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Ron Hiram  

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  • Anticipating Targa Resources Partners' Q2 2015 Results [View article]
    Hard to answer in a vacuum. Depends on how concentrated you are in this position, your need for current income, the composition of the rest of your portfolio, etc. My MLP holdings are biased towards partnerships with the strongest coverage ratios, but I do have smaller positions in others.

    I avoided Targa because I thought it was too concentrated in the Bakken, where it is more expensive to extract oil & to transport it to the market. By more expensive I mean relative to, for example, the Texas shale formations (Eagle Ford, Permian) and Marcellus/Utica. My thinking was that the Bakken, and for similar reasons the Canadian and midcontinent shale formations, are likely to be the first to see production cuts in response to lower oil prices. Having said that, I do not believe the dividend is under threat in the short term. Longer term (>1 year), distributions could be adversely impacted.
    Jun 9, 2015. 08:37 AM | Likes Like |Link to Comment
  • A Closer Look At Buckeye Partners' Distributable Cash Flow As Of Q1 2015 [View article]
    Yes, probably by end of next week
    May 28, 2015. 09:19 AM | Likes Like |Link to Comment
  • Preliminary Review Of Energy Transfer Partners' Q4 2014 Results [View article]
    MLP Data computes coverage by dividing total DCF by distributions made to LPs. But LPs are not entitled to the entire amount of DCF. ETE (the general partner) gets a substantial portion. DCF coverage should be computed based on distributions made to all the partners. Therefore the denominator should be distributions to LPs + distributions to GP. The result will be a lower number than that shown by MLP Data.
    Feb 26, 2015. 09:04 PM | Likes Like |Link to Comment
  • Preliminary Review Of Energy Transfer Partners' Q4 2014 Results [View article]
    The coverage ratios in the link you sent are incorrect. ETP does not have, nor does it claim to have, 1.35x coverage.
    Feb 26, 2015. 08:59 AM | Likes Like |Link to Comment
  • Preliminary Review Of Magellan Midstream Partners' 4Q 2104 Results [View article]
    See my response to same question under PAA.
    Feb 13, 2015. 10:40 AM | Likes Like |Link to Comment
  • Preliminary Review Of Plains All American Pipeline's Q4 2014 Results [View article]
    The terms are defined in the article, e.g., EV = enterprise value. So EV/TTM EBITDA = enterprise value divided by earnings before interest, taxes and depreciation. More in depth descriptions of what these terms mean and their significance are easily obtained via Wikipedia.
    Feb 13, 2015. 10:39 AM | Likes Like |Link to Comment
  • Preliminary Review Of Plains All American Pipeline's Q4 2014 Results [View article]
    Higher coverage ratio is better. This is the only ratio in the tables I provided. The other numbers in the tables are either $ millions or per unit numbers, or % change from the same quarter a year ago.
    Feb 11, 2015. 12:51 PM | Likes Like |Link to Comment
  • A Closer Look At Plains All American Pipeline's Q3'14 Distributable Cash Flow [View article]
    Transportation and Facilities are fee-based businesses, while Supply & Logistics are margin-based activities associated with sale of gathered and bulk-purchased crude oil, as well as sales of NGL volumes purchased from suppliers (including the sale of additional barrels exchanged through buy/sell arrangements entered into to supplement the margins of the gathered and bulk-purchased volumes). Therefore it is not surprising that S&L accounts for the bulk of PAA's revenues and expenses. It makes more sense to look at segment profits than at revenues. For example, in 3Q14 Transportation generated $231m, Facilities $147m and S&L $152m. Margin-based activities are more volatile. Regarding the risk that S&L will wipe out the entire profit I can only point out that PAA's track record. S&L has made a positive contribution every single quarter, without exception, since at least 1Q10.
    Jan 13, 2015. 08:19 AM | 2 Likes Like |Link to Comment
  • A Closer Look At Plains All American Pipeline's Q3'14 Distributable Cash Flow [View article]
    PAA’s assets are located throughout North America in major crude oil production & liquids-rich areas, as well as inland and coastal terminal & interchange locations. It is therefore positioned to transport imported as well as domestically produced oil. PAA noted in its 2013 10-K that "While expected to decline, imports of foreign crude oil and other petroleum products are still expected to play a major role in achieving a balanced U.S. market on an aggregate basis. However, because of the substantial number of different grades and varieties of crude oil and their distinguishing physical and economic properties and the distinct configuration of each refinery’s process units, significant logistics infrastructure and services are required to balance the U.S. market on a region by region basis". PAA's infrastructure enables such balancing.
