnergy    Venoco, an E&P company with Southern California onshore and offshore assets, announced their Ch 11 filing on Friday after their Holly platform suspended operations due to the Plains All American pipeline spill in May 2015.      Midstream Provider: Plains All American          

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    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 figu…

    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  

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    Mar 11, 2016

    MLP Short Interest As of 2/29/16

    Total Short Interest for the MLPData universe increased from 419MM to 464MM shares as of February 29, 2016.  Below are the top changes from the previous reporting period of February 12, 2016        

    Total Short Interest for the MLPData universe increased from 419MM to 464MM shares as of February 29, 2016.  Below are the top changes from the previous reporting period of February 12, 2016        

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    Mar 09, 2016

    Midstream Contracts Rejected in Bankruptcy, How Does this Impact MLPs?

    Midstream Master Limited Partnerships should be designed to generate a  base level of operating cash flows in return for making infrastructure available to producers.  If a midstream company intends to develop new gathering or pipeline systems, they require that producers commit to future use of the infrastructure, ensuring a level of return on the…

    Midstream Master Limited Partnerships should be designed to generate a  base level of operating cash flows in return for making infrastructure available to producers.  If a midstream company intends to develop new gathering or pipeline systems, they require that producers commit to future use of the infrastructure, ensuring a level of return on their investment over a considerable period of time.  In the case where a Master Limited Partnership acquires existing assets from either a Sponsor, via dropdown, or by way of a market purchase, the assets are purchased assuming a base level of cash flows.  Without the cash flows, the EBITDA multiple on such acquisitions would be significantly lower than those which have occurred over the past 5 years.   Prior to the crude crash, the industry has coined and marketed these base cash flows as  Fixed Fee, Take or Pay, and Minimum Volume commitments, suggesting that they are low risk cash flows. Over the past year, MLP investors have learned that these contracts are not as "guaranteed" as often suggested, but to date have not regarded these agreements as easily terminated.  MLP management teams have been adamant about the staying power of these agreements, if a producer were to enter bankruptcy.  During the Q4 earnings calls, most MLPs outlined their counter party exposure to risky producers, but assumed that all of the revenue would not be at risk if they all petitioned for bankruptcy.  However, there are two cases winding their way through the court system which may impact these base line cash flows assumptions, specifically related to the obligations of the producer if they declare bankruptcy, and either operate or sell the assets thereafter.   Earlier this year on July 15th, Sabine Oil and Gas filed a petition for relief under Chapter 11 and in doing so, filed a motion to reject the 10 year dedicated acreage gas and condensate gathering contracts, governed by Texas law,  in place with Nordheim Eagle Ford Gathering LLC, a subsidiary of Cheniere Energy .  Sabine also petitioned to reject their Production Gathering, Treating and Processing agreement with HPIP as well as a Water and Acid Handling agreement in place since May 2014.  The Debtors argued that the company is no longer able to produce the necessary volumes required by the agreements, and the deficiency payments would impose a considerable and unnecessary drain on resources, indicating that new gathering agreements could be contracted at much lower rates. Through September 2015, Sabine paid $2.7MM in deficiency payments related to their gathering agreements, on roughly $26MM of total gathering fees recording through the same period.  HPIP and Nordheim argued that the gathering agreements run with the land, and are not subject to rejection  On Tuesday, Judge Chapman ruled that the midstream contracts could be rejected on the basis that the Debtors did not reject the contracts out of bad faith, whim, or caprice,  meaning there would be no obligations of future payments.  The Judge did not determine that the gathering agreements do not run with the land per se, but suggested that argument was outside the scope of the motion, although the Court did provide a non binding opinion.   The second  case is related to the proposed sale of acreage from the bankrupt Quicksilver Resources to Bluestone Natural Resources.  What is being contested is whether the dedicated gas processing and transportation agreements between Crestwood and Quicksilver can be terminated upon the sale of the acreage, a condition which Bluestone has placed on completing the $245MM transaction.  Crestwood's position is that the gathering agreements are connected to the land, regardless of ownership, arguing that they otherwise would not have paid $741MM for the Quicksilver Gas Services pipelines on October 1, 2010.  Being the largest producer on the network, Crestwood's position is that the gathering system's value is predicated upon the acreage for which is was developed.   Bluestone's position is that the $65MM paid for gathering, processing and transportation through September 30, 2016 is above the prevailing market rates, despite the fact that Quicksilver recorded a $454MM gain when they sold the pipelines to Crestwood, as well as renegotiated the rates up to 65% lower in July 2014.  Below are Quicksilver's rates and future volume commitments (excluding compression agreements in place with CSI Compressco as disclosed in their most recent 10k       The company previously opted not to pay gathering fees for their Canadian Horn River acreage, which resulted in termination of service prior to any proposed acreage sale, which may be a key factor in the Bluestone transaction, as noted by Judge Silverstein:     QRCI did not pay an uneconomic Canadian gathering and processing commitment, which included significant unused firm capacity, due in late February 2015.. In early March 2015, the third-party service provider issued a demand letter regarding the missed payment and suspended service resulting in our Horn River Asset production being shut-in.  Further, a termination notice was issued by the third-party service provider effective March 19, 2015.  We continue to explore alternative to gather and process our Horn River Asset production; however, we may not be able to find economic alternatives in the near-term, or at all, and production may remain shut-in.     Judge Silverstein indicated she will do her best to render a decision by the March 31st deadline for Bluestone to complete their purchase of the Quicksilver assets.  A decision which allows the gathering agreements to be terminated will likely be a key factor in the sale of future acreage by struggling producers.   So what should MLP Investors make of these judgments?   It is certainly not good news, as it enables producer to negotiate with a stronger hand prior to bankruptcy, where the producer has viable options to replace their midstream providers.  Creditors will also be more weary of extending capital and the market will demand higher rates on current and future debt issuance. Certainly midstream companies will be modifying their future agreements to address this issue, but for the moment, there is some MLP asset exposure to near insolvent producers, who constitute a small percentage of diversified midstream cash flows.  Williams, which has significant exposure to Chesapeake by way of their Access Midstream acquisition a few years ago, outlined their view on the topic below:   "And so here’s how we think about the risk. First of all, we have long term dedications with strong contractual conveyances of interest in unproduced gas. We like our argument that we hold a current real estate in unproduced gas and that our covenants running with the land not subject to the rejection in bankruptcy. We certainly are following current bankruptcy cases like Sabine where the general question is at issue. But people should understand that the ultimate outcome in individual cases will turn on specific facts and circumstances."   "Regardless, even if the court were to rule we don’t have such legal rights, our gathering lines are physically connected to Chesapeake’s wellheads and pads. And we provide a very critical service, conditioning and connecting Chesapeake’s production to points where they can then choose the best markets for long haul transportation alternatives. In exchange for the dedication of production, we invested capital to build gathering lines that are uniquely positioned to serve Chesapeake’s well. So all these systems were built out specifically for their needs and generally at their direction as to the size and scale that they needed to be able to produce volumes on a projected basis."   "In most cases, there are no other gathering lines nearby because these are big contiguous areas and, again, these systems were built specifically for their production. And in many cases, our pipelines have been built on populated places such as beneath the city of Fort Worth. And it would be very costly for others to replicate our gathering lines. And the rates of return that we generate from these investments and assets are very typical for a midstream provider."   "Likewise, our gathering lines have been in place for some time, and thus, the reserves behind them are now partially produced. To continue to produce such gas, Chesapeake and its creditors, if that ever came to that, would want and need to utilize our gathering lines to deliver gas to the markets. So such gathering lines are just very distinguishable from long haul transportation service because the intra and interstate pipeline initiate service after the gas is already pulled at marketable points, producers then have many options to receive cash for their products other than transportation on any one particular interstate pipeline."   "If it did come to a bankruptcy, a producer can argue that it can reject certain types of contracts. And we believe gathering contracts such as ours are not the type of contract that would be rejected. But even if the gathering contract were allowed to be rejected, a producer and its creditors will continue to need the gathering service to be able to produce gas and create revenue. If a producer rejects the gathering contract in a bankruptcy, the gatherer will no longer be obligated to provide the gathering service."   "Furthermore, rejection of a contract is all or nothing. Therefore, the analysis of the risk of any producer’s bankruptcy is best analyzed contract by contract and really understanding that the particulars of the services being provided and how unique those services are that are being provided."   MLP Management teams will now be pressed to provide greater transparency of their agreements and counter-parties, as likely will be finding their producer "partners" a little more emboldened with their concession requests.   MLPData will provide updates to the Quicksilver case, and any other additional disclosures related to the midstream contract rejections or re-negotiations.         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  

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    Mar 08, 2016

    Bankruptcy Watch: Quicksilver Resources

    The market is still assuming E&P restructuring's are waiting to be filed in order address the maturing obligations and bank covenants.  To date, the filings have been few, but that may pick up after Spring Re-Determination, which may be much more aggressive than the previous Fall process.  This week we focus on the Quicksilver Resources, which…

    The market is still assuming E&P restructuring's are waiting to be filed in order address the maturing obligations and bank covenants.  To date, the filings have been few, but that may pick up after Spring Re-Determination, which may be much more aggressive than the previous Fall process.  This week we focus on the Quicksilver Resources, which is expected to receive judgment by March 31st, 2016   Quicksilver Update:  This is a closely followed case related to the proposed sale of acreage from the bankrupt Quicksilver Resources to Bluestone Natural Resources.  What is being contested is whether the dedicated gas processing and transportation agreements between Crestwood and Quicksilver can be terminated upon the sale of the acreage, a condition which Bluestone has placed on completing the $245MM transaction.  Crestwood's position is that the gathering agreements are connected to the land, regardless of ownership, arguing that they otherwise would not have paid $741MM for the Quicksilver Gas Services pipelines on October 1, 2010.  Being the largest producer on the network, Crestwood's position is that the gathering system's value is predicated upon the acreage for which is was developed.   Bluestone's position is that the $65MM paid for gathering, processing and transportation through September 30, 2016 is above the prevailing market rates, despite the fact that Quicksilver recorded a $454MM gain when they sold the pipelines to Crestwood, as well as renegotiated the rates up to 65% lower in July 2014.  Below are Quicksilver's rates and future volume commitments (excluding compression agreements in place with CSI Compressco as disclosed in their most recent 10k         The company previously opted not to pay gathering fees for their Canadian Horn River acreage, which resulted in termination of service prior to any proposed acreage sale, which may be a key factor in the Bluestone transaction, as noted by Judge Silverstein         Judge Silverstein indicated she will do her best to render a decision by the March 31st deadline for Bluestone to complete their purchase of the Quicksilver assets.  A decision which allows the gathering agreements to be terminated will likely be a key factor in the sale of future acreage by struggling producers.      

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    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 cooperative…

    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  

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    Mar 04, 2016

    Bankruptcy Watch: 3/4/16

      The market is still assuming E&P restructuring's are waiting to be filed in order address the maturing obligations and bank covenants.  To date, the filings have been few, but that may pick up after Spring Re-Determination, which may be much more aggressive than the previous Fall process.  This week we have the following filings   Green Hu…

      The market is still assuming E&P restructuring's are waiting to be filed in order address the maturing obligations and bank covenants.  To date, the filings have been few, but that may pick up after Spring Re-Determination, which may be much more aggressive than the previous Fall process.  This week we have the following filings   Green Hunter Resources:  Ticker GRH a diversified water resource, waste management, environmental services, and hydrocarbon marketing company specializing in the unconventional oil and natural gas shale resource plays within the Appalachian Basin.  The company expects to liquidate all assets No Midstream Agreements   W&T Offshore: Ticker WTI  W&T is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico.  We have grown through acquisitions, exploration and development and currently hold working interests in approximately 54 offshore fields in federal and state waters (50 producing and four fields capable of producing). Company drew done their remaining credit line and retained Kirkland & Ellis, suggesting a forthcoming restructuring. No Midstream Agreements   We continue to monitor the Sabine Oil case for Judge Chapman's decision regarding the requested termination of Sabine's Minimum Volume Commitment agreements, as disclosed below in their 10Q          

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    Feb 29, 2016

    MLP Short Interest

    Short interest volume for trades reported through February 12 increased by 5% with Energy Transfer Partners increasing by 77% over the prior period  

    Short interest volume for trades reported through February 12 increased by 5% with Energy Transfer Partners increasing by 77% over the prior period  

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    Feb 27, 2016

    MLP Credit Yields

    As units have reported their Q4 results, the credit markets have adjusted to the updated financial information and guidance.  Targa, DCP Midstream and Western Gas had the largest changes since 2/12/16    

    As units have reported their Q4 results, the credit markets have adjusted to the updated financial information and guidance.  Targa, DCP Midstream and Western Gas had the largest changes since 2/12/16    

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    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, ev…

    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      

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    Feb 26, 2016

    Midstream Risks and the Sabine Oil Case

        Master Limited Partnerships have been under duress due to a myriad of factors, including excessive leverage, higher cost of capital, declining production and lower capex spending.  Each MLP is weathering the storm to various degress, depending upon their assets and contract terms.  However, the assumption that Take or Pay producer agreements…

        Master Limited Partnerships have been under duress due to a myriad of factors, including excessive leverage, higher cost of capital, declining production and lower capex spending.  Each MLP is weathering the storm to various degress, depending upon their assets and contract terms.  However, the assumption that Take or Pay producer agreements provide some level of stability is an evolving risk for which the market is trying to better understand.  A pending restructuring case, Sabine Oil and Gas, is petitioning to cancel the gathering agreements.  On Tuesday, the Judge ruled that the agreements could be terminated.   It is important to note that one decision does not equally apply to all midstream MLPs, or even MLP with similar assets.  The midstream providers can have considerable leverage to the extent that the assets will continue to be in production, an assumed case for most Ch 11 filings.  Williams Partners made an effort to educate the market on this topic during their recent conference call.  With 18% of their EBITDA exposed to Chesapeake, which recently slashed their capex  by 57% for 2016, the assumption is that Williams is exposed to a potential restructuring, leading to revised terms of prevailing midstream agreements, which the market has assumed to be at above market rates.  Williams countered these assumptions by suggesting that their agreements are All or None, meaning that components cannot be renegotiated or terminated.  Below is a more detailed explanation from Williams as described in their Q4 Conference Call by their CEO Alan Armstrong.   "And so here’s how we think about the risk. First of all, we have long term dedications with strong contractual conveyances of interest in unproduced gas. We like our argument that we hold a current real estate in unproduced gas and that our covenants running with the land not subject to the rejection in bankruptcy. We certainly are following current bankruptcy cases like Sabine where the general question is at issue. But people should understand that the ultimate outcome in individual cases will turn on specific facts and circumstances."   "Regardless, even if the court were to rule we don’t have such legal rights, our gathering lines are physically connected to Chesapeake’s wellheads and pads. And we provide a very critical service, conditioning and connecting Chesapeake’s production to points where they can then choose the best markets for long haul transportation alternatives. In exchange for the dedication of production, we invested capital to build gathering lines that are uniquely positioned to serve Chesapeake’s well. So all these systems were built out specifically for their needs and generally at their direction as to the size and scale that they needed to be able to produce volumes on a projected basis."   "In most cases, there are no other gathering lines nearby because these are big contiguous areas and, again, these systems were built specifically for their production. And in many cases, our pipelines have been built on populated places such as beneath the city of Fort Worth. And it would be very costly for others to replicate our gathering lines. And the rates of return that we generate from these investments and assets are very typical for a midstream provider."   "Likewise, our gathering lines have been in place for some time, and thus, the reserves behind them are now partially produced. To continue to produce such gas, Chesapeake and its creditors, if that ever came to that, would want and need to utilize our gathering lines to deliver gas to the markets. So such gathering lines are just very distinguishable from long haul transportation service because the intra and interstate pipeline initiate service after the gas is already pulled at marketable points, producers then have many options to receive cash for their products other than transportation on any one particular interstate pipeline."   "If it did come to a bankruptcy, a producer can argue that it can reject certain types of contracts. And we believe gathering contracts such as ours are not the type of contract that would be rejected. But even if the gathering contract were allowed to be rejected, a producer and its creditors will continue to need the gathering service to be able to produce gas and create revenue. If a producer rejects the gathering contract in a bankruptcy, the gatherer will no longer be obligated to provide the gathering service."   "Furthermore, rejection of a contract is all or nothing. Therefore, the analysis of the risk of any producer’s bankruptcy is best analyzed contract by contract and really understanding that the particulars of the services being provided and how unique those services are that are being provided."   While it is unclear what the future holds for a Chesapeake restructuring, they have been able to reduce their G&P fees further by $50MM in 2016, this time at the expense of Energy Transfer, but in return purchased additional services at market rates.  Below are a few comments made by Chesapeake's CEO, Robert Lawler,  on their earnings call   Question: What is the prize if Chesapeake were to renegotiate Minimum Volume Commitment agreements to market rates?   CEO Response:  It's very large and it is in the hundreds of millions range   The table below provides the midstream commitments Chesapeake has made through 2019     Prior to the crude crash, MLP investors were comforted by pitch decks which suggested that their cash flows were stable and had no direct commodity price exposure.  In hindsight, the positioning of such safety may not be applicable to current market conditions.  Access Midstream Partner's, which provides the midstream gathering and processing services to Chesapeake, provided this slide from 2013, prior to their acquisition by Williams.           While it remains to be seen how these negotiations are resolved prior to, or after, a potential restructuring, it is evident that the contracts as described in company presentations contain several caveats, which may diminish the implied safety of the cash flows.   Investors will need to follow the extent to which midstream agreements are modified, or terminated, during a restructuring process.  MLPData will continue to provide updates to the status of such agreements on our Insights section and Twitter       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    

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    Feb 25, 2016

    Bankruptcy Watch: 2/25/16

      The market is still assuming E&P restructuring's are waiting to be filed in order address the maturing obligations and bank covenants.  To date, the filings have been few, but that may pick up after Spring Re-Determination, which may be much more aggressive than the previous Fall process.  This week we have the following filings   Craig En…

      The market is still assuming E&P restructuring's are waiting to be filed in order address the maturing obligations and bank covenants.  To date, the filings have been few, but that may pick up after Spring Re-Determination, which may be much more aggressive than the previous Fall process.  This week we have the following filings   Craig Energy LLC  Colorado No Midstream creditors listed in Ch 11 Filing    

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    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

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    Feb 14, 2016

    MLP Weekly: What will Energy Transfer Do?

    Last week’s buried disclosure of Energy Transfer Equity’s CFO replacement shook the MLP market as investors were left to wonder about the acquisition of Williams Inc and the implications of a breakup.   On Monday, the company issued another release which attempted to address investor fear, which was completely ineffective, and added more confusion…

    Last week’s buried disclosure of Energy Transfer Equity’s CFO replacement shook the MLP market as investors were left to wonder about the acquisition of Williams Inc and the implications of a breakup.   On Monday, the company issued another release which attempted to address investor fear, which was completely ineffective, and added more confusion to the situation.  A report that Cheasapeake, a significant producer serviced by Williams Partners and other midstream units, had hired a restructuring firm, created more uncertainty about how that may affect the transaction and midstream cash flows.   Energy Transfer Equity has yet to announce any changes to the William acquisition, which includes a $6B cash payment, now equal to 60% of the market cap for Williams, and exceeds the current market cap of Energy Transfer Equity.  Williams Partners continues to benefit from the proposed transaction by way of the $428MM termination fee, being paid by waiving a portion of the quarterly IDR payment, due to the failed merger.   All this has led to extreme volatility across the Energy Transfer and Williams assets, leaving investors bracing for what will be disclosed on February 24th.     The market also received new information regarding 2016 capex from a large shale producer.  Pioneer announced a 50% reduction in drilling, including the removal of all rigs from the Eagle Ford. Production is still expected to grow by 10% despite the 20% capex reduction from $2.4 to $2.0B, which has been a common theme from producers who have reduced their drilling programs.   Keeping an Eye on Coverage   Q4 reporting and 2016 guidance provides investors with necessary risk metrics to evaluate Master Limited Partnerships, including the Distributable Cash Flow Coverage ratio.  As an investor, it is difficult to discern the health of cash flows from existing assets while the company is investing and putting into production new assets.  While DCF may be increasing, it may be due to new projects that are now in production, masking weakness is the existing asset performance.  The Coverage ratio provides the first check on whether the partnership is generating enough cash to pay the total actual distributions.  The market has assigned a premium to distribution safety over distribution growth for those with marginal coverage.  Below is a list of units with the highest coverage from our Scans page:       Coverage alone does not address the question about healthy cash flows, since the Distributable Cash Flow statements provided by the partnerships includes depreciation, accruals and one time events, such as asset sales.  Cash Flow from Operations are a critical metrics which helps establish the quality of the DCF and the distribution policy.  Plains All American is an example of a company which is experiencing stress in their business and needs to fund the gap between DCF and Distributions by raising capital (which they have done) or selling assets (which they are doing) until new project assets become operational.  The battleground over Plains is whether the existing business will continue to deteriorate more sharply than forecasted, and if so, will management continue to fund that gap.  Below are MLPData's Unit Metrics for Plains All American         Insider Transactions   Despite the troubling metrics, Plains All American's management team showed their confidence by making sizeable unit purchase of both PAA and PAGP this past week.   Summit Midstream's Sponsor continues to purchase units in the open market, which is part of their previously announced $100MM buyback plan, disclosed on December 11th, 2015 when unit prices were 14.5% higher than Friday's close.         Fund Flows   Traders liquidated Exchange Traded Fund positions this past week, reversing the positive flows through the middle of January.  Closed End Fund de-leveraging continues to be the greater risk as sizable leverage still exists across funds which hold $17.5B of assets        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

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    Feb 12, 2016

    MLP Credit Yields

    The below table provides the change in bond yields, compared to the unit yields, Month to Date total returns and the Trailing Twelve Month Distributable Cash Flow coverage.      

    The below table provides the change in bond yields, compared to the unit yields, Month to Date total returns and the Trailing Twelve Month Distributable Cash Flow coverage.      

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    Feb 11, 2016

    MLP Short Interest

    As of January 29, 2016, the below table ranks unit short interest by the largest absolute changes in short sales, along with the current WTD and MTD total returns      

    As of January 29, 2016, the below table ranks unit short interest by the largest absolute changes in short sales, along with the current WTD and MTD total returns      

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    Feb 10, 2016

    Quick Look: Plains All American Q4 Results and 2016 Guidance

    On 2/9/16, Plains All American announced Q4 results, which were slightly below their previous Guidance, primarily due to the timing of revenue recognition related to credit worthy shippers, not counter party defaults, as some may have interpreted.  Units dropped the morning after results were published, and management's comments did little to abate…

    On 2/9/16, Plains All American announced Q4 results, which were slightly below their previous Guidance, primarily due to the timing of revenue recognition related to credit worthy shippers, not counter party defaults, as some may have interpreted.  Units dropped the morning after results were published, and management's comments did little to abate the selling throughout the day as crude continued to weaken.  The bridge between guidance and actual is below with our comments overlayed:     2016 Guidance   Management forecasts EBITDA is expected to increase 4.9% from $2,168MM to $2,275MM assuming the 2016 average crude price will be $47.50 (Q1 $35, Q2 $45, Q3 $55, Q4 $60) .  The company expects to have a DCF coverage ratio of .87x for 2016 at the midpoint.  However, since the guidance was provided in January, the rig count has continued to decline (25% lower) with further commodity price declines (20% lower), which questions whether the guidance is now realistic as producers further cut capex budgets..    The company sees the next 12 to 24 months as very challenging, and feels that the $1.6B preferred issuance was timed properly and will help address market uncertainties.    Below is the historical timeline of annual Adjusted EBITDA as projected by the company on the date of the last update:         Management Questions   The following are a few of the questions posed by MLP Analysts to Management during the call:     Question:  Any Changes to previously provided Distribution Guidance.  Answer:  No     Question:  Any thoughts about changing the company structure?  Answer:  Working on the analysis, which may be middle of the year, however, it is like trying to nail jello to a tree given the rapidly changing market valuations.     Question:  What % of MVC EBITDA is at risk in 2016?  Answer:  The MVC terms differ with makeup's occurring over monthly, quarterly and annual periods.  Worst case, 1  to 2% of the total could be at risk, which are non investment grade shippers.     Question:  Are you still one and done?  Answer:  Yes, we are.  We will not need capital for 2016 or 2017.  We do not have a gun to our head.     Question:  What is the downside if the market is strong or weaker than forecasted?  Answer:  3 to 4% on the downside to Guidance which may be offset by the benefits of contango.       Summary   PAA's distribution safety is a function of crude prices, which are well below ($33.72 current average)  the expected price of  $47.50.  Further, the company carries a hefty IDR payment from PAA to PAGP, which historically has been an incentive for LP growth.  However, with the prospects of declining capital expenditures, the idea of paying $400MM to the GP for no benefit, further adds risk to the units.  It is unclear how PAGP could reduce any Incentive Distribution Rights payments given the legal structure, so the burden of the IDR's should be assumed to be a head-wind along with the new preferred payments, to maintaining the distribution, let alone any future growth.     

