The market for master limited partnerships in 2014 has so far been a bumpy ride, with the Alerian MLP Index having fallen by 1.2% since the start of this year, compared with a 20.4% rise in 2013. A repeat of last year's performance may be unlikely, but the market is still abound with MLPs offering high sustainable yields with prospects of further growth. The following MLPs have been making acquisitions and developing organic projects in anticipation of increased drilling activity in the Eagle Ford Formation, which should enable the partnerships to continue to grow their cash distributions in the medium term. Despite these growth prospects, they offer a distribution yield of 7% or above.
Regency Energy Partners LP (NYSE:RGP) focuses on the gathering and processing, contract compression, contract treating, transportation, fractionation and storage of natural gas and natural gas liquids. In 2013, Regency Energy spent $948 million on organic growth plans, with the majority of projects being located in Louisiana and Texas. The total NGL transportation throughput volumes has already risen to an average of 164,000 barrels per day in 2013, from 134,000 barrels per day in 2012. The partnership's own organic Eagle Ford Expansion Project is expected to reach final completion this year, which should continue to see throughput volumes continue to grow in the foreseeable future.
In December, Regency Energy announced its intention to purchase Eagle Rock Energy Partners's (NASDAQ:EROC) midstream business for approximately $1.3 billion. It follows Regency Energy's acquisition of the midstream assets of Hoover Energy Partners and an agreement to buy PVR Partners LP (NYSE:PVR) for approximately $3.88 billion. Eagle Rock's midstream assets will complement its gathering and processing business and further diversify Regency's basin exposure in the Texas Panhandle, East Texas and South Texas. It would also help to reposition Regency Energy more towards areas with natural gas liquids and provides strong growth opportunities with the expected increase in drilling activity over the coming years.
Adjusted EBITDA in 2013 increased by 18% to $608 million, from $517 million in 2012. Distributable cash flow rose 33% to $411 million, from $310 million in 2012. With cash distributions totaling $1.87 in 2013, RGP has a distributable cash flow coverage ratio of 1.01x. Although, Regency Energy's recent acquisition spree has put off many investors on concerns of rising indebtedness and dilution through the issuances of new limited partner units; these acquisitions position the partnership towards future growth prospects. Some of those concerns could be offset by the partnership's distribution yield of 7.0% and its robust coverage ratio. In addition, Regency's management has indicated that it intends to grow cash distributions at between 6-8% in 2014.
Williams Partners LP (NYSE:WPZ) operates interstate natural gas pipelines and midstream assets for the gathering and processing of natural gas. The partnership expects to introduce approximately $4.5 billion worth of projects into service between 2014 and 2015, from organic capital spending and bolt-on acquisitions. This includes expansions to its Transco pipeline, which is a pipeline system that connects 12 states from the Gulf coast of Texas to New York, to support growing demand from unconventional sources of natural gas. In addition, there is an upgrade to the Geismar Olefins Plant, the construction of fractionation and additional processing facilities at Ohio Valley Midstream and the expansion of the Redwater facility in Alberta, Canada.
Adjusted EBITDA in 2013 declined by 3% to $2,485 million, from $2,563 million in 2012. The lower profitability was mainly attributed to declines in production from the Piceance basin area due to adverse winter conditions and lower NGL margins in the Western operating area. Lost production from the Geismar plant incident in June 2013 was also a factor in the decline in EBITDA, and the plant would remain a drag on profitability until June 2014. The partnership is also trying to reduce its exposure to commodity prices, by the rapid development of fee-based pipeline extension projects.
Distributable cash flow rose 19% to $1,771 million, from $1,489 million in 2012. With cash distributions totaling $3.48 in 2013, WPZ has a distribution yield of 7.2%. Its distributable cash flow coverage ratio is 0.90x, and its net debt-to-adjusted EBITDA is 3.7x. WPZ expects the coverage ratios to recover to 0.97x in 2014, and 1.03x in 2015, with its guidance for annual distribution growth of approximately 6% in each of 2014 and 2015.
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