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  • Stats For E&P MLPs 4-25-14 0 comments
    Apr 27, 2014 9:03 PM

    One of the half-truths (or hyperbole's) of investing that I strongly believe in - "There are no bad stocks, there are only bad portfolios." MLP E&P stocks are relatively low growth and relatively high risk investments. This conservative (or risk sensitive) investor would say that a MLP portfolio that derives more than a third of its income from E&P MLPs is a bad portfolio.

    I own units in ARP. I purchased ARP when I sold shares in BDC TCAP. I needed to replace the income. To borrow an explanation from my unwritten book ("Everything you need to know about investing you can learn from the lyrics in Rock n' Roll") - it was a decision where I used the lyrics of Glen Campbell's Wichita Lineman - it was a case where "I need you more than want you". It was also the case that ARP had the most attractive yield + distribution CAGR. That decision was made in July of 2013.

    Arp has had very good distribution growth since my purchase. ARP still has a below average distribution/DCF ratio - which implies better than average distribution growth. The projected 2015 DCF/distribution ratio is even more attractive. So I still feel good about the decision. The fact that ARP is a relatively small holding in my total MLP portfolio assists with being comfortable in that decision.

    The data:

    MLP E&P Stocks
    On 4-23 EROC suspended all distributions until midstream assets are sold. The yield is based on the Q1 distribution.

     12-31-13CurrentDistrib/Q1 DistDist/dcfDist/dcfYear-to-Date Percent Change
     PricePriceQuarterYield20142015PricePr+DistEPSTargetDCFDist*cagr

    ARP20.4820.270.580011.4585.9378.38-1.031.81-89.801.34-0.3720.830.00
    BBEP20.3420.340.49259.6987.9581.400.002.42-14.020.96-0.444.79-20.00
    EROC5.954.380.150013.7098.3695.24-26.39-23.87-60.00-20.92-11.59-31.820.00
    EVEP33.9336.520.77108.4496.9883.357.639.9115.15-5.62-5.640.52-37.50
    LINE30.7928.560.724810.1584.0379.65-7.24-4.899.03-0.33-8.97-0.03-50.00
    LGCY28.1625.960.59009.0985.2086.76-7.81-5.72-6.35-4.29-2.123.5111.11
    LRE17.0317.730.490011.0589.9186.344.116.99-19.833.55-10.292.08-20.00
    MCEP22.8522.940.51508.9872.2874.100.392.65-13.94-1.22-14.414.04-14.29
    MEMP21.9422.960.55009.5883.0286.274.657.16-4.614.22-8.938.37-25.00
    QRE17.1218.300.487510.6690.7095.596.899.746.15-0.901.900.000.00
    VNR29.5230.670.62258.1278.3078.063.906.0010.693.74-0.932.47-5.41

    The E&P Average 10.0886.6084.10-1.351.11-15.23-1.77-5.621.34 

    * Distribution growth is year over year - or Q1-14 dividend by Q1-13 Distribution dates used were:

    ARP : monthlyBBEP : monthlyEROC : 02-14EVEP : 02-14LINE: monthlyLGCY: 02-14
    LRE : 02-14MCEP: 02-12MEMP: 02-14QRE: monthlyVNR: monthly

    Historical MLP E&P Month-End Yields:

    Jan 09: 15.90%Feb: 18.45%Mar: 19.60%April: 15.48%May: 15.24%June: 10.58%
    July 09: 9.39%Aug: 7.75%Sept: 7.10%Oct : 7.49%Nov: 7.32%Dec: 6.47%
    Jan 10: 6.43%Feb: 6.30%Mar: 7.04%April: 6.68%May: 8.90%June: 8.53%
    July 10: 7.62%Aug: 7.90%Sept: 7.48%Oct : 7.10%Nov: 7.06%Dec: 6.59%
    Jan 11: 6.31%Feb: 6.17%Mar: 6.01%April: 5.78%May: 6.27%June: 6.37%
    July 11: 6.37%Aug: 6.68%Sept: 7.17%Oct : 6.50%Nov: 6.80%Dec: 6.42%
    Jan 12: 6.42%Feb: 7.41%Mar: 7.41%April: 7.50%May: 8.82%June: 8.70%
    July 12: 8.18%Aug: 7.94%Sept: 7.70%Oct : 7.59%Nov: 8.24%Dec: 8.73%
    Jan 13:Feb:Mar:April:May:June: 8.64%
    July 13: 8.68%Aug: 10.19%*Sept: 9.80%Oct : 9.89%Nov: 10.12%Dec: 9.79%
    Jan 14: 9.76%Feb: 9.93%Mar: 10.05%April:May:June: 8.64%

    * 1st month where EROC replaced CEP. Oct was 1st month PSE was dropped.
    Sector average yield stats are not that useful due to several E&Ps [like ATN, BBEP, CEP and QELP] eliminating distributions in 2008 and 2009, and with BBEP re-starting distributions in 2010. In February of 2012, LRE, MCEP, MEMP and QRE were added to the sector, dropping the influence of zero distribution paying CEP had on the sector average. Due to those distortions, the month end yield history on LINE is also included below as a representative of sector yields for each time period.