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    Feb 07, 2016

    MLP Weekly: Managament MiSSteps

    As Q4 earnings and 2016 guidance is revealed, Master Limited Partnership investors and analysts are still guessing as to how each management team will address their unique circumstances.  We have seen some cut their distributions due to fears of credit downgrades, others reduce to fund growth capex in light of no capital market options, some mainta…

    As Q4 earnings and 2016 guidance is revealed, Master Limited Partnership investors and analysts are still guessing as to how each management team will address their unique circumstances.  We have seen some cut their distributions due to fears of credit downgrades, others reduce to fund growth capex in light of no capital market options, some maintain by issuing convertible preferred's to bridge what is a thought to be a short term cash flow issue, and now we have the unique story of Marathon's MPLX LP.  While MPLX did not cut their distribution, they did significantly cut their forecasted 2016 distribution growth rate by reducing guidance 50% and opted to go silent on growth beyond 2017.  What made this a surprise to the market, and those previous MarketWest unit holders who now own MPLX units, is that on December 3rd, 2015, MPLX held their Analyst Day, at which time their reaffirmed their growth guidance as shown on this chart       What makes this revised projection noteworthy is that the lower guidance does not appear to be a result of a deterioration in their business, but rather is driven by Management's view that their units are not being rewarded for their high growth rate, and the cost of issuing more units is prohibitive.  Although some management teams have previously commented about the market not rewarding future distribution growth, MPLX is the first to follow through by lowering their growth rate.  The -32% fall after the announcement did not address their issue, at least for now, as the closing yield is a lofty 9.92%.           Once upon a time, MPLX LP was a high growth, low risk unit which offered investors the opportunity to receive tax deferred income with minimal principal risk due to the sponsor drop down cashflows of protected EBITDA.  At that time, Shell Midstream, Valero Partners and Phillips 66 Partners were the other high growth, best in class, units of the peer group.  On July 13, 2015, MPLX decided to lever their MLP strategy by acquiring MarkWest, which over time would increase Distributable Cash Flow and the Incentive Distribution Payments made by MPLX to parent MPC.  Up to this point, the decision to acquire MarkWest has destroyed value from every perspective.  The day before the acquisition was announced, the combined market cap of MPLX and MWE was $16.3B vs $6.0B as of this week, a stomach churning 62.5% decline.         After listening to several earnings call, a few CEO's have adopted the thesis that the decline in MLP valuation is a function of flat, or negative, fund flows.  The story line is that MLP packaged funds provided the market with fresh capital to purchase new units from 2011 through 2015 and that fire hose is now closed.  An interesting analysis was published by SL Advisor's Simon Lack on this topic, which offers an analytical framework for this justification.  While this likely has impacted unit declines, the key reason for fund outflows and other selling, is the market's fear about lower for longer and it's impact on distribution safety and growth.  While fund flows have been positive the past two weeks, the de-leveraging of closed end funds may be offsetting the inflows.       Unit News   A select number of units continue to perform as management has suggested.  Tesoro Logistics Partners is one of these units which has acquired assets, QEP Midstream, and has delivered on the expected performance and continues to forecast growth in line with previous expectations.  The company announced $30MM of synergies, 16% higher than their target, and 3.6% higher EBITDA than forecast since the acquisition on July 22, 2015.  Overall, Tesoro reported strong volumes and re-affirmed their 2016 EBITDA guidance and a 17% growth rate, commenting that they do not know anything more, or less, than they did at December's Analyst Day.   The company did state that longer term, due to scale, the growth rate would likely be in the 10-15% range.     Spectra Energy Partners delivered strong results and exceed their target 1.1x coverage ratio while still increasing their YoY distributions by 8.68%.  In spite of the market conditions, the company was able to raise $500MM in 2015 from their ATM program.    EQT Midstream Partners reported  strong DCF coverage which resulted in 1.67 coverage and re-affirmed their 2016 Adjusted EBITDA target and 21% distribution growth target, while lowering their capex budget by 3.5%, or $25MM.  Firm Reservation fees covered 83% of their Transmission, Storage and Gathering revenues.   Valero Energy Partners reported 2.33x coverage, generating $30MM of excess cash flow,  and restated their 25% distribution growth rate through 2017.     Magellan Midstream Partners reported a 17% decline  in Net Income compared to Q4 of 2014 due to Refined Product commodity exposure, but still expects to maintain 1.2x coverage and grow 2016 distributions by 10% and at least 8% for 2017.  Magellan's has maintained a TTM Coverage ratio of 1.42.   In what has now become a necessity, Targa Resource Corporation  will be holding a special meeting on February 12, 2016 to approve the acquisition of Targa Resource Partners.  The deal announced on November 3rd, 2015, offers NGLS investors 0.62 shares of TRGP, in a taxable transaction.  The elimination of IDRs was expected to deliver 16% dividend growth in 2016, and a 10%  over the next 3 years, along with a 1.05x to 1.1x coverage ratio.  On December 4th, this guidance was reaffirmed, but TRGP's 15% yield suggests the market thinks otherwise.           Announced Distributions   5 out of 7 units increased their distributions this past week, while  Navios Maritime Partners suspended further dividends.    For those which have reported Q4 results, 37% of the universe have increased their distribution from the previous quarter.          Yield to CAGR   While a three year growth rate target for MLP's is highly speculative, the below chart plots the relationship between the forecasted growth rate and current yield for midstream units, updated daily.  Premium Subscribers can access the charts here and customize the universe.     Bankruptcy Watch   No new cases filed, but a noteworthy comment from the Sabine Oil and Gas Ch 11 proceedings this past week.  Judge Shelly Chapman indicated that she was inclined to allow certain midstream agreements to be terminated or renegotiated, as disclosed from the hearing published on PACER.  Enable Midstream has provided services to Sabine and is one of their top 40 unsecured creditors.       Index Methodology Changes   Alerian announced a rather significant rule book change on Friday which allows a constituent to remain, or be added to the index, if it has cut it's distribution payment over the previous two quarters.  Previously, a unit had to have a policy to maintain or increase distributions over time, pay at least their Minimum Quarterly Distribution (MQD), and maintain or grow their distribution for at least one of the previous two quarters.  As show below, the current rule book only requires that a unit has declared a distribution in the previous two quarters.   The current index composition includes 5 units which have cut their distributions, Global Partners, Seadrill Partners, Vanguard National Resources, Teekay LNG Partners and Teekay Offshore Partners, with several more likely to cut their Q1 distributions.  This change allows the index to remain fairly liquid in light of the dwindling set of MLP's which pay a distribution.  Not long ago, being added or removed to the index often impacted a unit's price over the short term.              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

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    Feb 03, 2016

    Quick Look: MPLX LP results for 4Q15

    Quick Look:  MPLX LP results for 4Q15 As MPLX LP reported 1Q15 results today, the market punished the units with as much as a 25% decrease through market hours.  This follows an announcement last week to increase unit holder distributions by 6.4% to $0.50 per common unit for the 4th quarter of 2015, for a 29% increase in 2015.   Recall the marke…

    Quick Look:  MPLX LP results for 4Q15 As MPLX LP reported 1Q15 results today, the market punished the units with as much as a 25% decrease through market hours.  This follows an announcement last week to increase unit holder distributions by 6.4% to $0.50 per common unit for the 4th quarter of 2015, for a 29% increase in 2015.   Recall the markets priced a 200 basis point increase after the merger, with the pre-merger yield of approximately 4.5%?   Today added another 250+ basis point yield increase given the markets reaction, closing today with a yield of 9.15%.   Why the downward plunge?   Management changed their future distribution growth forecasts since their Analysts Day two months ago, from describing themselves as “peer-leading” to “normal”, from a 25% growth rate as of 12/3/15 to a current 2016 forecast of 12-15% - - - due to:   Poor market price performance given the recently announced increase in distribution, so slowing future growth given the current yield levels Need to reduce debt leverage ratios to 4x by yearend, from the present 4.7x, to retain Investment Grade ratings Preserve capital and financing sources for when opportunities for growth improve versus the current yield chasing envirnoment.   The Good News   -  Future asset dropdowns from MPLX parent sponsor, Marathon Petroleum Corporation, to continue as planned for 2Q16 with issued units expected to be financed by MPC.  Dropdown of 2Q expected to add $30M to the quarterly EBITDA, or ~10.5%.   -  Other dropdowns under consideration for 3rd and 4th quarters, with $1.6B in EBITDA in potential dropdowns.   -  Ten new fractionation projects continue, although schedules are extended longer to reduce organic capital growth expenditures by $450M.   -  Project on schedule for completion of MPLX's first entry into the Permian Basin.   -  MPLX has strong financial flexibility to manage and grow asset base as market conditions improve.   -  For any MPLX forecasts beyond 2016, manage expects to target unit distribution coverage ratios at 1.1x distributable cash flow.                     Conclusion   Management restated multiple times throughout the call that the merger combines strong underlying assets with complementing operations that are performing well, however as prudent managers and given the current yields, MPLX needs to reduce the growth expansion rate and “keep powder dry” for a more opportune market environment given the commodity prices.   The market certainly hasn’t rewarded 2015’s consecutive growth of MPLX distributions in the past as a self-described "peer-leading" growth manager of distributions, so perhaps it is time to try something new.    

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    Jan 31, 2016

    MLP Weekly: Keeping the Faith

    With a tailwind from rising Crude prices, Master Limited Partnership management teams had an opportunity to discuss their Q4 results, and respond to the concerns about counter-party risk, declining margins and unfunded growth capital commitments.  Overall, since the beginning of the year, the market appears to have priced in a more pessimistic set…

    With a tailwind from rising Crude prices, Master Limited Partnership management teams had an opportunity to discuss their Q4 results, and respond to the concerns about counter-party risk, declining margins and unfunded growth capital commitments.  Overall, since the beginning of the year, the market appears to have priced in a more pessimistic set of assumptions, helping the benchmark index gain 4.93% for the week and now a -12% total return for the year to date.   For those MLP investors who have held or added to their position, it was a very good week.   Although the results of Kinder Morgan, Enterprise Products, NuStar and Phillips66 were relatively good for Q4, Enterprise' Products CEO Jim Teague summed up  2015 as a "very rough for the industry, and 2016 appears to be even more difficult".  Two major Shale E&P companies also announced significant reductions to their 2016 capex, but moderate declines in their expected volumes, suggesting that Shale volume declines may be slower for longer.  Hess announced a 40% reduction to their 2016 capex budget, a 20% decrease from their October guidance.  However, 2016 production is expected to be similar to their October forecast of 340,000 BOE pd, a 7.6% reduction from 2015's 368,000 bbl/pd average production.  Continental Resources also announced a 66% reduction of 2016 capex, and expects to lower production from 221,000 to 200,000 bbl/pd, a 10% reduction.     The EIA reported the average natural Henry Hub  gas spot price for December 2015 of $1.93 per MMBtu was the lowest monthly average since March 1999. The agency expects natural gas prices to rise, averaging $2.65/MMBtu in 2016 and $3.22/MMBtu in 2017. Expected price increases assume consumption growth, mainly from the industrial sector, that outpaces near-term production growth, or declines.   Distribution Announcements   To date, 90 companies in the MLPData universe have reported Q4 distribution rates, of which 30 have increased their quarter over quarter distribution.  Only two of these 30 units have a forward yield in excess of 10%, Hoegh LNG Partners and Sprague Resources.  Of the remaining units, 50 have held distributions flat over the previous quarter, and 8 have reduced their distributions.   This past week, Global Partners was one of the 8 which lowered their distributions by 33%, due to the challenges with their Crude by Rail terminals, burdened by above market fixed rate rail car leases, some of which are idle.  Curiously, Global Partners increased their Q3 distribution by 0.72% in a quarter where they acknowledged greater CBR risks and a customer default. The CBR segment must have fell sharply over the past 90 to warrant such a significant cut with very little warning.       Energy Transfer/Williams Merger   After declaring a flat distribution for Q4, Energy Transfer Partners announced a minimum $750MM reduction in 2016 capex, which should eliminate the need for any public debt or equity financing in 2016, sending units up 12.9% for the week.  Earlier in the week, Williams Partners also reduced their 2016 capex budget by $1B, declaring they will not need debt or equity financing to fund their projects and distributions, while maintaining their Investment Grade status.   With no new unit issuance or distribution growth expected at least until mid 2017, Energy Transfer Equity, the GP which stands to benefit from such increases, continues to decline, losing 9.28% this week, with an incredible 13.13% yield.  Energy Transfer has yet to announce any changes to the Williams transaction since their September offer, which included $6.05B of cash.  Energy Transfer will hold their Q4 earnings call on February 24.         Enterprise Products Q4 Results and 2016 Outlook   EPD's management team provided investors a glimpse into market conditions and a reminder about the minimal counter-party risks associated with their business model.  While experiencing a 44% drop in revenues year over year, EPD was able to increase EBITDA by 46%.  A summary of the call can be found here     Kinder Morgan Analyst Day   Kinder hosted their Analyst Day,  a week after reviewing their Q4 results, called Built for the Long Term (last year was named With Change Comes Opportunity).  Kinder pointed out that despite only 10% of the EBITDA was derived from crude segments, their stock traded with a very high correlation to crude.  With the market fixated on the endless backlog of projects, and continued need to deploy growth capital, Kinder summarized that by 2020, after spending $18.2B on high graded growth projects, the company expects to generate $0.88/share of incremental distributable cash flow, vs the $2.14 per share of DCF generated in 2015.  Their 2016 budget assumes an average crude price of $38 per barrel and $2.50 natural gas, a bit optimistic prior to this week's crude advance.  Investors reacted positively to the news of lower future capex, de-leveraging using internally generated cash flow, and potential for either stock buybacks or distribution increases, sending shares up 8.05% for the week and over 31% since their Q4 earnings release       Fund Flows   Mutual Fund flows continued their positive trend since since the middle of January adding nearly $90MM of capital over the past week, a much needed boost to funds which are suffering from dramatic AUM declines over the past 18 months.         Breaking News and Instant Analysis? Follow Us on Twitter    Master Limited Partnerships will begin to report Q4 Earnings and their Outlook for 2016 this week.  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 metrics 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          

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    Jan 30, 2016

    MLP Short Interest

    Below are the short interest changes from December 31st 2015 through January 15th, 2016 for units with the highest number of short sold shares  

    Below are the short interest changes from December 31st 2015 through January 15th, 2016 for units with the highest number of short sold shares  

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    Jan 30, 2016

    Kayne Anderson's Annual Review

    Kayne Anderson, the $16B energy asset manager, described their 2015 performance to shareholders as "Simply put, it was a terrible year for the Company" a rather unfiltered description of the pain that both investors and management experienced.  The letter goes on to explain their views on market valuations and what the future holds for Master Limit…

    Kayne Anderson, the $16B energy asset manager, described their 2015 performance to shareholders as "Simply put, it was a terrible year for the Company" a rather unfiltered description of the pain that both investors and management experienced.  The letter goes on to explain their views on market valuations and what the future holds for Master Limited Partnerships.  It is a good read from a very experienced MLP manager      

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    Jan 28, 2016

    Quick Look: Enterprise Products Partners Q4 Results

    On January 28th, Enterprise Products released their Q4 results, and for first time, offered forward guidance in light of market volatility.   Below are the highlights from the earnings release and conference call comments     Q4 Distribution of $0.39 was covered by 1.3x of Distributable Cash Flow   Retained $302MM of DCF in Q4   Revenues dec…

    On January 28th, Enterprise Products released their Q4 results, and for first time, offered forward guidance in light of market volatility.   Below are the highlights from the earnings release and conference call comments     Q4 Distribution of $0.39 was covered by 1.3x of Distributable Cash Flow   Retained $302MM of DCF in Q4   Revenues declined 40% Quarter over Quarter, but costs were also reduced by 43%   Expect to increase 2016 Distributions to $1.61 for the year, or 5.2% higher than 2015   2.4% of Revenues are exposed to at risk E&P    Permian volumes increasing, flat elsewhere, slight declines in Eagle Ford   2016 Capex expected to be $2.5 to $2.8B, including the final EFS installment payment.  Change from previously higher estimates is related to the timing rather than a reduction.     Management would not comment on how the growth capex will be funded specifically, but outlined the sources as retained cash flow, potential asset sales, debt/equity issuance or EPCO direct unit purchases   Management was asked about margin pressure, and responded that there are many conversations, but did not provide any specifics   Summary:  EPD produced another strong quarter in spite of the headwinds.  They do expect 2016 to be more challenging than 2015, but has still committed to a 5.2% distribution increase Year over Year.  Management clearly projects confidence with their ability to manage in a volatile production environment and offer a strong foundation of knowledge and experience.  They are focused on Demand pull projects other than the Permian pipeline, insulating themselves from producer uncertainty.          

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    Jan 24, 2016

    MLP Weekly: Changing Signals

    This past week, many investors hit their panic button and sold shares into a rapidly sinking market where frequent headlines continued calling for $20 crude, unnerving many MLP investors.  By the middle of the week, the benchmark index was down almost 14%, and 30% for the year.   For those MLP investors wondering if the market is reflective of futu…

    This past week, many investors hit their panic button and sold shares into a rapidly sinking market where frequent headlines continued calling for $20 crude, unnerving many MLP investors.  By the middle of the week, the benchmark index was down almost 14%, and 30% for the year.   For those MLP investors wondering if the market is reflective of future fundamentals,  there are a few things to to consider from this week.  First, Kinder Morgan reported a relatively modest decline of only -2% from their previous Dec 8th 2016 DCF forecast while assuming $38 WTI and $2.50 Henry Hub average realized price for 2106, suggesting volumes and margins will continue even in a lower for longer scenario.  Twenty units have reported an increase to their Q4 distributions to date, and 14 this past week, announced quarter over quarter distributions.  The market paid little attention to these events until oil bounced, from what looked to be a very sharp drop on Wednesday, but perhaps wasn't a drop at all.   The February WTI contract was set to expire on Wednesday.  Shortly before the close, the Feb contract dropped $1.91 to close at $26.55, at which point the contract expired and physical settlement occurred for those still holding a position.  The steep -6.7% drop sent panic across the market that oil may in fact near $20, leading a to a one day -7.04% drop in the benchmark index.   The March contract now became the front month contract, and opened at $28, printing a 5.46% increase over the previous close, and sending the benchmark index back up 5.1%. That is a sizeable move in a global commodity for which there is little explanation yet available for what happened when the contract rolled, which is usually a fluid continuum of prices.          By Thursday, the oil market was responding to more tangible information, when the EIA reported a 1MM barrel decline in distillates inventory, sending crude up 9% for the day.   By the end of the week, the market was trading a 2016 average WTI strip price of $36.  Clearly MLPs have been trading in lockstep with oil regardless of the extent to which higher or lower oil will impact an MLP's 2016 Distributable Cash Flow.  While Q4 earning calls will reveal the pain incurred from lower energy prices,  2016 performance will be based on crude levels, which are averaging 16% lower than the Q4 realized price.     Kinder Morgan   Held their first management call since announcing their dividend cut in which they disclosed expectations to generate $4.9B of DCF in 2016, while reducing their capital expenditures by $900MM.  Natural gas transport volumes were up 5% over the previous year, driven by higher power generation demand.  The Terminals business had mixed results, as liquids were up in volume, but were offset by a $45MM charge for two coal customers who declared bankruptcy.  The Products Pipeline segment produced 1.9% higher volumes over the previous year, prior to the Hiland acquisition.   Kinder estimates that each $1 change in crude (from the base case of $38) will impact DCF by $7MM, and each $0.10 change in natural gas (from base case of $2.50) will impact DCF by $1.2MM.   After the earning call, the headlines were modestly positive, but the next day, KMI surged 15% and finished the week up 18% as the market considered the potential for future dividend increases as a result of a shrinking backlog of viable projects.       Distribution Announcements   40 Units reported their Q4 distributions this past week; 14 increased from previous quarter, 24 unchanged, and 4 reduced distributions, for which 3 of the 4 previously announced their intent to lower distributions       Moody's Credit Watch   Moody's expanded their Credit watch list by adding 69 more US E&P and oilfield services to their review for downgrade list:    Approach Resources Inc., Bill Barrett Corp, Bonanza Creek Energy, Inc.,Breitburn Energy Partners L.P., Carrizo Oil & Gas, Inc., Chaparral Energy, Inc., Chesapeake Energy Corporation, Clayton Williams Energy, Inc., CrownRock, L.P., Diamondback Energy, Inc., Endeavor Energy Resources, L.P., EV Energy Partners, L.P., Fieldwood Energy LLC, Gulfport Energy Corporation, Jonah Energy LLC, Jones Energy Holdings, LLC, Laredo Petroleum, Inc., Legacy Reserves LP, Matador Resources Company, Memorial Production Partners LP, Memorial Resource Development Corp., Northern Oil and Gas, Inc, Oasis Petroleum Inc, Parsley Energy LLC, PDC Energy, Resolute Energy Corporation, Rice Energy Inc., RSP Permian, Inc., Sanchez Energy Corporation, Stone Energy Corporation, Talos Production LLC, Templar Energy, LLC, Vanguard Natural Resources, LLC, Vine Oil & Gas, LP, and W&T Offshore, Atwood Oceanics, Inc., Bristow Group Inc., Cactus Wellhead LLC, CJ Holding Co., Compressco Partners, L.P., Diamond Offshore Drilling, Inc., ENSCO International Incorporated, Ensco plc, Era Group Inc., FMC Technologies, Inc., Forum Energy Technologies, Inc., GulfMark Offshore, Inc., HGIM CORP., Hornbeck Offshore Services, Inc., Light Tower Rentals, Inc., Nabors Industries Inc., National Oilwell Varco, Inc., Noble Corporation (Cayman Island), Noble Drilling Corporation, Noble Holding International Limited, Oceaneering International, Inc., Parker Drilling Company, PHI, Inc., Pioneer Energy Services Corp., Pride International, Inc., Prowler Acquisition Corp, Rowan Companies, Inc., Schlumberger Holdings Corporation, SEACOR Holdings Inc., SESI, L.L.C., Transocean Inc., UTEX Industries, Inc., Weatherford International Ltd. (Bermuda), and Weatherford International, LLC     Fund Flows   MLP Open End Funds, with over $12B of AUM, have seen outflows slow down the last several weeks as wholesalers are working hard to maintain their dwindling asset base.  UBS announced this week that they will be redeeming their two MLP focused Exchange Traded Notes, with approximately $120MM of principal outstanding.                 Earnings Calendar             Follow Us on Twitter for breaking News and Analysis   Master Limited Partnerships will begin to report Q4 Earnings and their Outlook for 2016 this week.  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 to for access to current and historical metrics 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

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    Jan 20, 2016

    Bankruptcy Watch 1/25/16

    With market participants fixated on the fate of US Shale producers and their midstream agreements, MLPData will be publishing a weekly roundup of E&P filings and their midstream creditors as disclosed in their filing.  Our goal is to ensure that midstream MLP investors are aware of unsecured creditor status associated with a bankruptcy filing.…

    With market participants fixated on the fate of US Shale producers and their midstream agreements, MLPData will be publishing a weekly roundup of E&P filings and their midstream creditors as disclosed in their filing.  Our goal is to ensure that midstream MLP investors are aware of unsecured creditor status associated with a bankruptcy filing.  Midstream agreements can be modified prior to, and as a result of, bankruptcy.  The extent to which the agreements are modified are opaque, but the Top 20 Unsecured Credit list, published in a Bankruptcy filing, provides insight into the receivables and revenues at risk from re-negotiation or termination     Moody's downgrades Eclipse's CFR to Caa2; outlook negative, concern that Company may not be able to cover Interest Expense MLP Exposure:  EnLink Midstream Partners  Ticker:  ENLK      

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    Jan 19, 2016

    Bankruptcy Watch 1/19/16

    With market participants fixated on the fate of US Shale producers and their midstream agreements, MLPData will be publishing a weekly roundup of E&P filings and their midstream creditors as disclosed in their filing.  Our goal is to ensure that midstream MLP investors are aware of unsecured creditor status associated with a bankruptcy filing.…

    With market participants fixated on the fate of US Shale producers and their midstream agreements, MLPData will be publishing a weekly roundup of E&P filings and their midstream creditors as disclosed in their filing.  Our goal is to ensure that midstream MLP investors are aware of unsecured creditor status associated with a bankruptcy filing.  Midstream agreements can be modified prior to, and as a result of, bankruptcy.  The extent to which the agreements are modified are opaque, but the Top 20 Unsecured Credit list, published in a Bankruptcy filing, provides insight into the receivables and revenues at risk from re-negotiation or termination     BANKRUPTCY FILING - 12/15/15  MAGNUM HUNTER COUNTERPARTY:  EXTERRAN ENERGY SOLUTIONS LP, USA COMPRESSION PARTNERS  BALANCE:  $314,938   POSSIBLE MLP EXPOSURE - USA Compression Partners Ticker: USAC  Archrock Partners LP Ticker APLP Balance:  $1,352,000   Exterran Energy Solutions L.P., is a wholly-owned subsidiary of Exterran Corporation, a to be publicly listed international compression services and global fabrication company based in Houston.  It is not clear as to whether the contracted party is the Archrock MLP or  Exterran.      

