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In an article dated December 19, 2011, regarding Buckeye Partners L.P. (NYSE:BPL) I noted the following:

What I see for the 9 months ending 9/30/11 causes me concern regarding BPL's ability to make distributions that are financed by operations, not by borrowings or sale of additional partnership units.

BPL issued a press release with its fourth quarter and year-end results February 10, 2012, reporting distributable cash flow (DCF) of $72.25 million for the quarter and $318.7 for the 12 2011. Following that, on February 13, Citigroup downgraded BPL to "Sell".

The reported DCF numbers are indeed good cause for concern:

Period:4Q112011
Reported DCF per unit$0.77$3.51
Distributions per unit$1.0375$4.075
Coverage ratio based on reported DCF0.740.86

Indeed, sustainable DCF was substantially lower than reported DCF in each of the first 3 quarters of 2010 and in each of the first 3 quarters of 2011. To review these numbers click here.

BPL currently yields 6.74%, but investors should be aware that a significant portion of what they are receiving does not seem to be generated from sustainable sources. I will take a closer look at the numbers and compare reported to sustainable DCF once BPL files its 10-K (which will include cash flow data not provided in the press release).

Source: Another Note Of Caution On Buckeye Partners L.P.'s Distributable Cash Flow