    Jan 11, 2015. 09:11 AM | Likes Like |Link to Comment
  • A Closer Look At Targa Resources Partners' 3Q'14 Distributable Cash Flow [View article]
    Targa recently reaffirmed that 2015 distributions will grow by 11-13% for NGLS and by 35% for TRGP. In 2015 it expects to achieve 1x distribution coverage with gas at $3.75 per MMBtu and with oil at $60 per barrel. No mention was made of expectations for 2016 and beyond. Given current prices of ~$2.93 per MMBtu and $48.80 per barrel, coverage may fall below the 1x threshold in 2015. There are numerous examples of MLPs that have not cut distributions despite negative (i.e., below 1x) coverage. I expect Targa will meet its distribution growth targets in 2015 even if coverage falls below 1x. I do not expect distribution cuts, at least not until we have several quarters of negative DCF coverage behind us. How many quarters depends on the magnitude of the drop in DCF coverage. As of now, my best guess is that it will not happen in 2015.
    Jan 11, 2015. 08:40 AM | Likes Like |Link to Comment
  • A Closer Look At Targa Resources Partners' 3Q'14 Distributable Cash Flow [View article]
    Targa is highly concentrated in the Bakken, where it is more expensive to extract oil & to transport it to the market. By more expensive I mean relative to the Texas shale formations (Eagle Ford, Permian) and Marcellus/Utica. So the Bakken, and for similar reasons the Canadian and midcontinent shale formations, are likely to be the first to see production cuts in response to lower oil prices. The larger price drop for NGLS vs. for example EPD, MMP, and ETP reflects this. Having said that, I do not believe the dividend is under threat in the short term. Longer term (>1 year), dividend growth could be adversely impacted.
    Dec 2, 2014. 11:24 AM | 2 Likes Like |Link to Comment
  • A Closer Look At Plains All American Pipeline's Q3'14 Distributable Cash Flow [View article]
    The major competitor to the proposed Keystone XL pipeline intended to transport Canadian oil to the Gulf Coast via Cushing is KMI’s Trans Mountain pipeline. PAA said it was evaluating the opportunity to connect to the Keystone XL and the TransCanada East systems.
    Nov 21, 2014. 09:31 PM | Likes Like |Link to Comment
  • A Closer Look At Plains All American Pipeline's Q3'14 Distributable Cash Flow [View article]
    Hard to answer this in a vacuum - the answer requires understanding how your entire portfolio is allocated to assets of different risk classes, the composition and volatility of your income-producing assets, how sensitive you are to a current yield reduction (from PAA's 4.86% to PAGP's 2.85%), whether/how you plan to make up for the foregone yield, your ability to absorb additional risk that come with the GP's prospects for faster distribution growth and capital appreciation. Other factor to consider: a) the lower level of liquidity in the GP units than in the underlying MLPs; b) while PAGP should provide superior growth, less dilution and better alignment of your interests with management's, you may be too concentrated in MLPs for your yield producing investments. If that's the case, there are more non-MLP alternatives to PAGP's 2.86% yield than to PAA's 4.86% yield.
    Nov 21, 2014. 09:05 PM | Likes Like |Link to Comment
  • A Closer Look At Energy Transfer Partners' 3Q'14 Distributable Cash Flow [View article]
    ETE will, at some point, drop down its interest in the Bakken Pipeline to ETP (which is already a partner and will see its stake increase) and/or SXL (which currently has no interest in this pipeline).
    Nov 21, 2014. 08:50 PM | Likes Like |Link to Comment
  • A Closer Look At Energy Transfer Partners' 3Q'14 Distributable Cash Flow [View article]
    Don't understand what are the "various contractions" you refer to.
    Nov 21, 2014. 08:47 PM | Likes Like |Link to Comment
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