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    Jan 17, 2016

    MLP Weekly: Under Pressure

    What do Master Limited Partnerships and China have in common?  Both are down nearly 18% year to date with negative sentiment and uncertainty.  It is apparent that management teams of highly leveraged MLP's with committed capital projects, have almost no short term influence over their units, regardless of the remedies applied.  This past week, Plai…

    What do Master Limited Partnerships and China have in common?  Both are down nearly 18% year to date with negative sentiment and uncertainty.  It is apparent that management teams of highly leveraged MLP's with committed capital projects, have almost no short term influence over their units, regardless of the remedies applied.  This past week, Plains All American followed through on their previous comments to fund their future capital expenditure commitments by avoiding the capital markets,  raising $1.5B in capital from energy focused PE firms.  The news did little to remove uncertainty related to unit prices.  The chart below illustrates the tremendous volatility around the announcement, which began with a large number of buys, quickly giving way to selling pressure.  By the end of the week, Plains and Plains GP ended the week -5% lower from prior to the announcement.  Plains initially disclosed that they planned to close the deal the following week, but market events motivated them to lock in commitments now, which was probably a very smart move given what could have transpired.  We suspect management and their PE investors had expected a better response, but if they do not need to access the capital markets for two years, the tepid market response is of little real consequence for the time being.         Lower crude headlines continued to pressure units, and by the end of the week, suggestive headlines of Broken MLPs and Broken Mergers, permeated through social media,, blogs and publishers, creating broad selling across all names.   On Friday, Wells Fargo published a list of MLPs most likely to cut, including American Midstream, Archrock Partners, Crestwood Partners, Energy Transfer Partners, and Williams Partners.   Meanwhile, banks began to report their Q4 results and their loan loss reserves for energy related loans, which on the surface look to be more optimistic than one might expect.       Fund Flows       Credit Actions     None Reported this week.  Moody's previously reported the following companies are under review:  Anadarko, Antero, Apache, Denbury Resources, EP Energy, EQT Corp, Hess, Hunt Oil, Kerr-McGee, National Fuel Gas, Occidental, Pioneer Natural Resources, SM Energy, Union Pacific Resources Group, Unit Corp, WPX Energy, Concho Energy, Cimarex Energy, ConocoPhillips, Energen, EOG Resources, Kodiak Oil and Gas, Marathon Oil, Murphy Oil, Newfield Exploration, Noble Energy, QEP Resources, Range Resources, Southwest Energy       Credit Yields       What's Next?   Fourth quarter midstream results begin with Kinder Morgan's release on January 20th,  followed by Enterprise Products the following week.   The earnings calendar is updated daily with the company confirmation of release details.   After the close on Friday, Williams Inc reiterated the Board's support to complete their transaction with Energy Transfer under the prevailing terms announced in September.  Perhaps this statement may temper the volatility, but we expect mixed results from the Q4 calls, which will continue to taint Master Limited Partnerships until energy prices rebound, regardless of management guidance and results.         Follow Us on Twitter for breaking News and Analysis   Premium Subscribers can access Weekly Fund Flows Here   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

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    Jan 14, 2016

    MLP Short Interest

    Below is the table of short interest as of 12/31/15.   Investors shorted an additional 21.65MM shares of Energy Transfer between 12/15 and 12/31, during which time shares actually had a positive return due to year end buying        Top Declines in Short interest 12/15/15 to 12/31/15  

    Below is the table of short interest as of 12/31/15.   Investors shorted an additional 21.65MM shares of Energy Transfer between 12/15 and 12/31, during which time shares actually had a positive return due to year end buying        Top Declines in Short interest 12/15/15 to 12/31/15  

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    Jan 13, 2016

    Plains All American: One and Done?

    Prior to the market open on Tuesday, January 12, Plains All American announced their plans to finance their 2 year $2B growth capital commitments and distributable cash flow shortfall while avoiding the capital markets.  While many observers expected Plains to cut their Q4 distribution from $0.70, Plains followed through on their previous suggestio…

    Prior to the market open on Tuesday, January 12, Plains All American announced their plans to finance their 2 year $2B growth capital commitments and distributable cash flow shortfall while avoiding the capital markets.  While many observers expected Plains to cut their Q4 distribution from $0.70, Plains followed through on their previous suggestions that such a move would not be necessary, confirming their Q4 distribution rate of $0.70.  The more compelling information was related to their $1.5B capital raise from four  energy focused PE shops, Kayne Anderson, EnCap, Energy Minerals Group and First Reserve.  The new capital, expected to close in January, will be raised using a new Perpetual 8% Preferred share, which will pay $2.10 per annum, and offers the buyers the right to convert into PAA units after two years and prohibits the PE investors from hedging their PAA exposure.  Plains also will maintain the option to pay the 8% in new PIK through 2017.   The most important aspect of this these new shares are the Incentive Distribution Rights provisions.  If Plains were to issue new units to the market, each new unit would create an incremental IDR fee paid from PAA to their General Partner, Plains GP Holdings.  If they were to have used that option, the IDR burden would have been $0.8285 per unit at their current distribution rate, or roughly $46MM if they were to have issued 56MM new units (which is the conversion rate for the new preferred's increasing units by 14%).  Over the two year period prior to the conversion option, the total would have been $92MM assuming the 2016 distribution remains flat.  In order to offset this burden, Plains GP agreed to waive their IDR fee for these incremental units by only receiving 50% of the distribution rate above the current rate.     Plains also provided their 2015 and 2016 outlook and assumptions:   -  2015 Full Year EBITDA will be on low range of guidance due to propane margins and the recent tornadoes. This is about 5% lower from the guidance provided at the beginning of the year.   -  2016 Crude prices will average $47.50 and $67.50 in 2017 with a volume decrease of roughly 5% as indicated below       -  2016 Expected EBITDA $2.3B, a 4.5% increase, but impacted by declining Supply and Logistics margin as indicated below         To summarize, Plains will pay an 8% rate for the capital versus 13% if they had to have issued new units and will likely maintain their current distribution rate through 2017 at the least.  Plains GP shareholders will now also have a flat outlook where neither new units or a distribution increase will change their IDR cash flows through 2017.   Plains investors will be rewarded if crude prices increase, along with volumes.  If prices remain below $40 through Q4 of 2017, volatility and risk increase as the lower for longer ramifications will be a continued focus of speculation and a shrinking base of investors.     Follow Us on Twitter for breaking News and Analysis   Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below  

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    Jan 10, 2016

    MLP Weekly: Hold On

    So much for the 2016 rebound.  The year started off on the right foot with Enterprise Products and Tallgrass Energy announcing Q4 distribution increases, but the 12% drop in crude for the week led some investors to further exit their positions, re-igniting the closed end fund de-leveraging cycle, and another leg down for MLP's as the benchmark inde…

    So much for the 2016 rebound.  The year started off on the right foot with Enterprise Products and Tallgrass Energy announcing Q4 distribution increases, but the 12% drop in crude for the week led some investors to further exit their positions, re-igniting the closed end fund de-leveraging cycle, and another leg down for MLP's as the benchmark index closed -7.69% for the week.  Goldman Sachs held their annual Global Energy Conference this past week, which focused investors on the queasy state of E&P balance sheets and risk.  The below GS chart illustrates the level of US crude production by credit:       While the impact of lower volumes on 2016 EDITDA is uncertain,  MLP's have been crushed by unrelated forces over the past 6 weeks.  Mutual Fund Flows have been negative since late November,  but the bigger issue is that Closed End Funds have been deleveraging at an accelerating pace, forcing funds to liquidates positions.  Merrill Lynch reported that in December, the largest Closed End Fund Families reduced their leverage by $899MM from the previous month of November.  Prior to December, the aggregate reduction of leverage from September, October and November combined was only $500MM.    MLPData recently aggregated the top 10 Closed End Fund positions to assess the what units may be at risk from further leverage reductions, and where research management teams have their greatest confidence.  It is interesting to note that only one company, Energy Transfer Partners, is held as a top 10 position in all of the 8 largest funds. Finally, while short interest continues to be a concern, the most recent levels reported did not show a significant aggregate increase.         Bankruptcy Exposure   Each week, MLPData will report E&P bankruptcies and the potential exposure an MLP may have to the filing, either directly through contracts, or indirectly from Sponsor exposure.  While we do not expect E&P filings to have an affect on 1H 2016 midstream EBITDA, the uncertainty of the exposure and the potential headline risk is worthy of attention and continued due diligence.    Credit Actions   Energy Transfer was pummelled this week after Moody's downgraded Williams Inc and Williams Partners, coupled with an outlook change for Equity Transfer.   On 1/7/16, Moody's downgraded Williams Partners and maintained a negative outlook due to the expected inability for Williams to reduce their leverage in light of a weak commodity prices and lower expected volumes.  Williams Inc was also downgraded, moving from Investment Grade to Speculative, on the expectations that Williams Partners will contribute lower IDR payments.  On 1/8/16, Moody's followed with a change of Energy Transfer's outlook from positive to stable due to WPZ cash flow risks, but reaffirmed their Investment Grade status.           On the same day, Moody's reaffirmed the IG rating for Enable Midstream Partners with a stable outlook, concluding that the gas and processing weakness would be offset by strong transmission and storage fees, and minimal counter party risk.        Unit News   NGL Energy Partners followed up on their previous plans to avoid the capital markets by announcing the sale of their TransMontaigne GP interests to Arclight for $350MM.  The sale will improve NGL's 2016 Distributable Cash Flow by $12MM after offsetting the elimination of IDR payments.  NGL will retain 3.2MM of TLP units, and has offered Arclight the option to purchase 800,000 units by a future date.  The news sent NGL units up  45.61% for the week, but still yielding 19.28%, despite previous management comments that they were not contemplating a distribution cut.    Tallgrass Energy Partners announced that they increased their ownership to 98% of the Pony Express Pipeline and financed part of the transaction by issuing units to their sponsor, Tallgrass Development.  The transaction is in support of Management's 20% distribution guidance through 2017.   CrossAmerica Partners announced the acquisition of 31 convenience stores for $48.5MM.  Financing terms were not disclosed.     Distribution Announcements   MLP;s with good new to report are likely to do so early, as the below units reported increases to their Q4 distributions  The week ended with the first midstream cut, as Southcross Energy opted to suspend their distributions in light of poor coverage and worsening conditions.  We were expecting a distribution announcement from Plains All American this past week, so we will have to see what may be released on Monday.           Follow Us on Twitter for breaking News and Analysis   Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Jan 08, 2016

    MLP Credit Yields

    Since the holiday break, MLP credit yields have improved through 1/7/2016, despite the drop in crude.  Spectra Energy, Cheniere and Targa Resources led the group in yield improvement.               Premium Subscribers can access Weekly Fund Flows Here   Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor…

    Since the holiday break, MLP credit yields have improved through 1/7/2016, despite the drop in crude.  Spectra Energy, Cheniere and Targa Resources led the group in yield improvement.               Premium Subscribers can access Weekly Fund Flows Here   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

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    Jan 07, 2016

    MLP Fund Concentrations

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 12/31/15…

    Paying close attention to MLP Fund rotations and concentrations can provide investors with insights into how institutional managers view the risk reward relationships for various units. MLPData tracks the weekly fund flows and the monthly top ten positions as reported by the funds, in order to identify relative changes in sentiment.  As of 12/31/15, the below grid displays the top 10 holdings across the largest actively managed fund.  Although Energy Transfer Partners is a distant second in market cap to Enterprise Products, it is the only MLP held as a top ten position across all of funds below, suggesting that the research teams continue to feel comfortable about their distribution coverage and ability to manage their growth capital objectives         remium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Jan 06, 2016

    Bankruptcy Watch First Edition

    With market participants fixated on the fate of US Shale producers and their midstream agreements, MLPData will be publishing a weekly roundup of E&P filings and their midstream creditors as disclosed in their filing.  Our goal is to ensure that midstream MLP investors are aware of unsecured creditor status associated with a bankruptcy filing.…

    With market participants fixated on the fate of US Shale producers and their midstream agreements, MLPData will be publishing a weekly roundup of E&P filings and their midstream creditors as disclosed in their filing.  Our goal is to ensure that midstream MLP investors are aware of unsecured creditor status associated with a bankruptcy filing.  Midstream agreements can be modified prior to, and as a result of, bankruptcy.  The extent to which the agreements are modified are opaque, but the Top 20 Unsecured Credit list, published in a Bankruptcy filing, provides insight into the receivables and revenues at risk from re-negotiation or termination     BANKRUPTCY FILING - 12/31/15  SWIFT ENERGY COMPANY COUNTERPARTY:  EXTERRAN ENERGY SOLUTIONS LP  BALANCE:  $1,426,209 POSSIBLE MLP EXPOSURE - ARCHROCK PARTNERS LP TICKER APLP Exterran Energy Solutions L.P., is a wholly-owned subsidiary of Exterran Corporation, a to be publicly listed international compression services and global fabrication company based in Houston.  It is not clear as to whether the contracted party is the Archrock MLP or  Exterran.         Archrock Partners LP DCF            

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    Jan 04, 2016

    Tallgrass Energy Partners Keeps on Growing

    Over the past 12 months, most investors have been averse to the idea of investing in crude pipeline assets.  But in the nuanced world of Master Limited Partnerships, the location of the pipelines, and the balance sheet of the acquiring entity, can make such assets look attractive  The Pony Express Pipeline (PXP), a 760 mile crude pipeline from Guer…

    Over the past 12 months, most investors have been averse to the idea of investing in crude pipeline assets.  But in the nuanced world of Master Limited Partnerships, the location of the pipelines, and the balance sheet of the acquiring entity, can make such assets look attractive  The Pony Express Pipeline (PXP), a 760 mile crude pipeline from Guernsey, WY to Cushing, OK, is an outlet for Bakeen, Niobara, and Powder River Basin crude production, which can transport up to 320,000 barrels per day,   PXP was originally a natural gas pipeline owned by Kinder Morgan, which was sold to Tallgrass Development (TDEV) in 2012.  TDEV expanded the capacity and converted the pipeline to carry crude in 2014.  Tallgrass Energy Partners (TEP) acquired an additional ownership stake in PXP  in July 2014 for 9x EBITDA.  In the Q3 earnings call, Tallgrass Energy disclosed that November volumes were 10% higher and the pipeline was operating at capacity, despite the drop is rig counts and crude strip prices.   After authorizing a 6.7% increase in their Q4 distribution on January 4th, Tallgrass Energy announced the acquisition of an additional 31.3% interest in PXP, raising their ownership to 98%.  The $743MM acquisition will be funded the issuance of 6.5MM new units to TDEV, with a call option to repurchase the units at $42.50 within the next 18 months.  The remaining balance of $475MM will be funded by their existing credit line, leaving $272MM available on their line after the acquisition.  This transaction has been expected, but perhaps TDEV funding the full equity allocation may have been a surprise given the 5.82% yield.   The last time they raised equity in the public markets, TEP was yielding 3.96%.            The drop down will help fund their 20% distribution growth target through 2017.  A sponsor willing to purchase the equity needed to fund dropdown allows the balance sheet to remain in good shape to partially fund future drops, such as REX.   TDEV, by way of their ownership in Tallgrass Energy GP, will benefit from the increase in the IDR payments as a result of the increase in units outstanding, which are presently at the 50% split.  Below are TEP's unit metrics for the last several quarters, indicating current leverage near 3.0x prior to the acquisition.             Premium Subscribers can access Weekly Fund Flows Here   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  

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    Dec 27, 2015

    MLP Weekly: Has the Purge Ended?

    MLP investors were rewarded with an unexpected bounce during the Christmas week as the benchmark index surged 13.79% after persistent selling punished units the previous weeks.  One could point to ONEOK's 2016 operational guidance as the spark to create some confidence in the sector, but the guidance was nuanced by an expectation that 2016 average…

    MLP investors were rewarded with an unexpected bounce during the Christmas week as the benchmark index surged 13.79% after persistent selling punished units the previous weeks.  One could point to ONEOK's 2016 operational guidance as the spark to create some confidence in the sector, but the guidance was nuanced by an expectation that 2016 average crude prices would be $40 - $45 bbl.  As of 12/24, the average crude futures price is $41.46 bbl over the next twelve months.  Perhaps it was the support that several MLP's received during the week coupled with a fundamental view that 2016 cash flows will allow some units to further grow distributions.   Whatever the reason, once again MLP investors confirmed that they will sell into weakness, pushing prices lower, offering the patient investor the opportunity to buy at a discount.  The question at this point is whether we have seen the low set for the next 12 months, and if so, what level of upside still remains going into 2016.   The purge, comprised of retail tax loss harvesting, fund liquidations, institutional fund rebalancing (both MLP and C-Corp dividend focused strategies), and margin sales, started at the end of November, as shown on the chart below, which calculates the aggregate daily value of all trades for the MLPData universe.  Over the past twelve months, the daily average dollar volume traded was $3.25B, but nearly hit $8B in mid December, as investors dumped shares.  During this same period, the short interest levels did not increase materially, nor did Fund flows exceed $500MM in redemptions.  Selling peaked on December 7th, as investors awaited Kinder Morgan to updated their 2016 dividend guidance.         We have been waiting for MLP management teams, who have been telling investors that market is not indicative of their value, to step up and purchase these discounted units.  This past week, Plains All American, Dominion Midstream and ONEOK, all had sizeable insider transactions.  ArcLight, which previously announced plans to invest up to $75MM in American Midstream Partners, filed a purchase.  First Reserve, which earlier this month committed to purchase up to $100MM in Crestwood units, made an initial purchase of $17.6MM on 12/21.         As we head into the last week of the year, the data suggests the MLP purge has ended for now, and investors will now focus on the reporting of Q4 volumes and margins, and 2016 guidance, commencing on January 20th, 2016, along with the other factors which will influence sentiment.           Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Dec 26, 2015

    MLP Short Interest

      Prior to the week 12/21/15,  Master Limited Partnerships have been on a downward spiral primarily on the concerns about distribution safety in light of a lower for longer energy outlook.  Although the fall has been rapid, short sales do not seem to be a major factor, as total short sales have been in the 350,000,000 share range for the last 6 we…

      Prior to the week 12/21/15,  Master Limited Partnerships have been on a downward spiral primarily on the concerns about distribution safety in light of a lower for longer energy outlook.  Although the fall has been rapid, short sales do not seem to be a major factor, as total short sales have been in the 350,000,000 share range for the last 6 weeks, fluctuating by +/-14,000,000 shares.  Below are the units ranked by greatest change in the last reported week of 12/15.  The Week To Date column indicates that despite the top increases in Energy Transfer Equity, MPLX LP and Targa Resources Corp, each of the units moved higher this week.         Below are the units (we keep KMI in the list as a proxy) which had the greatest reduction is short sales outstanding    

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    Dec 26, 2015

    Guidance and Support

    During the week of  12/21/15, the following companies issued press releases aimed at increasing investor confidence:   ONEOK and ONEOK Partners:  Operational Guidance issued 12/21 We expect 2016 earnings to be driven by continued natural gas and natural gas liquids volume growth across our integrated pipeline system, with strong year-end perform…

    During the week of  12/21/15, the following companies issued press releases aimed at increasing investor confidence:   ONEOK and ONEOK Partners:  Operational Guidance issued 12/21 We expect 2016 earnings to be driven by continued natural gas and natural gas liquids volume growth across our integrated pipeline system, with strong year-end performance providing us momentum into 2016. Our substantial backlog of well connects, flared gas inventory in the Williston Basin and uncompleted wells provides considerable visibility into our 2016 volumes," said Terry K. Spencer, president and chief executive officer of ONEOK and ONEOK Partners. "Our commodity price outlook remains cautious for 2016. However, we expect the partnership's 2016 earnings to increase compared with 2015 guidance, primarily from volume and fee-based margin increases, resulting in increased distributable cash flow.   "At ONEOK Partners, we remain committed to maintaining our investment-grade credit ratings, sustaining our current distribution and achieving distribution coverage of 1.0 times or better in 2016 at current NYMEX future strip pricing of $40 to $45 per barrel of crude. ONEOK Partners does not expect to access the public equity markets in 2016 and well into 2017," said Spencer. "If needed, ONEOK continues to be well-positioned to provide financial support to ONEOK Partners. We have a long history of prudent financial decision-making, as demonstrated by the $750 million of equity raised at the partnership this past summer, and we will continue to make decisions that are in the best long-term interest of our investors at both ONEOK and the partnership to create value, reduce risk and protect the partnership's investment-grade credit rating.     "The partnership has a solid balance sheet and ample liquidity, including access to our commercial paper program and $2.4 billion credit facility, to support our current capital-growth program and fund the 2016 long-term debt maturities," Spencer said. "We continue to evaluate long-term debt financing alternatives for our 2016 debt maturities, but our strong liquidity position allows us to be opportunistic when refinancing. Additionally, ONEOK has no maturities until 2022 and an unutilized $300 million credit facility. The credit facility can be drawn to facilitate purchasing partnership equity, with the expectation to repay those borrowings with internally generated cash flow.   "ONEOK Partners is well-positioned to not only withstand the low commodity price and uncertain capital market environment but also to take advantage of opportunities," added Spencer. "Our strong position in the Williston Basincontinues to serve us well, and we continue to benefit from a large natural gas supply backlog in the basin. Our natural gas pipelines segment is well-positioned to expand its fee-based natural gas export capabilities in the future, particularly to Mexico where we have key relationships through our joint venture Roadrunner Gas Transmission pipeline. Our large and extensive natural gas liquids business maintains a growing position in the emerging Stack and SCOOP plays in Oklahoma, and we remain well-positioned in the Gulf Coast to take advantage of ethane demand growth potential over the next two years."   American Midstream Partners:    Issued 12/21/15   Affiliates of ArcLight Capital Partners, LLC (“ArcLight”), which controls the general partner of American Midstream Partners, LP (NYSE: AMID) (the “Partnership”) today announced that ArcLight has approved a unit purchase program (the “Purchase Program”) whereby ArcLight may purchase up to $75 million of common units of the Partnership. ArcLight’s unit purchases are expected to commence as early as December 22, 2015. ArcLight may purchase units under the Purchase Program in open market transactions, in privately negotiated transactions, or otherwise. The amount and timing of any ArcLight unit purchases may vary and will be determined based on market conditions, unit price and other factors. The Purchase Program does not require ArcLight to purchase a specific number of units. There can be no assurance that ArcLight will purchase any units under the Purchase Program, and the Purchase Program may be modified or suspended at any time without prior notice. ArcLight’s unit purchases, if any, made under the Purchase Program will not impact the total number of units outstanding. “As the sponsor of the Partnership, we strongly believe the Partnership’s current unit price undervalues the assets of the Partnership. In light of this belief, as well as our confidence in the strength of these assets, the management team, and prospects for the future, ArcLight authorized an additional $75 million investment to be used for ArcLight to acquire common units of the Partnership,” commented Dan Revers, Managing Partner of ArcLight. “We are pleased to broaden our financial commitment to the Partnership through the Purchase Program.       KNOT Offshore Partners:  Operational Update 12/21/15   Despite the disruption in the capital markets, the Partnership has not experienced any material changes in its operations since its third quarter 2015 earnings announcement on November 5, 2015. The Partnership’s underlying business continues to perform well in the fourth quarter. The Partnership’s vessels have experienced 100% utilization in the months of October and November 2015. As a result of the acquisition of the shuttle tanker Ingrid Knutsenon October 15, 2015, the Partnership expects to report incrementally higher Adjusted EBITDA in the fourth quarter of 2015. Furthermore, the Partnership has no newbuilding commitments and no loan maturities before the second half of 2018.   Therefore, the Partnership's management currently expects to recommend to the board of directors (the “Board”) an unchanged distribution of $0.52 per unit with respect to the fourth quarter of 2015. The Board must approve the fourth quarter of 2015 distribution and this approval will be dependent upon, among other things, the absence of any material adverse developments at the time of the determination. Management expects the Board to meet in January 2016 to determine this cash distribution   Rice Energy:  Issued 12/21/15   Rice Energy Inc. (NYSE: RICE) ("Rice") today announced that it has agreed to non-binding terms with an energy infrastructure fund to invest up to $500 million in preferred equity in Rice Midstream Holdings LLC ("RMH"), a wholly-owned subsidiary of Rice, and common equity in a new wholly-owned subsidiary of RMH, "GP Holdings", which will be formed to hold the common units, subordinated units and incentive distribution rights in Rice Midstream Partners LP (NYSE: RMP) currently held by RMH.   The closing of the transaction is expected to occur in the first quarter of 2016 and is subject to the completion of diligence, definitive documentation and satisfactory customary conditions precedent. At closing, Rice Energy plans to utilize $375 million, of which it intends to use a portion to repay all outstanding borrowings under RMH's revolving credit facility, and the remainder to fund Rice's 2016 development of its core Marcellus Shale and Utica Shale wells    

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    Dec 20, 2015

    MLP Risks: What is the Market Thinking?

