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MLP Weekly: Holding Steady, Fewer Options

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Midstream units continue to gain modestly from higher oil and booming production, in spite of new trade tariffs and further threats which may impact US energy exports and increase the costs of pipeline materials.  The recent OPEC announcement, and oil's response, should be a tailwind for units in the coming week.  However, the universe of MLP structures continue to contract as Cheniere Energy followed through on their plans to roll their majority owned LLC, which owns nearly 50% of the their MLP units, Cheniere Energy Partners,  back into the C-Corp in all stock tax free transaction.  Below is the current status of the largest midstream MLPs, Red indicates an announced transition to C-Corp and Yellow that a Sponsor is considering a strategic review of their MLP vehicles or the Sponsor has recently been acquired, both of which elevating the risk of a C-Corp conversion.

 

 

MLP Dashboard

 

 

While the number of MLP vehicles are contracting, an industry trade group forecasts Capital expenditures for new oil and gas infrastructure development will total an average of $791 billion from 2018 through 2035, while acknowledging the peak investment will occur by 2019.

 

 

INGAA Table

 

 

MLP Fund Holdings

 

With a dwindlng set of MLP alternatives, Funds have a smaller pool of names to invest and maintain their allocations.  Below are the largest actively managed MLP funds along with their most recently reported top 10 positions.  Most are exposed to Energy Transfer's potential Simplification in early 2019 by way of the LP rather than the GP.  

 

 

MLP Fund Concentrations

 

 

These funds have stemmed the outflows from earlier in the year and recently have seen a modest increase in flows the last few weeks.  

 

 

 

Fund Flows

 

 

Large Cap Midstream Yield To Coverage

 

Chart below plots the Trailing Twelve Month DCF coverage ratios with the forward annualized distribution yield  Premium Subscribers can access the full midstream universe here

 

Yield To Coverage

 

 

Second Quarter Distribution Announcements and Earnings should begin in the next few weeks.   Follow MLPData for the latest announcements.

 

 

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