    Each day, current and prospective MLP investors are faced with a  highly volatile market which is impacted by both fundamental and technical factors.  The technical factors of tax loss selling, fund redemptions and margin sales, are no doubt in play given the recent performance of the asset class, and the number of new investors who have purchased…

    Each day, current and prospective MLP investors are faced with a  highly volatile market which is impacted by both fundamental and technical factors.  The technical factors of tax loss selling, fund redemptions and margin sales, are no doubt in play given the recent performance of the asset class, and the number of new investors who have purchased MLP products over the past 24 months.  Fundamental factors, such as 2016 DCF levels and the impact of an expanding set of E&P companies entering the bankruptcy process, provides the market with a range of potential outcomes, each of which may be unique to an MLP's location, assets, and contract structures.   In this article, we will outline the macro risks, and the implied market expectations of how these risks will impact 2016.   Energy Producers are beginning to experience the pain from their higher priced hedges expiring, a declining spot market, and scarce capital available to maintain or expand drilling programs. Add to that the potential for credit downgrades as Moody's has put the following 27 IG companies on review, which will be completed in the next several months:     Canadian:  Encana, Canadian Oil Sands, Baytex, Canadian National Resources, Cenovus Energy, Husky Energy, Suncor   US:  Anadarko, Antero, Apache, Denbury Resources, EP Energy, EQT Corp, Hess, Hunt Oil, Kerr-McGee, National Fuel Gas, Occidental, Pioneer Natural Resources, SM Energy, Union Pacific Resources Group, Unit Corp, WPX Energy, Concho Energy, Cimarex Energy, ConocoPhillips, Energen, EOG Resources, Kodiak Oil and Gas, Marathon Oil, Murphy Oil, Newfield Exploration, Noble Energy, QEP Resources, Range Resources, Southwest Energy     Although only four of these companies have spun out Midstream MLPs, virtually all of them are counterparties to MLP midstream agreements, which means that they may have to reduce spending in order to maintain their investment grade status, which will impact future volumes and commitments.  Banks with energy loans have been less aggressive with their E&P counterparties by way of the semi annual redeterminations and price deck updates.  According to a September survey from Haynes & Boone prior to the Fall redeterminations, producers expected a 39% reduction in their borrowing capacity, but public producers have reported only a 9% reduction so far, according to Enercom.  According to a recent WSJ story, as of November, the amount of loans now classified as "substandard, doubtful or loss", has increased from $6.9B to $34.2B over the past year.  The banks are in a position to call collateral, where the public credit markets will just restrict access to additional public debt.  Given the data, there is a wide spectrum of outcomes if energy prices do not improve, and a lower for longer outlook suggests a When not If scenario for reduced capital leading to lower production.   Although 2015 DCF has held up, it is the future expectations that has crushed units over the past 12 months, so lets now dive deeper into how these conditions may impact midstream Distributable Cash Flows and their ability to maintain and grow their distributions:     Midstream Contracts Re-negotiations and Cancellations:  This is the area of greatest speculation given the potential for significant cash constraints placed upon producers in 2016.  The location of the assets along with the specific terms of the contracts, which are closely guarded by midstream operators, are what leads to a high level of uncertainty as to what may transpire. In an recent and insightful interview conducted by Deutsche Bank's Kristina Kazarian with J.P Hanson, MD of Houlihan Lokey's Financial Restructuring Group, Hanson outlined the steps related to midstream agreement where the counter party has declared bankruptcy.   The first point to note is that any impact from an E&P bankruptcy will take several months, or longer, to show up in midstream DCF, due to the length of the process.  Such a delay provides MLP management teams with cover to delay any change to guidance or distributions, until the final impact is known.  Hanson highlighted the bankruptcy case of Quicksilver, which had long haul transportation agreement with EnLink and Targa, where midstream contracts were rejected.  Hanson further explains that each type of service will determine how it will be handled in bankruptcy.  A Gathering, Processing and Transmission agreement will be a critical service necessary for the producer to earn revenues, but a long haul pipeline agreement could be canceled, or more easily renegotiated, if alternative routes are available.  In the case of Quicksilver Resources, an E&P which declared bankruptcy in March, Crestwood provides GPT services, which are in the process of being renegotiated, according to Hanson.  Midstream providers may not be able to accommodate all of the requested re-negotiations, so it is likely that the initial contracts that they do modify may be the most significant and do not suggest that other producers will be able to realize the same terms.     Significant Reductions in Volumes:  The market has been fixated on rig counts as the proxy for future production, but the increasing efficiency and the high number of Drilled but Uncompleted Wells, has made forecasting perilous for most who have offered specific numbers.  While the EIA has a lagging process to provide actual and estimated production data, the market still relies on their metrics to gauge market fundamentals.  If you were to consider only the EIA data as the proxy for 2016 production, the January crude numbers do not look that scary, with January only a 2.3% drop from December production.   The EIA has forecasted that US production will average 8.8MM bpd in 2016, vs 9.3MM realized in 2015, although others have forecasted 8.2MM - 8.4MM with the current price deck.  If we assume all of this EIA forecasted reduction will be in the below basins, production will decline by 10% across the board, with Bakken and Eagle Ford realizing the greatest declines.  However, North Dakota's Mineral Resources Department does not expect Bakken production to fall below 1MM bpd, suggesting that Shale volume declines could be less than 10%.  What neither estimate properly forecasts is the capital constraints that some producers may face, which may impact operations, regardless of historical productivity figures.         E&P Bankruptcy:  Clearly, public E&P bankruptcy announcements are increasing with more to follow, impacting investor sentiment.  The filing itself is a concern, but whether the company is reorganized, and with what modified contract terms, is what is of most importance to midstream MLP's.  The majority of units provide a summary of their counter party credit ratings, which gives investor a starting point to assess risk.  However, the pain of contract re-negotiations can be applied even by producers who have not yet fallen into bankruptcy, as indicated by the recent Chesapeake re-negotiation with Williams Partners.  Below is the list of companies which have filed to date, several of which are public companies.  Regardless of how the bankruptcies are handled, an increasing rate will further impact sentiment, for which the impact of any such changes will lag several months, or longer, before they are reported.            MLP Management Comments:  Management teams are in a tough position, as they are trying to monitor and assess the impact of the above factors, and provide proper guidance for 2016.  Since Kinder Morgan's about face on their dividend policy, which was not based on any significant change to the cash flows, nonetheless, the market has discounted any statements from MLP management regarding current or future distribution policies.  The following are a few recent management comments intended to increase unitholder confidence:    NGL Energy Partners:  On 12/11, the company released a statement that they are not "contemplating" a distribution cut in 2016, and expect 1.2x - 1.4x coverage in 2017, and will not need to issue public units to fund their $350-$400MM growth capex.  NGL is down -11% since the announcement will a yield of 29.73%.  So you can receive 60% of your principal in distributions by 2017 if management is correct with their outlook.   Plains All American:  On 12/8, the company released a presentation deck which stated that no 2016 distribution reduction is forecasted, given their 2016 capital needs and positive fundamental outlook for 2017.  PAA is up 3.8% since the presentation     In summary, we have a market trading on the belief that lower for longer energy prices will have a significant impact on midstream volumes across all MLP's, and we have MLP management teams, and fund sponsors, pointing out their EBITDA and DCF strength over the past 12 months, and the inventory of new demand projects to be delivered over the next 12-18 months. What we should recognize is that the last 12 months should not relied upon for performance going forward, simply because the variables are very different, and the predictive models are unproven.     So how should MLP investors make decisions going forward?  The first thing is to make sure you fully understand the assets, DCF coverage ratios, leverage, sponsor, cash flows, credit rating and 2016 growth capital expenditures for each unit that you own.  For those who own funds, review the top 10 holdings using the same criteria, and make sure you are comfortable that the fund manager is earning their fee's by avoiding any units which may announce a distribution cut.  Large MLP Fund managers are in a tough spot as there are only so many large cap units to deploy capital with sufficient liquidity, and that safety list of units is getting smaller.   MLPData will be updating the metrics and tables in this report to keep our subscribers up to date.         Follow Us on Twitter for breaking News and Analysis   Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC                

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    Dec 19, 2015

    Kayne Cuts, Blames Kinder

    On Friday, Kayne Anderson held a conference call to address recent market events and the impact on their funds.  Kayne announced reduced distributions across all their CEF funds in order to achieve 1.0x coverage, the percentage cuts were as follows:   KYN    -16% KYE     -32% KMF    -12% KED     - 9%   Kayne outlined the following factors an…

    On Friday, Kayne Anderson held a conference call to address recent market events and the impact on their funds.  Kayne announced reduced distributions across all their CEF funds in order to achieve 1.0x coverage, the percentage cuts were as follows:   KYN    -16% KYE     -32% KMF    -12% KED     - 9%   Kayne outlined the following factors and observations for the dividend cuts:   M&A which reduced portfolio weighted yield and income Reduced Leverage from MLP unit declines Kayne reduced Kinder Morgan’s holdings by $723MM over the past year, but still held a very large position DO NOT EXPECT to see any additional distribution cuts in their portfolios, but they have projected a cut in one of their holdings Expect Many Unit to stop or slow growth in 2016   Below is the latest holdings for KYN as of 10/31, and the names in yellow are midstream units which have elevated yield levels, which Kayne is expecting not to cut distributions IF their current portfolio is similar to what has been reported as per below.       In a move to show their support, Kayne Management will invest $14MM of their after tax management fees back into the funds, at the higher of the NAV or Closing price.  Since June, the management team has invested $42MM in their funds.    Kayne pointed out that they did not agree with Kinder’s actions, and thought they had better options.  The Moody’s negative outlook change came as a shock to Kinder’s management.  Kayne believes that the damage was self-inflicted, and Kinder could have either sold assets or issued additional preferred shares, and should kept their dividend flat.    Kayne points out that they properly understood the risks of their KMI holdings and they exercised their judgment of what the management should do.  They need to rely on Management’s comments, and in the case of Kinder, they communicated a growth plan just prior to the cut.    So will other management teams follow Kinder’s cut?  Those who have have realized a negative incentive for management teams to do so.  Teekay also followed the path of Kinder this past week, and have realized the same results when they chose to reduce the distribution to fund new capex growth.   Kayne believes the MLP model will survive and thrive.  Over the past few years, MLP’s have expected capital markets to be available for long term funding, and some management teams committed to multi year growth plans.   This crisis will force management teams to define projects with a 12-18 month outlook using their balance sheets.   Kayne expects prices to rebound in the second half and could end the year between $55 and $60.  Gas will have a difficult time trading about $3 in the near future.  What if the forecast is wrong?  Only 4 basins in the US have a breakeven price of below $60 bbl, which means that the issue is not IF but WHEN.   If prices stay in their current range of $40, US production could fall to 8.2MM bpd (vs 9.1MM current), so the portfolio strategy is to be defensive in case the rebound process takes longer and focus on assets where production cuts may be less significant.  Kayne suggests a lower for longer scenario will not cripple MLP midstream assets.  Historically, it was easier to model MLP cash flows and the expected distribution growth rates.  But it has become more difficult to assess how management teams will address their balance sheets.   Kayne finds it unbelievable that MLP’s have been hit harder than Oil Field Services companies.     On the final note, Kayne noted that this has been one of their best years for raising Institutional capital for MLP's.  

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    Dec 19, 2015

    MLP Bond Yields On the Move

    With MLP units reeling from lower crude prices and distribution cuts, bond investors have been trading  some midstream credits lower.  The below table provides Week to Week comparisons, with Targa and Summit Midstream realizing the greatest increase in yield from the beginning of December      

    With MLP units reeling from lower crude prices and distribution cuts, bond investors have been trading  some midstream credits lower.  The below table provides Week to Week comparisons, with Targa and Summit Midstream realizing the greatest increase in yield from the beginning of December      

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    Dec 18, 2015

    MLP Short Interest

    The below table provides the change in short interest and the corresponding Week to Date and Month to Date performance.  Despite the reduction of 6MM shares in ETE's short interest, the stock is down over -41% for the month.    

    The below table provides the change in short interest and the corresponding Week to Date and Month to Date performance.  Despite the reduction of 6MM shares in ETE's short interest, the stock is down over -41% for the month.    

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    Dec 18, 2015

    Closed End Fund Short Interest

    Master Limited Partnership Funds have been getting crushed as of late as funds reduce leverage as well as the rising level of short interest.  The Goldman Sachs MLP and Energy Renaissance Fund is leading the list with almost 1MM of short interest.  The fund's top ten holdings consist of high yielding low leverage names, including Teekay, which redu…

    Master Limited Partnership Funds have been getting crushed as of late as funds reduce leverage as well as the rising level of short interest.  The Goldman Sachs MLP and Energy Renaissance Fund is leading the list with almost 1MM of short interest.  The fund's top ten holdings consist of high yielding low leverage names, including Teekay, which reduced their dividend this past week by 80%  

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    Dec 13, 2015

    MLP Weekly: Can Mgt Credibility Withstand Low Energy Prices?

    This past week provided the market with a seminal event; Kinder Morgan's decision to cut their dividend by 75% after the equity and credit markets raised the risk premium to unbearable levels for any future offerings to fund their growth projects.  Only weeks before, Rich Kinder was still projecting 6-10% growth in their dividend for 2016.  Such a…

    This past week provided the market with a seminal event; Kinder Morgan's decision to cut their dividend by 75% after the equity and credit markets raised the risk premium to unbearable levels for any future offerings to fund their growth projects.  Only weeks before, Rich Kinder was still projecting 6-10% growth in their dividend for 2016.  Such a reversal has sparked fear across the midstream sector that Management teams may not be able to confidently provide forward guidance. Also, Credit rating agencies may be recalibrating their models which could lead to further downgrades, and those units which need access to capital for projects already committed and in development, will be hard pressed to make these projects accretive.   Investors who are relying on the Sell Side analysts have likely observed the cycle of Price target cuts, which almost always follow a company disclosure of modified guidance, leaving investors further isolated to reach their own conclusions on distribution safety.   For those who are able to properly assess the current cash flows and evaluate Management's guidance, there remains double digit returns as investors continue to sell units across the spectrum.  The fundamental performance of midstream assets have shown that they have been resilient in the face of a dramatic decline in energy prices, but the funding mechanism is of increasing risk, particularly for those which need to bridge a Distributable Cash Flow coverage gap in advance of new projects in development which have yet to generate cash flow.     MLP Investors have long relied upon Management's guidance, at least over the short term, as a key indicator for their investment decisions.  With Kinder's about face, such guidance is no longer a given, even if the company has an unblemished record of accurate guidance in the past.  The current energy cycle is unlike any other in the MLP era, namely a supply driven imbalance which shows few signs of abating.   MLP Management teams are issuing statements to assure investors that they will not be following Kinder Morgan's path, but the market remains skeptical.   Case in point, NGL Energy Partners, yielding 26.42%, announced  Friday that they are not contemplating a distribution cut for 2016, and expects 2017 coverage to range from 1.2x to 1.4x, and will require $350-400MM in capex to complete their growth projects.  Rather than moving higher on the news, NGL traded down -7.36%, as investors were likely looking for more certainty around the capex financing, and generally did not put much faith in the word contemplating.   Weekly Events   Energy Capital Partners, which owns 43.8% of the units and Incentive Distribution Rights,  announced that they have concluded their strategic review for Summit Midstream Partners, deciding to stay their present course.  ECP announced that 2016 drop downs will not require any issuance of public units, and will acquire up to $100MM of public units in the open market over the next 12 months.  EQT Midstream Partners announced their 2016 operational guidance, including an EBITDA range of $530MM to $550MM (a 22% increase over 2015)  with 80% of revenues derived from long term capacity reservation fees.   Growth capital in 2016 is expected to be $715MM with no indication of  how the funds will be raised.   Units with low coverage, high leverage and significant 2016 capital commitments, where highlighted this week by a few analysts, sending those units lower.  In an effort to further stem their increasing cost of capital, Energy Transfer Partners changed their DRIP discount from 5% to 1% effective immediately.  Wells Fargo held their annual Energy Symposium Conference this past week, with a few takeaway notes outlined here         Funds Flows   As expected, Mutual Fund investors have accelerated their exit of MLP mutual funds due to market performance.  Weekly outflows exceeded $330MM, which is the highest level since MLPData began tracking flows in 2013.   During the last two weeks of 2014, fund flows increased by $380MM when the benchmark index was 44% year over year.             Alerian Index Waivers   In order to avoid a significant reconstituention of the index, Alerian waived their rule to exclude companies with an adjusted market capitalization of less than $500MM.  We suspect that Alerian may also need deal with another rule, which requires that an MLP maintain or grow their distributions quarter over quarter for at least one of the trailing two quarters on a declared basis.   Below are the the constituent units of the Alerian MLP Index which have coverage ratios at or below 1.10x for the trailing twelve months.         Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Dec 10, 2015

    Kinder Cuts

      After a recent acquisition which triggered a Moody’s downgrade, Kinder Morgan announced on Tuesday that they will be reducing their dividend from $2.04 to $0.50 per year, starting with their February 2016 payment.   After the Tuesday evening announcement, MLP investors were feeling nervous about how this news may impact other highly leveraged Mi…

      After a recent acquisition which triggered a Moody’s downgrade, Kinder Morgan announced on Tuesday that they will be reducing their dividend from $2.04 to $0.50 per year, starting with their February 2016 payment.   After the Tuesday evening announcement, MLP investors were feeling nervous about how this news may impact other highly leveraged Midstream units.  Prior to market open on Wednesday, Management held a conference call where Rich Kinder, who as recently as October 21st, reaffirmed their 6-10% dividend growth guidance, offered the following comments:       - Despite the weakness in the energy value chain, Kinder expects to achieve 95% of their forecasted EBITDA for 2015.  The $5B DCF 2016 forecast is based upon the current energy environment   - The downgrade was unexpected, as Rating agencies had not previously included proportional debt from unconsolidated joint ventures, which is what triggered the negative outlook change from Moody’s after the announced NGPL acquisition the week prior   - With maintaining an Investment Grade credit the highest priority, Kinder Morgan had to make a decision to reduce growth projects for 2016 forward, in which they could maintain the dividend with perhaps some growth.  They chose not to reduce growth investments, but rather use their cash flows to fund their 2016 capex budget, and improve the balance sheet.     - As a result of the above, Rich Kinder, who made the point to reminder investors that Management, which owns 1/6th of the equity will feel equal short term pain from the new dividend policy, summarized Kinder Morgan’s position with these four points   Expect to have no need to access equity market in foreseeable future Substantially reduce need for debt Expect to maintain Investment Grade credit Expect to grow DCF   During the Q&A, the Management team was certainly humbled by the recent market events, and mentioned they set the new dividend to be slightly higher than the S&P yield, which they thought would continue to attract income focused funds.  CFO Kim Dang suggested that when using Distributable Cash Flow per unit as the peer metric, Kinder will be trading at a 7.0x multiple, vs the market average of 10-11x, implying that there is the potential for share appreciation as the investor base transitions from Income to Value focused investors.  As the chart below shows, Income focused retail investors will continue to sell their shares       On Wednesday, the Master Limited Partnership benchmark index traded higher 7.6%, as the market likely focused on the health of Kinder’s EBITDA outlook ($7.8B 8% YoY growth) and the assumption that other midstream providers may have better 2016 cash flows than expected.  MLP management teams also will now have the benefit of understanding how Moody’s may evaluate future transactions, reducing the risk of creating a similar set of circumstances which forced Kinder to take action.  Kinder Morgan's precipitous fall was triggered by an acquisition and not a dramatic change to their expected cash flows, which should provide some relief to investors, at least for the time being.       Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below

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    Dec 10, 2015

    Summary of the 14th Annual Wells Fargo Energy Symposium

    December 8 & 9, NYC 1,937 registered participants, up from 1,741 last year and 1,567 in 2013   Overview Given the timing for KMI’s dividend cut announced on December 8th, and their conference call on the 9th, much of the discussion was around MLP management teams strongly affirming their intentions to maintain distributions, while investors…

    December 8 & 9, NYC 1,937 registered participants, up from 1,741 last year and 1,567 in 2013   Overview Given the timing for KMI’s dividend cut announced on December 8th, and their conference call on the 9th, much of the discussion was around MLP management teams strongly affirming their intentions to maintain distributions, while investors seemed doubtful.  KMI was not present at conference.   Management teams were asked why they should not cut distributions and self-fund, instead of accessing traditional capital markets.   Most of the teams responded that they were managing growth projects and capital management projects with higher ROI hurdle rates, and would explore other alternatives if necessary   Other financing options or hybrid securities discussed for 2016 include: Convertible preferred and preferred equity Private investment in public equities (PIPES) Sponsors taking back units Asset Sales, capex reductions, sponsor support   EEP, ETP, PAA were adamant that they are not cutting distributions.   Other general topics:   The market is valuing coverage and distributions stability over growth now, making it necessary for management teams to reassess capital growth needs.   Investors are focused on leverage metrics, including consolidated leverage at GP/LP.   Investors are generally very pessimistic about energy fundamentals and capital markets access, while management teams seem to be taking longer term perspectives and are not looking to make any major changes based on short-term dislocation in stock prices.   Investor questions focused on the quality of cash flows:  amounts from fee-based backed by take-or-pay contracts and/or minimum volume commitments, versus volume sensitive fee-based cash flow, along with Pay-on-Production (POP) - - - along with the ability of customers to re-negotiate contracts.   A general theme among speakers was 2016 forecasts being pushed out in to 2017 for many growth plans, with supply/demand equilibrium being reached for oil prices.    Sound bites: Operating margins felt by crude pipeline operators in mature basins, due to “heavy excess capacity” with recent build-outs overshooting demand, while trucking fleets dropped prices…”never seen that before”.    PAA/PAGP CEO Greg Armstrong   “With a lifetime perspective in energy…this operating environment is like 1986, not ’08 or ’98 Russian collapse, but ’08!   OPEC totally controlling again, through dumping to punish other producers.”   Sylvester Johnson, CEO, Carrizo Oil & Gas (not an MLP) By the way, the price of oil fell in 1986 from $27 to below $10, an equivalent CPI value adjusted for 2015 is from $59 to below $22!     Commodity Forecasts provided by Rating Agencies and guest speaker Ponderosa Advisors                                                               2016                                                          2017    Oil /Bbl Gas /MMBtu Oil /Bbl Gas /MMBtu Fitch $48 $2.75 $55 $3.00 Moodys $45 $3.00 $50 $3.25 S&P $45 $3.00 $50 $3.25 Ponderosa $52 $2.86 $56 $3.25       Growth In Global Crude oil Supplies Is Outpacing Demand Growth     Source:  Ponderosa Advisors

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    Dec 09, 2015

    MLP Short Interest

    Since the Moody's downgrade of Kinder Morgan, and their subsequent distribution announcement to cut the annual dividend from $2.04 to $0.50 commencing in February 2016, Master Limited Partnerships have traded with significant volatility.  Below is the latest short interest ranking by Current Short Interest            

    Since the Moody's downgrade of Kinder Morgan, and their subsequent distribution announcement to cut the annual dividend from $2.04 to $0.50 commencing in February 2016, Master Limited Partnerships have traded with significant volatility.  Below is the latest short interest ranking by Current Short Interest            

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    Dec 09, 2015

    MLP Closed End Fund Short Interest

    After a volatile week, the below is the current Short Interest shares outstanding for the MLPData universe of Closed End Funds  

    After a volatile week, the below is the current Short Interest shares outstanding for the MLPData universe of Closed End Funds  

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    Dec 06, 2015

    MLP Weekly: Spark ignites MLP Exodus

    The past 18 months have been a very challenging time for those exposed to energy Master Limited Partnership, as the benchmark index has lost nearly -47% during this period and the near term looks rocky at best.  The obvious concerns about weak energy prices leading to shale productions declines in 2016 and beyond, coupled with high leverage, have s…

    The past 18 months have been a very challenging time for those exposed to energy Master Limited Partnership, as the benchmark index has lost nearly -47% during this period and the near term looks rocky at best.  The obvious concerns about weak energy prices leading to shale productions declines in 2016 and beyond, coupled with high leverage, have sharply increased the cost of capital for MLP's to grow their asset base and distributions.  This week's -10.88% decline was sparked by Kinder Morgan's Monday announcement that they have agreed to increase their ownership stake in Natural Gas Pipeline Company of America, for $136MM in cash, along with the assumption of $1.5B of new debt.  While it is not clear yet why Kinder decided to complete this acquisition now, Moody's quickly followed up with an outlook change from Stable to Negative, indicating that they expect Kinder will need to inject cash into NGPC, likely by issuing debt.  The previous fears about Kinder Morgan's excessive leverage, thin coverage ratios, and high dividend growth targets, were stoked as investors dumped their shares.  By Friday, Kinder's Investor Relation's department thought it had the answer to stabilize the market, by telling investors it would remain investment grade (meaning address the risk) and expect the $5B of 2016 EBITDA to fund the 6 - 10% dividend growth.  They took one more step, which was to suggest that the 2016 cash flows earmarked for dividend growth, could be used to fund their 2016 capital requirements, suggesting a change to their dividend growth policy to something in between 0% and 6%.  After this release, KMI slide further by -12.51% for the day, and a whopping -29.03% decline for the week.  The board is expected to update their dividend policy this week and the expected change should be announced over the next several days.  It is very likely that the market will react negatively to whatever action they take, and will ripple across the large cap MLP universe, regardless of whether the circumstances are similar.  MLP Management teams are earning their salaries and increasingly worthless options trying to determine what financial strategy may settle the markets.  Up to this point, transparency (Plains All American), acquisitions (Energy Transfer, MPLX and Markwest, Targa on Targa), private financing (Valero) have done little to stem investor sentiment that some units will not be able to sustain their distributions if organic volumes, and margins, decline by 10-15% and the cost of capital remains at present levels.  Add to this the expected news that OPEC did not agree even on a  production cap, let alone a reduction, further increasing speculation that some MLP's may be very challenged to maintain distributions if EBITDA is reduced from lower US production volumes.   If you are an MLP advisor or investor, now is the time that you must be fully informed about Distributable Cash Flow components and the LP Distribution Coverage ratios.  Distributions Yields, historical spreads, growth rates and other MLP centric metrics should be secondary to the sources and uses of cash flows.  With the exception of growth rates associated with the large sponsor drop downs, the analyst projected growth rates on the back of Q3 earnings may also be less reliable as a result of higher equity issuance costs.     Weekly Events   The week started off with a massive, and upsized, 71.5MM share issuance from Columbia Pipeline Group, which raised $1.2B of new capital at an 8% discount,  in part to fund the 2016 capital needs of Capital Pipeline Partners.  CPGX traded above the issuance price of $17.50 by the end of the week, while CPPL fell -10.34%.  Next up was the MPLX merger vote for MarketWest Energy Partners, which was approved on Tuesday with 80% of unitholders approving the deal.  MPLX fell -11.09% on the deal being consummated, and continued to slide -13% further as the follow up Analyst Day did not provide much transparency into whether EBITDA would need to be adjusted down or specifics about the funding approach for the $1.7B of 2016 budgeted capital expenditures.  Marathon's Management did say that "MLP yields are a game changer and the MPLX yield is ridiculous based upon fundamentals."            Although there are legitimate concerns related to a few highly levered LP units with light coverage and the need to raise capital to fund 2016 and 2017 projects, the market sold off investment grade units with Sponsors who can fund their drop downs without issuance of new units.  The majority of these units also dropped by ~ -10% this past week on nothing more than they use an MLP structure, which for some was a reason to sell.         So what may be next?  Investors should brace themselves for a further decline as retail investors of 2013/2014 exit their investments with losses, Kinder's expected flat dividend policy change announcement,  lower crude prices and headlines of excessive crude supply for the next several weeks.  Once the selling abates, in January there will be attractive opportunities to apply capital towards units with a healthy balance sheet, high coverage and very attractive tax deferred yields.    Investors should be prepared to withstand the media headlines which will opine that the MLP structure is dead and that assets are in for a steep decline, as summarized in 140 characters below                 Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Dec 05, 2015

    MLP Credit Yields

    MLP equity units were crushed this week with the benchmark index down -10.88% on the fears of a credit downgrade for Kinder Morgan which may lead to a change in their dividend growth policy.  Long term debt yields were modestly changed from the beginning , but yields are trending higher for most issuers since September.  Individual benchmark bond d…

    MLP equity units were crushed this week with the benchmark index down -10.88% on the fears of a credit downgrade for Kinder Morgan which may lead to a change in their dividend growth policy.  Long term debt yields were modestly changed from the beginning , but yields are trending higher for most issuers since September.  Individual benchmark bond data can be found on the Quote and Chart pages.            

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    Dec 01, 2015

    MLP Credit Yields

      The below table provides a trending view of how creditors assess the risks associated with MLP long term debt.  Individual benchmark bond data can be found on the Quote and Chart pages.    

      The below table provides a trending view of how creditors assess the risks associated with MLP long term debt.  Individual benchmark bond data can be found on the Quote and Chart pages.    

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    Nov 29, 2015

    MLP Weekly: No Thanks

    With nearly a year passed since the Thanksgiving Crude Crash of 2014, MLP investors are still wondering about the trajectory of their midstream investments, and whether units have reached a bottom where the worst case fundamental scenario is priced into most units.  Since November 2014, MLP unit values, for both crude and gas assets, have been crus…

    With nearly a year passed since the Thanksgiving Crude Crash of 2014, MLP investors are still wondering about the trajectory of their midstream investments, and whether units have reached a bottom where the worst case fundamental scenario is priced into most units.  Since November 2014, MLP unit values, for both crude and gas assets, have been crushed as illustrated in the chart below for two of the most widely held names.  Despite the precipitous drop, at least according to the EIA , the four week average US crude production of 9.17MM barrels is still marginally higher than it was a year ago, suggesting that the market has re-priced units for lower growth which will eventually impact the market.  Yield focused investors are still receiving their distributions, but the ability to maintain and grow the distributions in light of weak energy prices has increased the yields for all units, even those without any exposure.  As a result, most investors have seen units and funds decline by -25 to -40% and it is difficult to envision a scenario in the next 24 months where those losses are fully recovered.           Once upon a time, M&A was thought to be a catalyst for units, but after three large deals (Targa buys Targa Partners (down -22.7% since 11/3 announcement) , MPLX buys MarkWest Energy Partners (down -34.72% since 7/13 announcement)  and Energy Transfer buys Williams Inc (down -0.33% since 9/28 announcement), we can dismiss this as a positive catalyst, and make the argument that such transactions have accelerated the decline of the acquired units.     At a macro level, Investors have at least three potential scenarios to ponder to assess the sentiment and direction of the market:   1.  Unit prices currently reflect a 10-15% decline in crude production volumes for 2016 as well as the higher cost of capital to fund new growth, offering an attractive entry point for new capital   2.  Unit prices are still based upon optimistic production volumes and and higher energy strip prices implying forthcoming DCF risk in 2016   3.  The opportunity for investing in Energy Infrastructure has peaked and the future has considerable risks, such as increasing rates, lower ROE, lower volumes, limited demand driven project backlogs, low energy prices,  which are unlikely to offer consistent double digit returns and will shrink the demand for packaged products and direct unit ownership     Of course, every unit owns unique assets and contracts which means that an aggregate fundamental view of the market may impact each very differently.  However, in 2015, market sentiment has punished units which have had very limited exposure to market fundamentals.  As was our view a year ago, a total return strategy will likely prevail as the best return over the next 12 month, simply because there are fewer risks, the most notable is the limited exposure to organic volume changes.    Below are the top ten midstream units, measured by Trailing Twelve Month Total Returns, which have withstood the crude crash         UNIT MOVERS   On September 8th, Chesapeake was trading at $7.67, and the company announced it had restructured their midstream agreements with Williams Partners, which had previously purchased Access Midstream Partners.  The new agreement would reduce the gathering fees by $0.20 through 2017, and $0.30 thereafter, in exchange for an increase in dedicated acreage and a minimum volume commitment of 250MM BTU's effective mid 2017.  Since the announcement, Chesapeake has seen their equity decline by 31% along with a surge in their credit yields.  The impact on the midstream agreements (which account for 26% of Williams EBITDA through Q3) from a potential restructuring is uncertain, and the market has been increasing the risk premium associated with Williams, which presently is barely able to cover their quarterly distributions.    Atlas Resource Partners announced that they have been forced by their credit agreements to reduce their distribution from $1.29 to $0.15 per annum.   Seadrill announced their Q3 earnings which confirmed their current distribution, but investors focused on the worsening condition of their sponsor, Seadrill.  MPLX moved higher ahead of their MarkWest merger vote, scheduled for 9:00AM MST on December 1st..  KNOT Offshore Partners moved higher after a Conference presentation which reinforced the available drop down inventory of shuttle tankers with long term agreements.     General Partners, which benefit from both the LP issuance of new units as well as an increase in the distribution rate, rebounded this past week with Western Gas and Plains GP leading the pack.           Premium Subscribers can access Weekly Fund Flows Here   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   Are you looking to keep track of your MLP Distributions?  Check our our Portfolio application illustrated below           Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC                          

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    Nov 26, 2015

    MLP Short Interest

      The market has reduced the short interest of Plains GP Holdings by 1.8MM shares, but has increased the short interest of Plains All American by 1.9MM units, during the same period   TOP DECREASES IN MLP SHORT INTEREST         TOP INCREASES IN MLP SHORT INTEREST                   Premium Subscribers can access Weekly Fund Flo…

      The market has reduced the short interest of Plains GP Holdings by 1.8MM shares, but has increased the short interest of Plains All American by 1.9MM units, during the same period   TOP DECREASES IN MLP SHORT INTEREST         TOP INCREASES IN MLP SHORT INTEREST                   Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 26, 2015

    MLP Closed End Fund Short Interest

    Short interest continues to increase for both Closed End Funds with various levels of liquidity.  More recently issued funds, such as DSE and NML could be targeted as investors accounts are well below their IPO price and may be of greater risk for tax loss selling         Premium Subscribers can access Weekly Fund Flows Here   Premium Subs…

    Short interest continues to increase for both Closed End Funds with various levels of liquidity.  More recently issued funds, such as DSE and NML could be targeted as investors accounts are well below their IPO price and may be of greater risk for tax loss selling         Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 22, 2015

    MLP Weekly: Waiting to Roll

    The week started off with a strong catalyst from Energy Transfer, which outlined their plans to drop assets and increase distributions without the need for public markets access to fund new LP issuance.  As a result, the Energy Transfer companies traded higher but gave back some gains after the headlines of higher supply sent crude sharply lower, d…

    The week started off with a strong catalyst from Energy Transfer, which outlined their plans to drop assets and increase distributions without the need for public markets access to fund new LP issuance.  As a result, the Energy Transfer companies traded higher but gave back some gains after the headlines of higher supply sent crude sharply lower, dropping the benchmark index -1.47% for the week and -34.57% year to date.  The market reacted more positively to the Sunoco LP transaction, perhaps because they have no energy price exposure and higher coverage than their midstream ETE family members.         That was not the only good news, MPLX decided to once again sweeten their acquisition terms for MarkWest Energy from $5.21 to $6.20 per unit in advance of the 12/1/15 vote.  The cash component was raised on November 11th, and the second one appeared to be necessary to get large fund holders to approve the agreement.    MPLX unitholders, down -46% since the announcement, are still questioning whether this deal should move forward.           So much for the good news, by mid week, the fresh estimates by IEA of almost 3 billion barrels of crude inventory, sent crude oil lower, which led to the wide republishing of the "lower for longer" slogan along with calls for $20 barrels in 2016.   Lower prices, coupled with  20-35% 2016 capex reductions and higher cost of capital, will soon lead to a more significant rollover of US crude production.  The idea that midstream take or pay contracts are protected at even 90% 2015 run rate is very much in doubt.  Indications are that midstream operators have felt the need to modify terms, while at the same time, expecting lower volumes through 2016.  Plains All American is the proxy for such risk. Management recently suggested it may need a flat distribution year in 2016 to build coverage, but will return to growth in 2017 with target coverage.  We do not know what assumptions management has made about 2016 EBITDA, and the fact they have deferred their guidance until February, suggests that 2016 could create a wider gap between Distributable Cash Flows and committed distributions.  The market certainly thinks that is the case, as Plains traded down -7.25% for week, sporting a hefty 11.72% yield, along with an increasing yield on their debt, as illustrated below.             Q3 Growth Rates   Analysts and Management teams have updated their growth rates, although investors should be weary of these estimates if commodity price volatility continues with lower trending prices. Below is the latest chart which compares the 3 Year CAGR Distribution growth rate vs the current annualized distribution rate.  Many of the dots which represent 0% growth and high yields suggest that distribution cuts or suspensions are expected in the very near term.       Fund Flows   As the 2015 tax year comes to a close in 6 weeks, we will be keeping a close watch on fund flows.  Fund investors have seen their values drop between -16% to -70% YTD for many investments which have been made over the past 2 years.  If advisors are not able to convince investors that holding is a better option to selling, the technical pressure on MLP units before year end could be significant.  This past week funds raised a net $47MM as Open End funds liquidated over -$166M from redemptions.           All 2015 Q3 Unit Metrics and Ratios are Updated   Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Nov 19, 2015

    IPO Preview: Noble Midstream Partners

    Current market conditions would suggest that an IPO of a Master Limited Partnership with a single customer might be a difficult deal to close, but lead managers Barclays, JP Morgan and Baird are planning to bring the $250MM offering of Noble Midstream Partners to market on Friday with a midpoint distribution yield of 6.25%.  The company expects 20%…

    Current market conditions would suggest that an IPO of a Master Limited Partnership with a single customer might be a difficult deal to close, but lead managers Barclays, JP Morgan and Baird are planning to bring the $250MM offering of Noble Midstream Partners to market on Friday with a midpoint distribution yield of 6.25%.  The company expects 20% of the distributions to be subject to Federal tax through 2018 and projects a narrow 1.15x Distribution Coverage ratio for 2016, generating $8.6MM of excess cash, while borrowing $42MM to fund growth capital expenditures.   The 2016 Pro Forma projects $33.6MM of EBITDA, implying a 20x multiple on the $720MM market cap.   The General Partner will receive Incentive Distribution payments which will increase to 50% once the company reaches a quarterly distribution rate of $0.46875, a 48% increase over the initial $0.3125.       ASSETS   The below table outlines the initial Colorado DJ Basin assets which are backed by dedicated Noble  acreage agreements through 2030.  Even though these are fixed fee agreements, as highlighted in the second table, the company discloses that there are no minimum volume commitments associated these with these agreements.  Such exposure presents risks to investors that a significant reduction in production will impact the ability of the company to maintain their distributions.  In 2014, Investment Grade Sponsor Noble Energy operated 9 rigs in the DJ Basin, and currently only 3 rigs are operating.  However, this Basin is Nobles lowest cost region which also offers the longest lateral lengths and has been increasing production as indicated in the DJ Performance chart below     FIXED FEE, DEDICATED ACREAGE AGREEMENTS, BUT NO MINIMUM VOLUME COMMITMENT           GROWTH   Noble Midstream Partners expects to offer a "high distribution growth profile" by way of organic volume growth and Right Of First Offer (ROFO) asset drops for which Noble Energy has JV non controlling interests.  Such drops will be financing by a combination of debt and equity issuance.  As of late, the MLP equity window for secondary issuance has been virtually closed, leading to private unit transactions to fund growth.           MARKET COMPS   Below are a few comparative units to Noble Midstream Partners, most of which have reported considerably higher distribution coverage over the past twelve months, which reduces the distribution growth risk as a result of lower EBITDA volumes.         CONCLUSION   While MLP IPO's often allow investors to realize strong distribution growth prior to reaching high split IDR overhead, the uncertainty of lower capital expenditures and production in 2017 and beyond is a risk that is not fully compensated in the midpoint yield in our view.  Syndicate buyers are likely going to sell their small allocations to a secondary market with few interested buyers given the depressed prices for high quality units with more significant  and diversified drop down EBITDA inventories.           MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units can be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC   All Data is collected and provided by MLPData LLC

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    Nov 13, 2015

    Top MLP Shorts

    As of Friday 13th, the following are the top MLP short positions, along with the Week to Date and Month to Date total returns.             MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units can be  accessed Here     Premium Sub…

    As of Friday 13th, the following are the top MLP short positions, along with the Week to Date and Month to Date total returns.             MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units can be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 13, 2015

    Credit Yield Response

    AS MLPs have weakened due to Q3 Management guidance and crude fundamentals, the below table provides a trending view of how creditors assess the risks associated with long term debt.  Individual benchmark bond data can be found on the Quote and Chart pages.         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metric…

    AS MLPs have weakened due to Q3 Management guidance and crude fundamentals, the below table provides a trending view of how creditors assess the risks associated with long term debt.  Individual benchmark bond data can be found on the Quote and Chart pages.         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units can be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 08, 2015

    MLP Weekly: Plain Pain

    73 MLPs reported their Q3 results this past week, but one changed the course of the market on Wednesday, sending the benchmark index down -1.87%.  The week started with Targa announcing the acquisition of Targa Resource Partners in all all stock, taxable transaction, which will lower their cost of capital in order to fund future capital expansion n…

    73 MLPs reported their Q3 results this past week, but one changed the course of the market on Wednesday, sending the benchmark index down -1.87%.  The week started with Targa announcing the acquisition of Targa Resource Partners in all all stock, taxable transaction, which will lower their cost of capital in order to fund future capital expansion needs. The pattern of both units selling off after announced M&A continued, with Targa Resource Corp adding 117 bps to their cost of capital as a result of the transaction by the end of week, suggesting that TRGP investors preferred the IDR model over an integrated C-Corp, and now expect lower growth ahead as a result.   The market headed lower after Plains All American CEO provided more insight into the state of the crude midstream market.  As was the case on August 4th, CEO Greg Armstrong inferred that 2016 might be a flat distribution year due in part to excessive crude capacity, which was compressing margins, and highly uncertain production expectations.  On November 3rd, Plains chose not to provide 2016 Guidance as they have in the past, and instead deferred their outlook until February 2016.   These comments sent Plains  down -10.34% for the week, which is 20% lower than the price just after similar comments from August.       After the Plains Q3 Call, the market reversed from a +4.25% gain to a -1.97% loss by the end of the week, as large cap units traded lower.       Q3 Earnings Calls   As midstream producers report their Q3 volumes, we have been looking for evidence of the rollover across the pipeline network, which appears to be increasing volumes, either at the expense of Crude By Rail, or from an increase in production.  Below are the quarterly Transportation Volumes for Plains All American.  Transportation volumes represent crude and NGL which are transported over pipelines, gathering systems, trucks and barges       Despite the marginally higher volumes, Transportation EBITDA has been falling and is nearly -13% below Management's Guidance from Q1 2014       Here are a few other takeaways from the Q3 calls   On Alternative Financing:  Energy Transfer does not indicate any new financing vehicles are being considered to fund the $6B of expected 2016 capex.     On Customer Contracts:  Energy Transfer's CFO stated "we are renegotiation agreements which end in 3-4 years, and extending to 10 years with firm demand charges and fee based pricing"   On Excess Capacity:  Energy Transfer 's CEO affirms "No Question that certain areas are overbuilt, such as Barnett shale" ETP Management reaffirms their backlog is based on thrid party demand fee contracts with 10, 15 and 20 year terms"  PAA CEO Comments "We have alot of excess capacity.  We are certainly overbuilt right now, We have unused capacity and capital spend without any revenue"   On Asset Valuations:  Magellan's CEO commented "the recent acquisition opportunities we have looked at continue to surprise us as to what the bid prices have been"   On Targa's Price Drop after the announced Acquisition: "We do not watch the market tickers and are focused on long term performance"   On Crude by Rail:  Plains CEO commented "we originally forecasted 290,000bpd, and we have lowered to 185,000bpd, all of which is contracted under Minimum Volume Commitments"   On The outlook for Crude: Plains CEO Commented "we have about 100MM barrels of crude inventory above last year's inventory, which was a normal year.  It you spread that over 365 days, it is 270,000 barrels per day.  We should expect to see equilibrium in latter half of 2016 or early 2017"   Targa Acquisition of LP   Tallgrass Energy Partners Growth   Plains All American Earnings Summary     Midstream Yield to Coverage   With investors opting for higher coverage units to protect against future cash flow shortfalls, the below chart plots our midstream universe with the most recent Trailing Twelve Month Coverage ratio against the current annualized yield as of the Friday close.  Premium Subscribers can drill down and customize the charts constituents.         Distribution Scorecard   This past week, there were 4 distribution increases, 3 no change, and 4 decreases announced             MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units can be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 05, 2015

    Quick Look: Q3 Tallgrass Partners

    On Wednesday, November 4th Tallgrass Energy Partners released their Q3 earnings and provided management comments.  The Q3 results were reported after Plains All American, which disappointed the market with a flat outlook for 2016 and comments about excess capacity for crude logistics..  Tallgrass Energy provided the market with the following detail…

    On Wednesday, November 4th Tallgrass Energy Partners released their Q3 earnings and provided management comments.  The Q3 results were reported after Plains All American, which disappointed the market with a flat outlook for 2016 and comments about excess capacity for crude logistics..  Tallgrass Energy provided the market with the following details   -  Management has a long term outlook, no just the 90 day cycle which investors focus -  Strong performance in Crude Logistics from Pony Express from higher transportation revenues on 10% higher volumes, trending higher as of November -  Shipper Deficiencies of $8.3MM, (25k barrels per day lower than committed volumes) -  $150mm of liquidity available from credit revolver with a low 2.6x Debt/EBITDA ratio -  Ready for a bond offering, but awaiting attractive terms -  Management expects to exceed EBITDA, DCF and Growth Estimates set at the beginning of 2015     QUESTIONS AND ANSWERS   On Distribution Growth going forward?  Management expects 20% through 2017, but cautions investor that growth will not be linear   On Volume Declines?  Management has not seen any indications of decline across their four supply points.  Numerous wells drilled but uncompleted and production continues to flow   On REX Contract Rollovers?  It is contractually full and is adding new capacity for next year.  Contracts roll off in 2019 and contract re-negotiations will start in 2018, and management expects all capacity to be contracted, but rates rates are uncertain   On Financing and Drops?  Final Pony Express drop will be made likely in Q1 2016 and management believes they have debt and revolver alternatives and have been approached for equity issuance.   On M&A Options?  Bid Ask spread is still too wide, but nearing potential acquisitions, and may announce in next quarter or two   On Shippers reselling excess Capacity?  Pony is running at full capacity in November, despite MVC deficiencies which are very short term in nature.  If it was happening, TEP would not be aware of such arrangements.     Is Tallgrass Exposed to Commodity Prices?  Only 2% of their EBITDA is exposed via processing contracts.  Contracts have a demand and commodity fee component, the former is paid regardless of volumes       MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units ca be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 04, 2015

    Quick Look: Mgt Speaks, Q3 Plains All American

    Plains All American reported their Q3 results on Tuesday (11/3) along with lower guidance for 2015.  Below are a few of the highlights:   -  Q3 Distributable Cash Flows was only .78x and .93x over the trailing twelve months -  Q4  midpoint DCF is expected to be $405M, implying Q4 DCF coverage of .93x -  Lowered midpoint 2015 EBITDA by $72MM to…

    Plains All American reported their Q3 results on Tuesday (11/3) along with lower guidance for 2015.  Below are a few of the highlights:   -  Q3 Distributable Cash Flows was only .78x and .93x over the trailing twelve months -  Q4  midpoint DCF is expected to be $405M, implying Q4 DCF coverage of .93x -  Lowered midpoint 2015 EBITDA by $72MM to $1950MM -  Line 901 Incident resulted in a $65MM charge and $25MM of additional maintenance capex   During their Q2 Earnings Call, Greg Armstrong hinted at the scenario of keeping distributions flat in 2016 to maintain 1.0x coverage, and renew growth in 2017 as new projects come online. After the comments, PAA dropped 16% and is trading -5.6% lower as of Tuesday's close.     On the 11/4 Q3, Management made the following comments: -  Q3 in line, but Negative transportation impacts are accelerating in Q4 2014 -  Shippers are overcommited on their volume guarantees,  -  Lower crude volumes from Permian Basin -  No ATM issuance since Jan 2015 -  Will need 2016 Equity, but will be less than 2015 $1B -  Highly Cautious in 2016, Bullish in 2017+ long term -  Management defers to Feb 2016 Guidance due to limited E&P visibility -  Looking to reduce 2016 Capex, 25-30% lower than 2015 -  Mgt implies less than 1.0x coverage and flat distributions for 2016       DISTRIBUTION AND YIELD HISTORY      DISTRIBUTABLE CASH FLOW - Q3     MANAGEMENT GUIDANCE 2015 AS OF Q3         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units ca be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Nov 03, 2015

    Quick Look: Targa Corp Acquires Targa Partners

    In what may become a more familiar story, Targa Resource Corp has announced that it will acquire the remaining units of Targa Resoure Partners in order to improve distribution coverage for the combined entity.  Here are the highlights of the transactions   -  Targa Corp (TRGP) will issue .62 shares for each unit of Targa Resource Partners (NGLS),…

    In what may become a more familiar story, Targa Resource Corp has announced that it will acquire the remaining units of Targa Resoure Partners in order to improve distribution coverage for the combined entity.  Here are the highlights of the transactions   -  Targa Corp (TRGP) will issue .62 shares for each unit of Targa Resource Partners (NGLS), an 18% premium over 11/2 close   -  Taxable Transaction to NGLS unit holders   -  15% Dividend Growth Expected in 2016, 10% growth from 2015 to 2018    -    1.1x - 1.2x Dividend Coverage   -   $600MM of 2016 Capex   The main driver to the transaction is the elimination of the Incentive Distribution Rights paid from NGLS to TRGP, which $161MM over the  past twelve months         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units ca be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData

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    Nov 01, 2015

    MLP Weekly: Not So Scary

    As Q3 earning calls ramp up, the benchmark index gained 1.92% as large cap units rallied back after Enterprise Products reported relatively healthy volumes, EBITDA and coverage for the quarter.  However, some units are struggling, even those without exposure to oil and gas.  This past week, variable pay CVR Partners, which owns fertilizer productio…

    As Q3 earning calls ramp up, the benchmark index gained 1.92% as large cap units rallied back after Enterprise Products reported relatively healthy volumes, EBITDA and coverage for the quarter.  However, some units are struggling, even those without exposure to oil and gas.  This past week, variable pay CVR Partners, which owns fertilizer production plants, announced that they would not be making a Q3 distribution due to a supplier issue which cut their expected production.  Other units, such as High Crush Partner and Emerge Energy, announced they would not make a Q3 distribution as frac sand prices dropped 30%, and have further to go in Q4, which has dramatically changed the valuation model for units where cash flows are not sufficient to support distributions.  In our view, some of these MLPs should not be, creating headlines which impact investor sentiment for Master Limited Partnerships.  Clearly the fundamentals are challenging for most units, but financial media continues to use these MLP distribution suspensions as evidence of higher risk, casting concerns over the broad set of MLP assets.   For those Midstream units which did report their Q3 results this past week, the results were Not So Scary, and units responded to better than expected fundamentals and capital funding approaches of some units which will limit their need to access the public equity markets  Below are a subset of units which reported this week.  Subscribers can develop customized Watch Lists to monitor performance       Enterprise Products Partners   As the industry bellweather, investors look to EPD for insights into market supply and demand, given their broad set of diverse and integrated gas and liquids assets.  Here are a few highlights from the Q3 earnings call:   -  Mgt comments "We see alot of opportunities in this environment just as we have in other periods when markets have been disrupted" -  $7.8B of capital projects under construction supported by long term end user agreements, which commence in 2017 -  $4.7B of available liquidity, only $68MM of ATM issuance -  2016 Growth Capex expected to range from $3.2B to $3.5B -  Developing more assets in Permian Basin, where 30% of all US rigs are deployed,  with the building of two new processing plants and takeaway expansion  -  Management does not see a fall off in 2016  NGL Volumes -  Increasing LPG Export demand from Asian Companies     Q3 Announced Distributions   This past week, 38 units reported two distributions, which consisted of 16 increases (shown below), 17 unchanged, 2 decreases and three units which are not making Q3 distributions (EMES, HCLP, UAN)         Fund Flows   Nearing year end with all funds posting double digit losses and high distribution yields, investors will be keeping a close eye on the direction of ETF and Open End fund flows, which can have a significant short term technical impact on the thinly traded MLP market.  This past week, Flows improved with ETF's adding over $150MM of new assets.  Premium subscribers have access to current and historical fund flows           MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call.  Quick Look summaries for select units ca be  accessed Here     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData

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    Oct 31, 2015

    Q3 Quick Look: Enterprise Products Partners

      On October 29th, Enterprise Products Partners held their Q3 earnings call to review the quarter's performance.  Here are a few highlights from the commentary and Q&A:   -  If EDP had maintained IDR 's since 2010, EDP would have paid  GP $6B with an implied Q3 coverage of 0.7x -  Mgt comments "We see alot of opportunities in this environme…

      On October 29th, Enterprise Products Partners held their Q3 earnings call to review the quarter's performance.  Here are a few highlights from the commentary and Q&A:   -  If EDP had maintained IDR 's since 2010, EDP would have paid  GP $6B with an implied Q3 coverage of 0.7x -  Mgt comments "We see alot of opportunities in this environment just as we have in other periods when markets have been disrupted" -  $7.8B of capital projects under construction supported by long term end user agreements, which commence in 2017 -  $4.7B of available liquidity, only $68MM of ATM issuance -  2016 Growth Capex expected to range from $3.2B to $3.5B -  Developing more assets in Permian Basin, where 30% of all US rigs are deployed,  with the building of two new processing plants and takeaway expansion  -  Management does not see a fall off in 2016  NGL Volumes -  Increasing LPG Export demand from Asian Companies -  Diversified set of assets produced higher volumes and EBITDA   Volumes       Operating Income      (     Enterprise Products Distributable Cash Flows         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPDa

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    Oct 28, 2015

    MLP Short Interest

    Below are the most recently reported changes in short interest.  Energy Transfer Equity and Cheniere had the largest absolute change.  Short interest data can be found in the Quote tab for all Master Limited Partnerships      

    Below are the most recently reported changes in short interest.  Energy Transfer Equity and Cheniere had the largest absolute change.  Short interest data can be found in the Quote tab for all Master Limited Partnerships      

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    Oct 27, 2015

    This MLP Should Not Be

    Presenting to a standing room audience at the National Association of Publically Traded Partnerships in May 2014, Hi-Crush Partners presented investors the slide below, suggesting that Take or Pay agreements would provide strong DCF growth into 2015.        Just 17 months later, Hi-Crush Partners announced the suspension of their distribution…

    Presenting to a standing room audience at the National Association of Publically Traded Partnerships in May 2014, Hi-Crush Partners presented investors the slide below, suggesting that Take or Pay agreements would provide strong DCF growth into 2015.        Just 17 months later, Hi-Crush Partners announced the suspension of their distribution due to the precipitous drop in frac sand prices in Q3, with lower prices expected in Q4, which will  further stress their debt covenants.  The company reported 3.794MM tons of sand sold, on pace to exceed the 4MM tons mentioned in 2014, but at a price point which fell from $70 to $57/ton from Q2 2014 to Q3 2015.  While no one could have predicted the current state of the industry, Investors who read the 10Q's were likely comforted by the following disclosure:     These Take or Pay agreements were not the assets investors thought they were, and when things got tough, management opted to modify these agreements to maintain good client relationships, which clearly has not protected unit holders from the destruction of both their principal and income.  For that reason alone, Hi-Crush Partners is ill suited to be a yield instrument, regardless of whether crude recovers.         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC      

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    Oct 26, 2015

    Credit Yields Down

    As unit yields moved higher this past week, the average basis on midstream credits tightened.  Charts can be found here by selecting Bond vs Distribution yields       MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flow…

    As unit yields moved higher this past week, the average basis on midstream credits tightened.  Charts can be found here by selecting Bond vs Distribution yields       MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Oct 25, 2015

    MLP Weekly: The Toll Road

    The week started off with a Wall Street Journal article reminding investors of the painful total return losses realized year to date, and Units headed further south after Kinder Morgan revealed a lower growth rate in order to maintain 1.0x coverage, stoking the fears of investors.  The benchmark index fell -6.09% for the week, giving back the gains…

    The week started off with a Wall Street Journal article reminding investors of the painful total return losses realized year to date, and Units headed further south after Kinder Morgan revealed a lower growth rate in order to maintain 1.0x coverage, stoking the fears of investors.  The benchmark index fell -6.09% for the week, giving back the gains from the last 2 weeks.  Although no longer an MLP, Kinder Morgan has the same fear factor associated with Master Limited Partnerships, but with supposedly a more sophisticated investor base who are less spooked by technical movements.  Rich Kinder reiterated his view that KMI is a Toll Road Business, however, even a toll road suffers when the price of gasoline increases, as drivers reduce the amount of miles driven and tolls paid.  Midstream assets are very diverse, and some clearly have greater exposure to regional volume reductions, and others do not.  This week, all midstream units were punished, even those with growing volumes, such as EQT Midstream, which reported strong growth and a healthy balance sheet..   Below are the segment earnings results reported by Kinder, which is showing the the impact of the C02 segment on their decision to reduce the 2016 growth rate from 10% to 6%.  Here are some more notes from Kinder's earnings call       Kinder's disclosure of lower growth weighed on the rest of the market, particularly for units which need to access the public markets to support their growth plans.  Kinder disclosed a new financing vehicle that will provide them with funding through at least mid 2016, although no details were provided       EQT Midstream also reported their results on Thursday, reaffirming a 20% distribution growth rate through 2017 with a very healthy 1.63x DCF coverage along with a 1.29x Operating Cash flow coverage.  More details on EQM's Q3 Earnings can be found here.       Announced Q3 Distributions   This past week, 41 companies announced their distribution for Q3 performance, consisting of 27 increases over the previous quarter, 13 flat, and 2 reductions.  Below is the list of units which increased their distributions, we will be analyzing the coverage ratios when they are reported during the Q3 earnings call to better assess the risk of any future change in the distribution growth rates.       MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Oct 22, 2015

    Q3 Quick Look: EQT Midstream Partners

    Prior to market open on Thursday, October 22nd, EQT Midstream announced the following results     -  Reiterate 20% Distribution Growth through 2017 -  82% of revenues generated from firm reservation fees -  1.63x Q3 Coverage on Declared Q3 Distributions, 1.75x TTM -  Operating Cash Flow coverage 1.29x -  Volume increases in Transmission and…

    Prior to market open on Thursday, October 22nd, EQT Midstream announced the following results     -  Reiterate 20% Distribution Growth through 2017 -  82% of revenues generated from firm reservation fees -  1.63x Q3 Coverage on Declared Q3 Distributions, 1.75x TTM -  Operating Cash Flow coverage 1.29x -  Volume increases in Transmission and Gathering -  Increased low end of 2015 Adjusted EBITDA Guidance -  Management prioritizes growth over Sponsor drop downs -  $62MM ATM raised, majority from one trade        VOLUME TABLE         GUIDANCE         MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Oct 21, 2015

    Quick Look: Kinder Morgan

    We realize that Kinder Morgan is no longer an MLP, but it certainly is still a proxy for the state of the midstream market. and available capital.  Here are a few key items from the Earnings Call Q&A held after the close on Wed, October 21st:      - Increased Distributions from $0.49 to $.51 -  Lower 2016 Distribution growth is lowered from…

    We realize that Kinder Morgan is no longer an MLP, but it certainly is still a proxy for the state of the midstream market. and available capital.  Here are a few key items from the Earnings Call Q&A held after the close on Wed, October 21st:      - Increased Distributions from $0.49 to $.51 -  Lower 2016 Distribution growth is lowered from 10% at time of Fusion, to 6 to 10% and maintain + 1.0x coverage -  Management believes the market is paying a premium for coverage over growth -  No need to raise equity through middle of 2016 and can extend that date if necessary, Management would not comment on the source -  Northeast Direct will benefit from recent New England Nuclear Shutdowns and Regulatory approvals -  Tax Benefit extended to 2020, will not be a "Significant Federal Taxpayer" until then -  M&A opportunities in Asset Deals (less than $1B); Valuation is stlll too high for bigger deals; Corporate deals are more difficult and unpredictable   EBITDA Segment Performance Below:     -       MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Oct 17, 2015

    MLP Weekly: Drips of Drops

    Units traded within a narrower range this week as the benchmark index was down -0.52% and -24.95% Year to Date.  Crude advanced 1.9% as Dec 2016 WTI closed at $52.64.  Investors should be focused on Q3 management comments regarding volumes, beginning next week when Kinder Morgan and EQT report.   North American E&P production for 2016 is only 1…

    Units traded within a narrower range this week as the benchmark index was down -0.52% and -24.95% Year to Date.  Crude advanced 1.9% as Dec 2016 WTI closed at $52.64.  Investors should be focused on Q3 management comments regarding volumes, beginning next week when Kinder Morgan and EQT report.   North American E&P production for 2016 is only 11% hedged at $69.04, according to IHS, compared to 28% hedged in the second half of 2015.  While the market speculates about 2016 oil and gas production, the below charts provide a helpful perspective on the increased productivity as reported by the EIA, along with the the changes in absolute production by region.  For those trying to predict 2016 volumes, there are no historical data models to rely upon, and the facts, or assumptions, are constantly evolving, resulting in  a wide range of estimates.         Unit News   With the equity issuance window essentially closed for many units, MLPs are finding creative solutions to acquire new assets to either maintain or grow DCF.  Two small drops were announced this week, as USD Partners and KNOT Offshore Partners announced asset purchases which did not require the issuance of public units.  USD Partners purchased a crude by rail terminal for $225, an 8.7x EBITDA multiple, financed in part by the Seller acquiring 1.7MM units at market prices.  KNOT Offshore acquired the remaining interests in a shuttle tanker for $115MM, financed by new debt and no equity issuance.  SunCoke announced they expect to be whole under their Take or Pay contracts despite the announced idling of AK Steel's Ashland plant.  New Source Energy Partners reported in an SEC filing that their credit line has been reduced 50%, from $49MM to $24MM, as a result of Bank of Montreal's semi annual redetermination, which triggers a $25MM deficiency which must be cured by November 9th.  Antero Midstream announced higher guidance and reaffirmed their 28-30%  2016/2017 distribution growth rate, for which the two tables below highlight Antero's performance.  Below are the Quarterly changes in guidance, with the midpoint range increasing 19% since Q1 015.  The increase in guidance is from the $1.05B water drop down transaction, closed on September 24th, where 22.7MM new units were issued in a private placement to Antero Resources and institutional investors.   The below table provides the key Unit Metrics for Antero Midstream, indicating both healthy Distributable Cash Flow Coverage and Cash Flow from Operations Coverage.  When considering Free Cash Flow Coverage, Antero is not able to cover their growth capital expenditure with operating cash flow, which will require additional financing.     Credit Changes   We are keeping a watchful eye on the credit markets as an indicator of MLP risk.  The below table provides the yield changes from September through 10/16/15 for a select set of MLP issuers.  Those highlighted in yellow have had the most significant increase in yield since the September MLP crash.       Short Interest   Most units have seen a reduction in short interest over the past two weeks, with the exception of Crestwood Equity Partners, which recently merged their GP and LP units     MLPData will update Q3 Distributable Cash Flows, Coverage Ratios, Unit Metrics and Guidance shortly after the earning call     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Oct 10, 2015

    MLP Weekly: Negative Press Continues

    Units moved higher this week in tandem with the 9% increase in crude taking the benchmark index up  6.05% and lowering the Year To Date total return losses to -24.56%.  Along with higher crude, some units have reported a healthy Q3 distribution increase, apparently less impacted by the gloomy outlook many have assigned to 2016.  In spite of this re…

    Units moved higher this week in tandem with the 9% increase in crude taking the benchmark index up  6.05% and lowering the Year To Date total return losses to -24.56%.  Along with higher crude, some units have reported a healthy Q3 distribution increase, apparently less impacted by the gloomy outlook many have assigned to 2016.  In spite of this recent bounce, the number of negative MLP articles, excluding Sell side reports which are generally supportive, have been increasing.  These articles tease with a provocative headline and often provide some misinformation to support a conclusion.  Below are a few published this week     Investors Facing Dark Side of MLP Investing Investment News:  “MLPs are supposed to be toll collectors that deal with volume, but we've never seen them in a down market for energy,” Mr. Goldsborough said. “Now we're seeing a down market for energy and it has not worked out very well, because despite how they were billed, they are not insulated from commodity-price volatility.”  Not sure if the Morningstar Analyst is referring to Distributions or Growth, neither of which has fundamentally changed based upon the initial results.  Perhaps he is suggesting that lower growth rates are :what has not worked out", but hard to tell.   Many MLPs Need to Delay or Scrap Capital Spending Plans Barrons quotes an Analyst:  "We come to several conclusions: 1) current 2016 capex estimates look high and we expected them to be lowered in the coming weeks, potentially substantially, as MLPs either delay projects or scrap placeholder projects; 2) M&A could play a role in further eliminating/delaying some capex; 3) 2016 capital raising should be more weighted to equity than 2015 — a potential source of concern; 4) we see the potential for a lower equity overhang to provide a valuation boost heading into 2016".  So what the analyst is suggesting is that there will be less projects in 2016 if energy prices do not increase, which is hardly a surprise.  Despite the title, the author is not suggesting that all MLPs will delay all projects.  Rather the growth rates, and need for capital, will be lower in 2016, which makes for a less captivating headline.     Be Weary of Clients Using MLPs for Income WSJ quotes an Advisor "Most advisers do understand that MLPs are cash-flow-dependent, meaning that the more they distribute, the more valuable the position becomes. But many advisers don’t realize that many MLPs deliver high distributions through hedged contracts that locked in a high cost of oil even as actual costs have gone down. A good deal of those contracts expire over the next few years, which means that if there isn’t a substantial increase in the price of oil, we’ll see many publicly traded MLPs forced to reduce distributions."  The reference to many is related to Upstream units, which are a very small subset of the market, for which most investors and advisors have been warned.   We agree that lower prices could lead to lower volumes, in turn lowering cash flows, but that scenario has not yet played out in the market, but is a risk for 2016     Q3 Announced Distributions   In advance of Q3 earnings, 6 out of 7 units reported an increase in their quarterly distributions.  (Note TEGP did increase their distribution 8.3% which differs from the table below)         The following table shows the performance of of the units which reported this week       Credit vs Unit Yields     The table below provides benchmark bond yields since the most recent MLP crash compared to the current unit yield, Month to Date Total Return, and Trailing Twelve Month Distribution Coverage Ratio.           As more units report their distributions and follow up with their Q3 calls, we expect to see MLPs continue to find support with 5-10% upside through the end of October.  We see risk increasing mid November through year end as the impact of redeterminations are announced and the potential  of higher crude supply captures the market's attention.   We will be updating our unit metrics, guidance  and consensus growth forecasts after each earnings call to provide you with the necessary information to support your investment objectives.       Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Oct 08, 2015

    MLP Shorts and Returns

    The following table compares the change in Short Interest for the units with the highest number of short interest shares, with the Week to Date and Month to Date Total Returns.  Short interest for units can be found in the Quote tab             Premium Subscribers can access Weekly Fund Flows Here   Premium Subscribers can access Risk Me…

    The following table compares the change in Short Interest for the units with the highest number of short interest shares, with the Week to Date and Month to Date Total Returns.  Short interest for units can be found in the Quote tab             Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Oct 04, 2015

    MLP Weekly: Poking the Bear

    This week's market events and investor response were unprecedented as the benchmark index traded in a range of 15.1%, trading as low as -11.2% and closed higher +3.91%.  The market has become concerned with high debt companies in general, and in the case of energy, these concerns have extended to the belief that oil and gas production will rollover…

    This week's market events and investor response were unprecedented as the benchmark index traded in a range of 15.1%, trading as low as -11.2% and closed higher +3.91%.  The market has become concerned with high debt companies in general, and in the case of energy, these concerns have extended to the belief that oil and gas production will rollover, leading to lower Midstream distribution growth and potential cuts.  Add to that Energy Transfer's Monday morning announcement of the acquisition of Williams and several widely disseminated MLP articles targeting retail investors, and the week started off very ugly, then turned positive as 10 year rates dropped below 2.00% after the weak employment report.   Some investors have bought into the fear that Midstream MLPs will  be forced to renegotiate and reduce take or pay contracts with limited access to the capital markets, hampering  low coverage units and their ability to maintain distributions.  Apparently some believe this is an imminent certainty.  On Friday, Enterprise Products announced their target distribution increase of 1.3% Quarter over Quarter, and 5.48% Year over Year, sending units +25.29% from Tuesday's close, the day prior to the announcement.   Management had many options available given their Q2 Coverage ratio of 1.35x, but chose to maintain the modest growth rate with a likely healthy Q3 coverage ratio.  A few weeks ago, many criticized Plains All American for suggesting that 2016 may be a year of flat growth and we suspect many investors were very relieved to see EPD Poke the MLP Bears with their distribution announcement.     Distribution Announcements   Below are the units which reported distributions this past week:  2 increases and 3 held flat       Unit News   The big news this week was the Energy Transfer cash and stock acquisition of Williams Inc, which disappointed investors as ETE fell nearly 20% mid week.  The transaction details are summarized here.  Crestwood Equity Partners (CEQP) completed their acquisition of Crestwood Midstream Partners (CMLP), where unitholders received 2.75 units of CEQP.  Sanchez Production Partners announced a $345MM acquisition of Midstream assets from Sponsor Sanchez Energy, which will be financed by the issuance of a new Class B Preferred share to Stonepeak Infrastructure Partners.  As a result, SPP announced they expect to pay an annual distribution of $1.60 implying a 15.5% yield, however, investors may want to take note of Sanchez Energy's financial health, as they are the primary counter-party, paying $1.95 BOE for the midstream services.  Enterprise Products announced the addition of two new Board members, both with Private Equity backgrounds, we think a noteworthy development.           The State of LNG   With excess capacity impacting LNG prices, Genscape reported that commissioning has begun at Cheniere's Sabine LNG Export Facility this week, a few days after Carl Icahn increased his stake to 11.43%.  Meanwhile, across the globe, Bloomberg suggested that Petronet  may breaking their LNG Take or Pay agreement which Qatar, which currently is 36% above the spot rate, incurring a $1.4B penalty.  Such a scenario has Cheniere investors asking whether they have the same contract break risk and the answer is not exactly.  Cheniere contracts are for capacity reservation on the liquiefication terminal and not the actual purchase of the natural gas, reducing the likelihood of a contract termination.         Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC      

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    Oct 01, 2015

    MLP Short Interest Performance

    The Below Table tracks the units with the highest number of short sold shares, the change from the previous month, and the Week to Date Total Return           Don't let the Markets Fool You, be informed with MLPData's Premium Subscription     Premium Subscribers can access Weekly Fund Flows Here   Premium Subscribers can access Risk Me…

    The Below Table tracks the units with the highest number of short sold shares, the change from the previous month, and the Week to Date Total Return           Don't let the Markets Fool You, be informed with MLPData's Premium Subscription     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData

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    Oct 01, 2015

    So What Just Happened to MLPs?

    On Wednesday (9/30) the benchmark index bounced back 8.79% after a brutal slide, leaving units down -3.4% for the week so far.  So what just happened?  At MLPData, we run various scans and filters to find articles and insights related to Master Limited Partners, to understand how retail investors may be influenced.  This past week, an article from…

    On Wednesday (9/30) the benchmark index bounced back 8.79% after a brutal slide, leaving units down -3.4% for the week so far.  So what just happened?  At MLPData, we run various scans and filters to find articles and insights related to Master Limited Partners, to understand how retail investors may be influenced.  This past week, an article from an subscription newsletter author, wrote an article broadly republished with the provocative title "Warning: The Master Limited Partnership Model Might Not Survive".  Barron's republished the article with an even more alarming titled "Why the MLP Model Might Be a Goner", in which it referenced the original article as insights from a money manager, which differ's from the authors own bio on their site, a minor difference to some we suppose.    These two articles, perhaps coincidentally, added fear to an investor base searching for confidence after Energy Transfer's announcement on Monday.   Sell first and ask questions later appeared to guide many investors on Monday and Tuesday, leading to a dramatic markdown of MLP values.  No new information was offered to investors, just the fear that cuts were imminent and future cash flows available for distribution would at best be lowered, and perhaps eliminated.   Make no mistake, the future growth of midstream cash flows is at risk as volumes likely decline and producers require lower costs to survive.  This week's panic exceeded the worst case scenario, at least for 2016.   On Wednesday, the market refocused on the carnage, with units recovering some of the week's losses.  As a rebuttal to the negative articles, CBRE's Hinds Howard offered another view on the future of Master Limited Partnerships, aptly titled "The MLP Business Model Will Survive"       Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC  

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    Sep 30, 2015

    Credit vs Unit Yields

    Below is a subset of the MLPData Universe, which shows the September change in credit yields, unit yields,  unit Month to Date Total Returns, and Trailing Twelve Month Coverage Ratios         Premium Subscribers can access Weekly Fund Flows Here   Premium Subscribers can access Risk Metrics Here   Premium Subscribers can Monitor Portfoli…

    Below is a subset of the MLPData Universe, which shows the September change in credit yields, unit yields,  unit Month to Date Total Returns, and Trailing Twelve Month Coverage Ratios         Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPDa

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    Sep 29, 2015

    Expecting something better from Energy Transfer's Acquisition of Williams Inc?

    For months, Investors in Master Limited Partnerships have been warned that the market was ripe for Mergers and Acquisitions, where weaker units would be consolidated into a more credit worthy sponsor, leading to higher and more stable distribution growth.  The long awaited culmination to the Williams Inc strategic review came to a close Monday morn…

    For months, Investors in Master Limited Partnerships have been warned that the market was ripe for Mergers and Acquisitions, where weaker units would be consolidated into a more credit worthy sponsor, leading to higher and more stable distribution growth.  The long awaited culmination to the Williams Inc strategic review came to a close Monday morning when Energy Transfer Equity announced that they were acquiring Williams through a fairly complicated transaction.  If you were looking to the news improving your fortunes, that did not happen, at least not yet.   Just being exposed to energy and debt was a reason to trade down today, but Energy Transfer, and Williams, were both sharply lower by the doubts assigned to the $2B of synergies and $5B of capital need to realize those annual synergies by 2020.   Not sure what the market was expecting other than a higher price, but it sure did not think much of this transaction, from either side of the table.  One item most people assumed correctly is that Williams Partners will be left as a stand alone LP.  Even this expected news sent WPZ lower -6.12% on 4x the average 90 day volume.     Let's first explain the tax free transaction and then we will list the concerns expressed during the Q&A. The proposed deal, subject to Williams shareholder approval, expected to close by the second half of 2016, will first create a new C-Corp, which will trade under the ticker ETC,  designed to closely track the performance of ETE, which is structured as an MLP.   The ETC instrument is expected to appeal to a wider set of institutional investors, who otherwise would refrain from acquiring stakes in Master Limited Partners.  As a current Williams Inc shareholder, you will have the option to receive 1.8716 shares of the newly issued ETC for each WMB share owned, or a $8.00 and 1.5274 ETC shares, subject to a pro rated cash cap.   Williams Shareholders will also receive a special $0.10 dividend, payable immediately prior to the closing in mid 2016. Williams Inc will also be making a $428MM breakup payment to Williams Partners, which is expected to be distributed to unitholders likely as UBTI.   Once ETC is listed, the distribution of ETE (K-1 income)  will be identical to that of ETC (1099 Income), through 2018.  The ETC share will trade with a Contingent Consideration Right, which will ensure that there is no premium or discount between ETE and ETC during over the course of a two year period.  If a discount did exist under their calculation rules, a cash or equity payment will be made at the end of the measurement period.       So here are some of the key points highlighted by Energy Transfer which are expected to benefit shareholders:   -  $2B of EBITDA Commercial synergies will be realized by 2020 on a run rate basis -  $300-$400MM of Operating Cost synergies to be realized by 2017 on a run rate basis  -  ETE on the path to investment grade credit rating -  Investment Grade LP's will provide ETE with an increasing level of IDR payments.     Below is the chart of how the LP's have performed over the past year, which illustrates the LP financing challenges for new asset drops.         On the Conference call, below are a number of concerning topics posed to Kelcy Warren and Jamie Welch     Synergies:  Q: What is your confidence in achieving the synergies and where may they be realized?    A:  Our confidence is very high as we have been working very closely with the Williams management team over the past several months...we expect a significant portton of the $2B to be realized in the Appalachian Northeast where there is a significant opportunity for Liquids capital efficiencies     Capital Expenditures:  Q Where will the $5B be spent and can you execute your plan in light of the capital markets? A: It will be mostly in the Northeast...yes, despite current volatility, we have a blueprint to execute through the end of 2016...WPZ also has a plan to ensure that projects are executed through 2016     Dilution:  Q Why was more cash not offered vs equity? A We spent alot of time with the rating agency and Williams and we did not want to put the credit rating at risk, further, our financing cost is much lower than our cost of equity, so we chose this plan     Credit Rating:  Q When will ETE realize investment grade credit? A:  2017 would be ideal if we execute     On Simplicity  Q  This transaction seems to make ETE more complex and suggests the parts are trading at a discount, are there any plans for simplicity?  A  We have seen a very steep decline in our sector, our view is that this is the best structure to move forward.  There is a large overhang in our sector, with much upside.  From Complication comes Value   With the market fixated on the expectation of lower production, tighter credit and a very narrow equity window, it may be a while before Energy Transfer trades in line with the synergies management has outlined, the majority of which will not be material until 2018.                   -   Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC              

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    Sep 27, 2015

    MLP Weekly: Excessive Fear

    The brief history of Master Limited Partnerships has taught us that when uncertainty encapsulates the market, the fear factor often exceeds the fundamental realities, causing prices to drop well below their valuations.  We are clearly in one of these periods, where exceedingly grim headlines about the financial health of E&P companies and the e…

    The brief history of Master Limited Partnerships has taught us that when uncertainty encapsulates the market, the fear factor often exceeds the fundamental realities, causing prices to drop well below their valuations.  We are clearly in one of these periods, where exceedingly grim headlines about the financial health of E&P companies and the expected decline of production volumes, coupled with distribution cuts and suspensions from assets which never should have been packaged into an MLP, are heightening fears by the day.  The below chart, provided by Alerian, shows just has much this fear has impacted the benchmark index.  While we do acknowledge Midstream growth rates certainly will recede from late 2014 expectations, the market is liquidating their MLP exposure on the expectation of significantly lower EBITDA and necessary distribution cuts, neither of which occurred in 2008, when the credit markets did shut down and Oil dropped below $40 and production declined nearly 35%.     Unit News   Valero Midstream announced a $465MM acquisition of Terminal assets from sponsor Valero Energy, which is expected to contribute $50MM of EBITDA in 2016.  The transaction is set to close on 10/1/15, financed by approximately 1.675MM new units which will be purchased by Valero, and the remaining $395MM borrowed under a subordinated loan agreement with Valero.  Despite management's reaffirmation of 25% distribution growth rate and no market financing, VLP still dropped -12.95% for the week.  It was reported that Energy Capital Partners, the sponsor to Summit Midstream Partners, are looking to sell their GP ownership and their 44% LP stake, which sent shares down -24.67%. Emerge Energy Services, preannounced that they have eliminated their 2015 distribution guidance of $2.50 - $3.00 ($1.67 has been paid to date), leaving investors what to make of the previous Q2 comments where management stated "for now, we must assume market conditions will remain as they are for much or all of 2015, as such we are guiding $2.50 to $3.00 for 2015."   Columbia Pipeline Partners announced that they have received FERC approval for the Cameron Access Project, which includes 26 miles of greenfield pipeline lateral, which will provide direct access to the Cameron LNG Export terminal.  The $310MM project, which is a subset of a $10B backlog, is backed by binding agreements for 90% of the new capacity.       Short Sentiment     With MLPs trading with Oil, Plains All American has become the proxy short this week for this high correlation trade, with Short Interest increasing over 200%, between the period of 8/31/15 and 9/15/15.  Despite Management's worst case scenario of flat distributions in 2016, the market has now assigned PAA with a 9.32% yield.   Short interest is next updated 10/9/15 for the September month end data.       Q3 Distribution Announcements   Most units report their distribution announcement prior to their quarterly earning call, and those with positive news, tend to release very soon after the quarter end.  With Q3 calls awaiting confirmation, many investors are bracing themselves for deteriorating conditions and some comments about distributions.  Last quarter, Enterprise, Plains, Spectra and Teekay were the first to announce their distributions, and investors should keep on eye on whether their announcements are disclosed during the week of October 5th.         Closed End Funds Narrow Discounts     As MLP's have been crushed, Closed End Fund discounts have been narrowing.  The list below ranks the funds which have had the largest upside changes to discounts or premiums since 12/31/14.  It is not an easy story to explain, other than some investors are attracted to the yields.  We will be rolling out an X-Ray service in our Premium package which will allow fund investors to assess the portfolios for coverage ratios and distribution growth expectations.             Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC      

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    Sep 26, 2015

    Does Issue Date impact MLP Performance?

    Given the recent rout in Master Limited Partnerships, we wanted to consider whether seasoned MLP's, those issued prior to 2008, have performed any better than those issued after 2010 (there was a two year hiatus in issuance from after the 2008 crash).  The question is whether the more significant tax recapture associated with older units, which hav…

    Given the recent rout in Master Limited Partnerships, we wanted to consider whether seasoned MLP's, those issued prior to 2008, have performed any better than those issued after 2010 (there was a two year hiatus in issuance from after the 2008 crash).  The question is whether the more significant tax recapture associated with older units, which have paid out a higher amount of aggregate distributions for those who have owned since inception, has had any impact on retail selling Year and Month to Date Total Returns.   We stratify the MLPData universe by exchange listing date below and display the table for units issued prior to 2008.  In summary, the $313B market cap of issuance prior to 2008 has an average Year to Date Total Return performance of -23.14% and a Month to Date total Return Performance of -11.67%.  For the $200B of units issued after 2010, the YTD number is -25.40% and MTD is -16.77%.  There are many other obvious factors to consider along with this data, but on the surface, but it appears that seasoned issues are less likely to be liquidated in this downturn than those with a longer ownership period, and lower tax obligations upon sale.     The next table is issuance from 2010 to 2013   And the final table is issuance from 2013     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC  

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    Sep 26, 2015

    The 2008 MLP Crash vs Present

    MLP investors are looking for any insight to better understand recent market events and whether the future fundamental outlook is properly reflected in current valuations.  To that end, we took a quick look a the change in credit yields for the month of September 2015 and compared to the change in unit prices during the same period. Apart from two…

    MLP investors are looking for any insight to better understand recent market events and whether the future fundamental outlook is properly reflected in current valuations.  To that end, we took a quick look a the change in credit yields for the month of September 2015 and compared to the change in unit prices during the same period. Apart from two upstream units which cut and suspended their distributions, the change in credit yields have been between with -1% and 1%.  The majority of unit prices have declined from -10-25% as investors have dumped shares based upon the expectation of broad distribution cuts.  Bond holders do not feel that their risk has increased.       In 2008, the credit market deteriorated rapidly, which sent unit shares plummeting.  Of course, the credit crunch was not specific to energy prices or production, but it nonetheless impacted MLP's more so than other sectors, for reasons unrelated to market fundamentals.  Lets first look at 2008 and what happened to credit yields.  The Enterprise Products chart below indicates credit yield from September 2nd 2008 to October 16th, 2008, where the yields increased 358 bps to 10.46%, returning back to the previous yield by July 2009.  Over the course of 11 months, yields ranged from 6.92% to 10.86%, a period in which EPD raised their quarterly distributions by 1.4%, or 6.2% over the full period.           Crude hit a low on 12/19/09 at $39.7,  but just 10 months later, was trading at $78, a near double from the low.        During this period where the price of crude crashed, production dropped nearly 35% from 5.16MM bpd to 3.38MM bpd, only to recover 60 days later to 5.18MM bpd         Finally, during this same period, the units of Enterprise Products fell from $15 to a intraday low of $8, and took almost 8 months to recover back to the $15 level         For those looking back at 2008 as a reference point for the MLP crash of 2015, the similarities are few other than investors panicked and dumped units before any potential fundamental impact was realized by any Master Limited Partnership.  Despite oil production rebounding quickly, and credit markets returning to expected risk premiums, the recovery in unit prices occurred over a much longer time frame, which may be the most important similarity between 2008 and the present market     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Sep 20, 2015

    MLP Weekly: One Less Worry

    With the Fed announcing no change in rates with a cautious outlook, the additional risk of higher MLP refinancing rates is now off the table likely through 2016.   Unlike utiltiies which were up 2.7% for the week, the market took no more interest in MLPs after the announcement, as the benchmark index closed down -1.00% for the week and year to date…

    With the Fed announcing no change in rates with a cautious outlook, the additional risk of higher MLP refinancing rates is now off the table likely through 2016.   Unlike utiltiies which were up 2.7% for the week, the market took no more interest in MLPs after the announcement, as the benchmark index closed down -1.00% for the week and year to date -27.22%.   Weak fund flows continued, as Open End Funds and ETFs have seen some liquidations.   Yieldco's have also been crushed during this recent downturn, with NRG Yield Inc down 31% as their wind assets have produced less DCF from lower generation.  More importantly, NRG acknowledged that the equity window is closed for renewable power funding, a scenario that could also apply to some Master Limited Partnerships.     Weekly Events   Antero Resources followed through on their plan to drop their water resource assets into Antero Midstream Partners. While Antero hoped to drop the asset sooner, when market conditions were more favorable, the IRS paused all new Private Letter Rulings until recently, allowing these water resource cash flows to be recognized as qualifying income. In order to complete the $1.05B transaction, Antero Partners will pay Antero Resources $534MM in cash and issue 23.9MM new units for the balance.  However, 12.9MM of the units were completed through a private placement at $18.84 per unit, a discount of 7% from the previous close, leaving only 11MM new units to be placed into the publlc markets.  The transaction will increase 2015 EBITDA and DCF  by $20MM and $15MM respectively, which is $0.11 per unit.     Northern Tier Energy LP announced that they will be taking down their St Paul Park Refinery's N 2 Crude Unit for unplanned maintenance, which will reduce Q3 volumes.  Enterprise Products increased their credit revolver from $3.5B to $4.0, an additional $500MM of potential financing.  Enlink Midstream Partners announced a $143 acquisition of gathering and processing assets in the Delaware Basin at a 7-8x EBITDA multiple.           Short Interest   With an increasing level of short interest across the MLP universe, we will be tracking the weekly performance of the MLPs (and C-Corps which were MLP's) with the highest number of short sales.  This week, WMB shorts were likely covering as news of an imminent deal between Energy Transfer and Williams inc was reported by Bloomberg.         Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC        

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    Sep 19, 2015

    Key Points from 2015 Investing in MLP Conference

    This past week, MLPData sponsored our first conference exclusively dedicated to Registered Investment Advisors, Wealth Managers and Family Offices.  Given market events, the timing enabled investors to gain deep insight into relevant industry topics unfolding in our low commodity price environment.  The following summarizes a few of the key points…

    This past week, MLPData sponsored our first conference exclusively dedicated to Registered Investment Advisors, Wealth Managers and Family Offices.  Given market events, the timing enabled investors to gain deep insight into relevant industry topics unfolding in our low commodity price environment.  The following summarizes a few of the key points discussed throughout the conference by the panelist, which consisted of Fund Managers, Tax and Indusry Experts, MLP Management, and RIA's managing MLP allocations:     What to Expect in 2015 and 2016:  Most panelists agreed that they expect to see volatility and perhaps more downside risk as Fall credit redeterminations take place, creating headlines of E&P distress, along with the potential for small and peripheral MLP's to announce distribution cuts in December.  These risks are unrelated to MLP fundamentals, but rather reflect market sentiment where units are being sold without asking questions.  2016 is considered the year of opportunity if investors are able to pick up oversold units in the Q4 of 2015.  Estimates are that US production will fall between 250k and 900k bpd before the end of year, allowing the market to re-balance and stabilize crude in the $50-$60 range.  Although volume reductions are not what MLP investors would hope for, operators can build budgets and infrastructure around higher prices, which will lead to growth projects.     Bankruptcy Risk of Take or Pay Contracts:  With looming announcements of E&P bankruptcy, exemplified by this week's announcement of Samson's pre-packaged Ch 11 bankruptcy filing, the audience was looking for insight into how might a Midstream operator be impacted if a take or pay customer were to declare bankruptcy.  Panelists responded by describing that each Bankruptcy filing could be different,  but the midstream operator will have a period of uncertainty regarding their contract terms.  However, the expectation is that to the extent there are Ch 11 filings by customers of midstream services, these filing will not result in the customer terminating operations, but more likely addressing their balance sheet and continuing to require the midstream services.  Those who are more captive to limited midstream alternatives will have the least amount of leverage to alter their take or pay commitments in the event of bankruptcy filing.  Although there were many questions about this topic, the panel did not expect bankruptcy driven take or pay reductions to have a material impact on 2016 cash flows,, and the headline risks were more worrisome than the actual impact.     The impact of Fund Flows:  There is no question that the recent performance of MLP's have been driven by the plethora of new Closed End Funds, Mutual Funds and ETF's which have been launched since 2010, raising over $30B in new capital to soak up MLP equity issuance and increase demand for units.  Those flows have since shifted and have turned modestly negative as retail investors liquidate energy exposure.  However, several fund managers mentioned the strong inflows related to new institutional money which may be indicating that MLP's have hit bottom.       Raising Capital:  MLPs usually fund new projects with 50% equity and 50% debt, the former of which is nearing 10% for many units, and even higher when considering the impact of IDR's.  At a double digit cost of equity financing, few new projects look attractive when considered Return on Invested Capital.  Recent new issuance have not been well received, increasing yields further.  Some Management teams are faced with reducing distributions if the market does not value their units in line with the assumption of no distribution cuts.   Accessing the public markets for equity issuance will likely be a last resort to sponsor financing and private equity, the latter of which reportedly is near $20B of available capital awaiting opportunity.     Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC      

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    Sep 13, 2015

    MLP Weekly: Short Focus

        Another unnerving week for MLP investors as the market has fixated on the head winds which may impede 2016 growth; the cost of equity issuance, lower crude prices and the potential for lower crude and gas production volumes in 2016.   The long list of MLPs presenting at the Barclay's Energy CEO Conference were not able to convince investors t…

        Another unnerving week for MLP investors as the market has fixated on the head winds which may impede 2016 growth; the cost of equity issuance, lower crude prices and the potential for lower crude and gas production volumes in 2016.   The long list of MLPs presenting at the Barclay's Energy CEO Conference were not able to convince investors that risks were less than the market has priced into the sector, and a Goldman Sachs downgrade on Midstream providers sent units lower, with the benchmark index losing -2.78% for the week.   In their Weekly Petroleum report, the EIA researched that 44 companies, which produced on average 2.7MM barrels per day of crude in the first half of 2015, or about 35% of US Lower 48 production, were increasingly dedicating a higher percentage (83%) of their operating cash flows to debt service over the first half of the year.  Since 6/30, energy yields have increased further, leading to a looming inflection point in the second half of the year, which in lieu of new financing, equity financing or restructuring, will likely lead to lower production volumes       For those MLPs  which do need capital to sustain their distributions, invest in growth projects, or reduce debt, the price to pay for such issuance will be painful.  On August 10th, American Midstream Partners announced a $162MM drop down from their sponsor, ArcLight, for a modest 5x Adjusted EBITDA multiple.  At the time, the partnership announced that at current unit prices, the aquisition would be funded without any equity issuance.  On September 9th, AMID announced a 7,500,000 marketed offering, which sent units tumbling -17.41% for the week, with a forward yield of 18.44%.  At the current distribution rate, these new units will require over $14MM of distributions, or over 40% of the Adjusted EBITDA associated with the drop down.  USA Compression Partners, which provides gathering and pipeline compression services, of which 85% of revenues are contracted by natural gas producers and service providers, also announced a 4MM share offering this past week, to reduce their revolver debt.  Despite reporting record Q2 EBITDA and  DCF and increasing 2015 guidance, their issuance drove units down -15.82% for the week.   Short sellers are adding to their MLP positions as of the latest data reported for September.  The shorts are betting on the overall decline in units for those with the greatest commodity price exposure, as well as units which are expected to issue equity in Q3 2015       Jim Chanos disclosed his bet against the upside in LNG exports, by shorting Cheniere Energy, a little over a month after Carl Icahn disclosed an 8.18% stake in the company.  LNG exports are considered to be a key demand outlet for US gas, but Chanos believes that the market will double it's global export capacity over the next four years while demand remains flat.  Although these projects are sponsored by long term projects, notes Chanos, almost 20% of capacity is not contracted, leaving cash flows exposed to the potential of uncompetitive LNG export prices. He further speculates that take or pay contracts may be renegotiated by large supplier, such as Qatar, making US LNG exports less attractive.       Weekly Events   DCP Midstream Partners gained 5.22% after sponsors Spectra Energy and Phillips 66 announced a non binding letter of intent to contribute $1.5B of cash  and contribute ownership interest in NGL pipelines, expected to contribute $100MM of EBITDA.  The proceeds will be used to reduce debt and despite the infusion, DPM is yielding 10.82%. Alerian removed Hi-Crush Partners, Memorial Production Partners, and Linn Energy from their indices due to distribution cuts, and added Boardwalk Partners (previously removed after a distribution cut), Columbia Pipeline Partners, and Vanguard Resource Partners.   Spectra Energy apparently has decided not to pursue an acquisition of Williams Inc, leaving Energy Transfer Equity as the most likely acquirer if the William's Board decides that a sale is a better alternative to their previously announced plan to acquire Williams Partners.       Premium Subscribers can access Weekly Fund Flows Here   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     Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Sep 07, 2015

    MLP Weekly: The Fall Begins

    Another week of roller coaster energy prices with crude rising nearly 10% early in the week only to return to the previous week levels.  The U.S. Energy Information Administration reported monthly June production data Monday showing a fall in production to 9.296 million barrels per day (bpd) in June from 9.4 million bpd in May, and a peak of 9.6 mi…

    Another week of roller coaster energy prices with crude rising nearly 10% early in the week only to return to the previous week levels.  The U.S. Energy Information Administration reported monthly June production data Monday showing a fall in production to 9.296 million barrels per day (bpd) in June from 9.4 million bpd in May, and a peak of 9.6 million bpd in April.  The EIA also disclosed that they have changed their methodology for the Petroleum Supply Monthly report, which previously relied upon state agencies to submit tax and production data, often lagging by several months to as long as a year.  The new methodology, used for this most recent report, surveys 13 states and the federal Gulf of Mexico, representing over 90% of US production.  With the change in methodology, previous production levels have been revised for Texas, which reduced production by 100,000 to 150,000 bpd, offset by a 10,000 to 50,000 increase in Gulf of Mexico production.  The markets react to these figures and the previous estimates left much room for data inconsistencies.  Crude traded nearly 10% higher  after the report of lower production, even though the change was mostly attributed to a new methodology, which actually reflected lower production back to January.  So with the new methodology brings lower production, which may more accurately reflect market conditions in the coming Fall months.     Unit News   Very little activity this past week.  Holly Energy Partners announced two small acquisitions, neither of which will require the issuance of new units. HEP announced that they will purchase a naptha and hydrogen generation unit from sponsor HFC for $62MM at a 9x EBITDA multiple.  Holly also announced the purchase from Enbridge of a 50% interest in the Frontier pipeline, with an EBITDA contribution of $6MM to $7MM per year   Exposed Banks   A new report by Moody's says there are more concerns than ever about the impact of low oil prices on U.S. banks that are deeply involved in oil and gas lending. "This price decline, along with our expectations that oil prices will remain depressed until at least the end of 2016, is credit negative for U.S. banks with significant energy-lending concentrations because it will result in higher loan-loss provisions in coming quarters," the Moody's report said.  The ratings agency did the analysis in a period when oil prices fell below $40 a barrel for the first time since 2009.  Moody's has identified 7 banks which have 75% of their loan portfolios exposed to energy.  The banks are Cullen/Frost, BOK Financial, Hancock Holding, Texas Capital Bankshare, Zions Bancorporation, Comerica and BBVA Compass.     Fund Flows   Despite the negative flows the last couple of weeks, Advisory Research launched a new fund, the MLP & Equity Fund, which seeks to maximize total return from MLP and energy infrastructure companies.  The fund is structured as a RIC, which limits MLP ownership to 25% of the total portfolio.     Fund flows were positive this week by $41MM.  Premium Subscribers have access to the weekly fund flow calculations, available each Friday.         MLPData has launched our new site, offering subscribers access to the most complete set of Energy focused Master Limited Partnership metrics available,   A list of capabilities are outlined here     If you have data or application suggestions for MLPData, please share it with us here.  Thank you to those who have shared their feedback and offered suggestions for further improving the site.   Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Aug 30, 2015

    MLP Weekly: Insiders Buy

    An oil rally catapulted units higher this week, sending Crude exposed Upstream and Midstream units up sharply as the market continues to link crude pricing to MLP margins and future distributions.  Market sentiment appeared to shift after Schlumberger announced a $14.8B cash and stock acquisition of Cameron International, suggesting that perhaps Sc…

    An oil rally catapulted units higher this week, sending Crude exposed Upstream and Midstream units up sharply as the market continues to link crude pricing to MLP margins and future distributions.  Market sentiment appeared to shift after Schlumberger announced a $14.8B cash and stock acquisition of Cameron International, suggesting that perhaps Schlumberger believe's that crude has bottomed out and fundamentals will begin to shift by year end.           With very little news this past week, the market traded with oil as Plains All American recovered losses from previous weeks.  Management teams from Summit Midstream Partners and Linn Energy announced resignations, and MPLX disclosed that they have received notification of early termination of the Hart-Scott-Rodino waiting period, and expect to close the MarkWest acquisition by Q4 2015.  Crestwood announced their merger vote will take place on September 30th. Upstream MLP's BreitBurn Energy Partners and Atlas Resource Partners both announced their monthly distribution  with no change from the prior month.          In Closed End Fund news, the Cushing MLP Total Return Fund, down over -50% TTM since the fund cut their distributions in early 2015, announced a 1:5 reverse split effective September 11, 2015.     Insider Purchases   Insiders stepped up their buys this past week with CrossAmerica Partners, Dominion Midstream Partners, MPLX LP, and NuStar GP insiders leading the way with purchases in excess of $500,000.       Yield to Growth   Since the beginning of the year, the majority of MLP's face the prospects of lower growth rates, but many units still have consensus or management guided 3 year growth rates in excess of 10% as illustrated below.  Distribution growth rate reductions have punished many LP and GP units and reversed the premiums earned when the growth rates were increasing     While this week provided some relief and optimism that the market has been mis-pricing Midstream units, MLP investors still have reasons to be concerned about principal risk and future distribution safety and growth.  Below are some of the issues our subscribers have been pondering as they consider how to adjust their MLP allocations:     -  What are the margin recontracting risks if sub $50 crude prevails through 2016 -  How much EBITDA is at risk due to counterparty default or bankruptcy? -  Can Management teams find accretive projects with current yield spreads? -  May 2016 be a year of low or no growth distribution growth? -  Can the market maintain volumes at current prices? -  Are the wide spreads a buy signal or is the risk premium justified?       We hope to address some of these concerns at our upcoming MLP Conference on September 16th in Grapevine, TX.  MLPData  will be rolling out a new Subscription Service on September 7th, 2015 which will provide a broader range of data analytics and analysis.     If you have data or application suggestions for MLPData, please share it with us here.  Thank you to those who have shared their feedback and offered suggestions for further improving the site.   Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Aug 16, 2015

    MLP Weekly: Support Your LP

    Units rebounded this past week as the oversold conditions from the prior week helped to push the benchmark index up +5.14%.  With a market which trades a total of just $2.5B  per day, or roughly .005% of the market cap, units valuation can be quite uncertain on a week to week basis.     Equity Financing   With many units trading -30% below t…

    Units rebounded this past week as the oversold conditions from the prior week helped to push the benchmark index up +5.14%.  With a market which trades a total of just $2.5B  per day, or roughly .005% of the market cap, units valuation can be quite uncertain on a week to week basis.     Equity Financing   With many units trading -30% below their 52 high weeks, issuing new equity to fund growth will result in lower accretion rates due to the higher number of units, and distributions, needed to fund a project.  To make matters worse, consider the impact of Incentive Distribution Rights, which makes the situations even more acute as the LP pays out the split on both newly issued and existing units.   At a lower unit price, more issued units are needed to raise the required capital, which in turn, increases the IDR burden.  To focus on one segment to illustrate the point, the following table screens the MLP universe for Midstream Natural Gas units which have IDR's     Let's focus on Targa Resource Partners to quantify the impact of IDR's.  Targa pays out 50% of all incremental distributions above $.50, to their General Partner, Targa Resources Corp.  Presently, $.7462 is paid out annually in IDR splits from NGLS to TRGP for all current shares.  When considering this additional payment, the cost of issuing a new unit increases from the current forward yield of 10.24% to 12.56% as outlined below.  If NGLS does not raise their distribution, but issues news units, TRGP will receive $.7462 for each new unit issued.           When distributions are increasing, the IDR overhead is accepted as a necessary expense to motivate the GP.  When distributions are decreasing, or become flat, the Sponsor needs to get more creative, using one or more of the following:   -  Waive IDR fees on newly issued units -  Lower Dropdown EBITDA multiple to limit, or eliminate,  the number of new unit issuance -  Finance the LP growth through the GP balance sheet -  Purchase units directly from the LP to avoid a market discount   Management teams have been relying on ATM programs to raise capital, and have avoided marketed offerings.  As the commodity price outlook continues to weaken, more Sponsors are going to be faced with how best to maintain and grow their distributions in light of the much higher cost of issuing new units.       Unit News   With the exception of Plains All American and Williams Partners, large cap units roared back this week.  Plains GP Holdings traded +9.72% higher for the week, but the LP traded up just +1.33%.  Williams Co advanced +7.03%, while Williams Partners declined -3.27%.  ONEOK Partners received Sponsor and Institutional support when it announced that ONEOK inc will purchase $650MM of unregistered units @ $30.17, increasing their LP ownership to 41.2% from 36.8%.  ONEOK Partners ended the week up 8.62% as the market assigned a big discount if the public markets were necessary to finance these new units.  Kayne Anderson, which between March and June reduced their OKS ownership by over 1MM units, opted to purchase 3.3MM units @ $30.17 across 17 fund entities.   Rentech Nitrogen Partners agreed to merge with CVR Partners where holders will receive 1.04 units of CVR plus $2.57 in cash.  American Midstream's announced that sponsor ArcLight will drop down a partial interest in their semi submersible floating production system and associated oil and gas export pipelines.  The $162MM purchase price is just 5.5x 2016 EBITDA, which means that AMID will not need to issue new units to finance the transaction.         With Crude trading at $45 and the fundamental outlook murky at best, Now is the time for investors to assess and discuss the opportunities and risks for MLP investments.  Please join a panel of seasoned experts on September 16th to learn more about MLP's and the most rewarding Income and Total Return strategies.       MLPData is in the final stages of developing a broader set of content and applications to help retail and professional Investors select, manage and monitor their yield and total return investment objectives.  Next week, MLPData will be offering a new set of premium subscription features and will continue to maintain free access to a subset of the content.    If you have data or application suggestions for MLPData, please share it with us here.  Thank you to those who have shared their feedback and offered suggestions for further improving the site.   Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC  

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    Aug 09, 2015

    MLP Weekly: Plain Talk

    After weeks of speculating how the market may react to lower 2015/2016 growth as a result of low energy prices, the market provided a glimpse of how MLP investors would respond.  Fear and Panic, coupled with legitimate Fundamental concerns, crushed units this week, ignited by Q&A comments by Plain All American's management team on their Wednesd…

    After weeks of speculating how the market may react to lower 2015/2016 growth as a result of low energy prices, the market provided a glimpse of how MLP investors would respond.  Fear and Panic, coupled with legitimate Fundamental concerns, crushed units this week, ignited by Q&A comments by Plain All American's management team on their Wednesday morning conference call.  These comments created uncertainty about whether other Management teams have been less than forthcoming about market conditions, and questioned the perspective that Midstream units, with their take or pay agreements, were highly insulated from margin pressures associated with lower volumes.  Or, as suggested by Energy Transfer CEO, Warren Kelcy, was Plains using market conditions as an excuse for poor management.  The market has reacted to the former, sending the benchmark index down over -25% for the year and nearly -10% for the week.   After listening to over 100 conference calls, the market will have a difficult time, if current energy prices persist, assessing the impact of rollover take or pay contracts, which increasingly will have a higher level of exposure to either price or production volumes. The concept of a fixed toll road, a common marketing pitch for midstream MLP's, will be a misnomer if crude prices continue in the $40-$50 range through 2016.     Plain Talk   By the time Plains All American finished their Q2 Q&A, the price of $PAA declined 16% and lowered their market cap by $2,500,000,000.  By week's end, Plains All American GP, which owns the IDR's and receives 50% of the incremental increase in distributions for current units and those issued in the future, declined over -30%, well below their $22.00 IPO price from October 2013.  Since that date, PAGP has distributed $1.19 in cash, and is trading  -$4.30 below the IPO price.  So what caused this rapid deconstruction of value?  As the chart below indicates. Plains released their earnings after the close on August 4th, which stated that 2015 EBITDA midpoint guidance would be lowered by $50MM, or $0.125 per unit.  Upon the market open, both PAA and PAGP fell around 5% on this news.  The earnings call, and release of the company presentation started at 11:00 AM EDT, at which point PAA had recovered slightly.  Management reviewed their performance and CEO Greg Armstrong concluded the call with the following comments:   "We assumed capital markets access would be restricted if commodity prices fell meaningfully and that therefore it would inhibit the ongoing development of logistics projects that we believe are marginal or unnecessary.That has proved not to be the case, at least until here very recently. And as a result, there has been more midstream logistics capacity built than we previously forecasted, and it's either has been built or under construction and that will increase competition and also the impact our volumes and margin."   "The second factor is the magnitude of the impact on regional markets and differentials that ship-or-pay arrangements have had and will likely continue to have during periods where volume growth falls short of company forecasts. "   "If current conditions remain challenging into early 2016, among the options we will need to consider is whether to view 2016 as a transition year with much lower distribution growth or as a year to defer any distribution growth until 2017 when coverage increases as a result of meaningfully higher EBITDA levels related to our various growth projects”   These comments accelerated the declines and sent PAGP into a free fall as 0% 2016 PAA distribution growth would mean that PAGP would only increase distributions from an increase in new unit issuance of PAA,  which given the drop in PAA, would make such issuance more expensive and further deteriorate Distributable Cash Flow.  The market seemed to disregard the fact that Plains expects to increase 2017 EBITDA by 30% as a result of projects, with firm commitments, which are in development.  Plains also targets a 1.05x coverage ratio, which means that in a down year, their growth would need to be funded by the balance sheet.  Although many other MLPs use this approach, Plains management takes a more conservative approach, and may defer growth for the long term benefit of unit holders.  At a 7.86% tax deferred yield and a strong balance sheet, Plains offers a very attractive entry point for what may be the worst case set of expectations.         Management Comments   This week, over 68 units reported their Q2 results, and below are a few noteworthy comments from the Q&A sessions   On Midstream Crude Pipelines Plains CEO comments to the question of where excess capacity exists "I would say in general it's across the board."  For which Energy Transfer's CEO responds to a similar question "The pipeline business will overbuild until the end of time. I mean that's what competitive people do. We've done it. Others have done it around us. And then you find yourself – you must scavenge a product from others when you see volume declines. Then how do you do that? Well, you provide more services than your peers do. You provide more optionality. So this is something we'll always live through. But I'll tell you, people that give guidance and then turn around and have a bad financial reporting period and then throw all of us under the bus. Hey, by the way, don't focus on us, focus on the industry. This is an industry problem. That gets a little frustrating for me."   On the Impact of Crude Storage Levels Plains CEO comments “So we're expecting to end the year somewhere between 23 million and 80 million barrels above normal. That's got to be worked off. We think that could make the first six months of 2016 difficult??   On Asset Valuations Plains CEO Comments "we've bid on 20 to 30 acquisitions where we felt very good about wanting to own those assets having synergies. And in many cases we were outbid by 30%, 40%, even 50%."   On Marcellus and Utica Volumes Targa CEO Comments "And I will tell you that I think the challenge for everybody up there right now is getting the takeaway capacity out of the area. And so, there's no doubt that the potential was there at this point. I don't think anybody that's involved or engaged in the there's an adequate call for it by the market. But as we sit today, the market – the supply side is desperate to see those expansion projects come online on the gas takeaway side to be able to alleviate that. So I think that's really the curtailment, if you will, right now, that will stop that from being – going gangbusters. "   "But the real impact was from shut-ins, particularly from producers up in the Susquehanna County area and some very substantial shut-ins that are due to lack of infrastructure availability."   On Following the MPLX Growth Strategy Since MPLX announced their plan to purchase Markwest Energy Partners, their units are down -22%.  High Growth sponsored units have declined and management teams have had to respond to questions of whether they will follow the MPLX growth strategy.  Dominion CEO comments "In terms of the MLP sector in general, it appears that some investors have shown concern based on recent transactions around change in business practice or at least change in philosophy on their business mix. DM will not go that way. DM is going to stay with what we told investors in February. That we have a great dropdown story, regulated assets, very firm earnings. And if we decide to acquire anything, it will fit that same portfolio."   On Whether LNG contracts are being renegotiated Dominion's CEO, which is developing the Cove Point LNG terminal for exports, comments "No".   On Frac Sand Pricing Emerge Energy CEO comments "With more than two-thirds of our contracts tied to a WTI pricing index, we believe this unique approach with our customers will provide higher confidence that our sand prices will recover quicker and to perhaps higher levels than many other proppant suppliers….the contract amendments that are WTI linked do not provide for price reductions with a move below $50. So, there are certain thresholds that are in place to take advantage of increases in WTI above the $50 threshold. And the contracts vary by customer and move in different threshold levels, but where we don't have downside in our pricing because of the recent drop below $50. "   Funds and Flows   Over the last 2 years, MLP ownership has become more concentrated by institutions who offer packaged funds. Since 2013, individual ownership of MLPs has increased by 10%, or 300,00,000 units, owned by 4.5MM individual entities, as per metrics reported by PwC.  Since 2012, fund assets have increased by $33B, primarily through the issuance of new funds.  Given the rapid losses associated with MLP funds as indicated below, fund outflows should be a concern, particularly for the large cap units held across most of the funds listed below.  The top 5 holdings for the Oppenheimer funds include ETE, ETP, EPD, MMP and WPZ as of 6/30/15.          With Crude trading at $45 and the fundamental outlook murky at best, Now is the time for investors to assess and discuss the opportunities and risks for MLP investments.  Please join a panel of seasoned experts on September 16th to learn more about MLP's and the most rewarding Income and Total Return strategies.   MLPData is in the final stages of developing a broader set of content and applications to help investors select, manage and monitor their yield and total return investment objectives.  In early August, MLPData will be offering a new set of premium subscription features and will continue to maintain free access to a subset of the content.    If you have data or application suggestions for MLPData, please share it with us here.  Thank you to those who have shared their feedback and offered suggestions for further improving the site.   Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Aug 02, 2015

    MLP Weekly: Management Comments

    The market has some data to digest as 32 units reported their Q2 results and discussed their outlook for the remainder of 2016.   Investors now have a little more clarity on the impact of lower commodity prices on volumes and revenues, and are in a better position to assess the risks associated with a $50 crude price which may prevail through 2015.…

    The market has some data to digest as 32 units reported their Q2 results and discussed their outlook for the remainder of 2016.   Investors now have a little more clarity on the impact of lower commodity prices on volumes and revenues, and are in a better position to assess the risks associated with a $50 crude price which may prevail through 2015.  MLP's started the week strong, but gave back some of the gains after Enterprise Products reported their Q2 results.       Management teams provided insights into their performance, broader market conditions,  and the incremental demand for energy infrastructure.  After listening to over 60 hours of conference calls,  here are a few revealing comments collected from the earnings calls through Friday   On Fee Based Re-Contracting Risk Enterprise Product's CEO commented "As these contracts rollover, I think going out and doing demand fees is going to be more difficult, but in this price environment, you probably would step up and do percent of liquids. And instead of demand fees, maybe you're talking acreage dedication. So, you've got to be willing to – in answer to your question – rolling over demand fee, take-or-pay contracts is not easy. Renewing based on what the customer needs, we'll be successful at doing. But you've got to get in front of it and you've got to offer them what they can live with. "   On Fall Redetermination Rates for Borrowing After announcing a suspension of distributions, Linn Energy's CFO stated "if the bank's price decks stayed the same, I think the banks right now – the signals we're getting is that those decks are going to come down probably 5% across the board on both oil and natural gas. "   On Following Marathon's Growth Strategy for MPLX Phillips 66 Partners CEO responded "I think when we think about M&A, we want something that is a, if we did that it would have to be fee-based, it would have to be complementary and create additional options to continue that growth and drive that growth story for PSXP. And it has to be good for PSXP unitholders, as well as benefit PSX.   In their Sponsor's call, Phillips 66 CEO also commented "And then I think you also have to acknowledge that everyone gets treated fairly whether it's the GP or the LP unitholders. And so think that you have to think that all the way through in terms of the partnership."   On Bakken Production Enbridge Energy Partner's CEO responded when asked about the risks of lower Bakken production "The most recent numbers that I saw is well in excess of 600,000 barrels a day of production from the Bakken that's still moving out of there on rail. So it's going to have to go on awful long ways in direction before we would foresee that it would start truing into the pipeline volumes that we're seeing the negative. "  Enbridge also commented "So we are seeing a good level of supply still in North Dakota. We are not really seeing a falloff in the production that one would maybe attribute if you just looked at the falloff in rig count."   On Oil Sands Production Enbridge CEO added "To-date so far this year, everything is right on target with what we had expected to seeing or continuing to hear from those people that have projects under development that are going to ramp up the heavy side of production through 2018 or so that everything is a go there."   On Northeast Gas Production William's CEO in response to the record EQT well results "And I will tell you that I think the challenge for everybody up there right now is getting the takeaway capacity out of the area. And so, there's no doubt that the potential was there at this point. I don't think anybody that's involved or engaged in the business up there doubts the potential.  And especially, in areas where you already have pads established for the Marcellus wet and even some of the Marcellus dry, the underlying Utica under that and the ability to take advantage of the existing pads and existing infrastructure to bring that production on is where we think a lot of that big production will come on when there's an adequate call for it by the market. But as we sit today, the market – the supply side is desperate to see those expansion projects come online on the gas takeaway side to be able to alleviate that. So I think that's really the curtailment, if you will, right now, that will stop that from being – going gangbusters, but it is impressive. "   Williams commented further on lower gathering volumes "But the real impact was from shut-ins, particularly from producers up in the Susquehanna County area and some very substantial shut-ins that are due to lack of infrastructure availability. "   "So we hear the term gas price there, but in fact, it really – the problem isn't the gas prices. They were enjoying $2.70 gas price up there. They would be pulling everything they could, but in fact, with all the constraints and lack of takeaway infrastructure right now, they're not getting that kind of pricing level and so some of those big producers start to bid against themselves as they put additional supplies into the market and so they're taking actions to curtail that production ."   On Shipping Refined Products Capital Product Partner's stated "The product tanker market continued improving in the second quarter of 2015, with spot freight rates at the highest level since the third quarter of 2008. Growing global oil demand and high refining margins in both Asia and Europe have been supporting refined product movements. In the Atlantic, product tankers generated strong returns in the spot market on the back of increased imports into U.S. East Coast. Concurrently, exports from the U.S. Gulf remained close to record levels during the second quarter, contributing to the strong sentiment in the market. "   Units News   Midcoast Energy Partner's was the week's leader after Sponsor Enbridge reported that they will forgo the necessary distributions from MEP to EEP over the next 30 months in order for the MEP Partnership to achieve a 1.0x coverage ratio.  Enbridge plans to drop assets down to MEP in 2016, and indicated that it is willing to receive MEP equity to fund the transaction, a likely necessity if MEP continues to trade with an 11% yield.  Enbridge also announced that due to market conditions, meaning their 7.41% forward yield, they will not be pursuing any further sponsor drop downs until maybe 2016.   Tallgrass Development, the Sponsor of Tallgrass Energy Partners, announced the Rockies Express Pipeline, began East to West operations on August 1st, bringing Appalachian gas to the Midwest across 1700 miles of 42" and 36" inch pipelines.   The pipeline will send over 1.2 billion cubic feet of gas from the Marcellus and Utica regions to the Chicago and Midwest markets.   Williams announced their strategic review process will delay the potential acquisition of Williams Partners from the previously communicated Fall period.  The company was tight lipped about any details of the review, even opting not to indicate whether a data room has been opened in support of a potential transaction.   Linn Energy announced the suspension of their monthly distribution, which to some investors and analysts, came as a surprise.  We imagine that there are some difficult conversations to be had between financial advisors and their income oriented clients about the rapid loss of principal and income.  The upstream MLP model was developed upon the assumption of profitable production, which at $50 crude, is a significant challenge for many producers, if current prices continue past their hedges.       Distributions   Last week, of the 33 units which reported Q2 distributions, 17 reported increases, 2 reported decreases or suspensions, and 14 were unchanged from the previous quarter.  In spite of the headlines warning of suspended distributions, the sector continues to generate higher distributions from operating cash flows.           With Crude trading at $50 and the fundamental outlook murky at best, Now is the time for investors to assess and discuss the opportunities and risks for MLP investments.  Please join a panel of seasoned experts on September 16th to learn more about MLP's and the most rewarding Income and Total Return strategies.   MLPData is in the final stages of developing a broader set of content and applications to help investors select, manage and monitor their yield and total return investment objectives.  In early August, MLPData will be offering a new set of premium subscription features and will continue to maintain free access to a subset of the content.    If you have data or application suggestions for MLPData, please share it with us here.  Thank you to those who have shared their feedback and offered suggestions for further improving the site.   Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC    

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    Jul 21, 2015

    Safe Haven Units Now at Risk

    It has been a challenging 11 months for MLP investors and the benchmark index has fallen over 25% with the prospect of higher rates and weaker energy prices by the end of the year.  As organic growth projects have become more difficult to find anchor sponsors, mergers and acquisitions have been the answer for some MLP's to develop growth opportunit…

    It has been a challenging 11 months for MLP investors and the benchmark index has fallen over 25% with the prospect of higher rates and weaker energy prices by the end of the year.  As organic growth projects have become more difficult to find anchor sponsors, mergers and acquisitions have been the answer for some MLP's to develop growth opportunities in the future.  On July 13th, Marathon's MPLX announced the acquisition of MarketWest Energy Partners, indicating a 32% premium from the prior close.  Investors had no chance to realize such a premium, as MPLX sank 15% after the announcement, and closed out the week 19.45% lower, leaving MarketWest unit holders with a paltry 9.5% equity premium and a one time cash payment of $3.37, for a total 13% premium.     So how did 19% of the premium evaporate over the 5 days since the announcement?  For starters, MPLX unit holders had assumed they purchased a high growth (25% 3 year CAGR) LP which would financially engineer growth by dropping chunks of the $1.6B of MPC EBITDA assets down into the LP, using their balance sheet to finance the transactions.  After the announcement, MPLX  management projected a 29% growth rate for 2015, and >= 25% through 2017, and then "peer leading" thereafter. The previously financially engineered growth rate has now likely been reduced, and the lower rate is now subject to greater risk from the new asset base.  Further, the combined company will now be paying 50% of all incremental distributions as Incentive Distribution Rights payments to Marathon Petroleum, the owner of the General Partner and IDR's.  The 217MM new units of MPLX will also be incrementally paying IDR fees to MPC, which were not burdened previously by MWE's lack of IDR's.       If the deal is completed in Q4 as previously announced, MarkWest Energy unit holders will be receiving cash roughly equivalent to difference between the MWE and MPLX per unit distribution rate, after adjusting for expected growth,  for the next two years (currently MPLX pays out $1.64 and MWE $3.64 per unit).   By 2017, the MPLX distribution rate should be $3.06 per unit, a 15% reduction from the current MWE distribution rate.   One has to add back the lower risk, lower cost of capital and higher forward growth rate, which over the longer term (2017-2020), should lead to both higher income and total returns for MarkWest Unit holders.  The same cannot not be said for MPLX unit holders, who have been punished with a 19.5% discount to their closing value prior to the announcement.  Making the future less certain is the higher number of units, and their associated IDR burden of 50%.  Together, MPLX investors are facing a lower growth, higher risk MLP than they owned prior to the announced acquisition, which is a game changer for total return investors who have found relative safety by investing in the sponsored drop down units in the table below.           MLPData is in the final stages of developing a broader set of content and applications to help investors select, manage and monitor their yield and total return investment objectives.  In the next two weeks, MLPData will be offering a new set of premium subscription features and will continue to maintain free access to a subset of the content.    If you have data or application suggestions for MLPData, please share it with us here   Comments or Questions for MLPData?  Please respond here   All Data is collected and provided by MLPData LLC

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    Jul 12, 2015

    MLP Weekly: 31 Days to Clarity

    Another volatile week for Master Limited Partnerships as the thinly traded market continues to fear the impact of higher interest rates, prolonged energy price weakness, and most of all, lower long term organic growth.  While each day presents seemingly little new data about these risks, the market speculation has continued to lead to a volatile an…

    Another volatile week for Master Limited Partnerships as the thinly traded market continues to fear the impact of higher interest rates, prolonged energy price weakness, and most of all, lower long term organic growth.  While each day presents seemingly little new data about these risks, the market speculation has continued to lead to a volatile and downw