    Historical LINE Month-End Yields:

    Jan 09: 15.47%Feb: 16.79%Mar: 16.91%April: 15.24%May: 12.76%June: 12.88%
    July 09: 11.26%Aug: 11.84%Sept: 11.00%Oct : 10.29%Nov: 10.60%Dec: 9.04%
    Jan 10: 9.68%Feb: 9.56%Mar: 9.80%April: 9.30%May: 10.30%June: 9.49%
    July 10: 8.21%Aug: 8.84%Sept: 7.88%Oct : 7.75%Nov: 7.27%Dec: 7.04%
    Jan 11: 6.67%Feb: 6.80%Mar: 6.78%April: 6.54%May: 6.79%June: 6.76%
    July 11: 6.89%Aug: 7.29%Sept: 7.74%Oct : 7.13%Nov: 7.58%Dec: 7.28%
    Jan 12: 7.25%Feb: 7.23%Mar: 7.23%April: 6.86%May: 8.16%June: 7.61%
    July 12: 7.32%Aug: 7.29%Sept: 7.03%Oct : 6.89%Nov: 7.32%Dec: 8.23%
    Jan 13:Feb:Mar:April:May:June: 8.74%
    July 13: 10.72%Aug: 12.02%Sept: 11.60%Oct : 10.47%Nov: 9.53%Dec: 9.42%
    Jan 14: 8.84%Feb: 9.10%Mar: 9.91%April:May:June: 8.74%

    E&P DCF and Price/DCF Stats 04-25


     DCF / Unit [in cents]DCF GrowthP/DCF Ratios
    Co.200920102011201220132014201512-1313-1414-15201320142015

    ARP00019323627029622.28%14.41%9.63%8.597.516.85
    BBEP230238222210202224242-3.81%10.89%8.04%10.079.088.40
    EROC162105100100716163-29.00%-14.08%3.28%6.177.186.95
    EVEP340297363355240318370-32.39%32.50%16.35%15.2211.489.87
    LINE300320350325295345364-9.23%16.95%5.51%9.688.287.85
    LGCY2452322722602712772724.23%2.21%-1.81%9.589.379.54
    LRE000200191218227-4.50%14.14%4.13%9.288.137.81
    MCEP0002302502852788.70%14.00%-2.46%9.188.058.25
    MEMP0002352412652552.55%9.96%-3.77%9.538.669.00
    QRE00187225200215204-11.11%7.50%-5.12%9.158.518.97
    VNR274268331310255318319-17.74%24.71%0.31%12.039.649.61

    Average      -6.3712.113.109.868.728.47

    Yield + CAGR Total Return Expectations


    CompanyQ1-14ConsensusTotalBondsMyTot RtnConsensusPr Impl
      YieldCAGRReturnRatingsRRRs- RRRRatingsCAGR

    AtlasARP11.45%4.00%15.45%NR13.501.952.42.05
    BreitBurnBBEP9.69%2.00%11.69%B12.70-1.011.63.01
    EagleRockEROC13.70%0.10%13.80%B12.701.102.5-1.00
    EV EnergyEVEP8.44%2.50%10.94%B-13.00-2.062.14.56
    Linn EnergyLINE10.15%2.00%12.15%B13.00-0.852.42.85
    LegacyLGCY9.09%3.00%12.09%B-12.70-0.612.03.61
    LRR EnergyLRE11.05%2.00%13.05%NR13.50-0.452.32.45
    Mid-ConMCEP8.98%3.00%11.98%NR13.50-1.521.84.52
    MemorialMEMP9.58%3.00%12.58%B-13.00-0.421.73.42
    QR EnergyQRE10.66%1.00%11.66%B-13.00-1.342.12.34
    VanguardVNR8.12%3.50%11.62%B12.70-1.081.94.58

    Average 10.08%2.37%12.46%   2.07

    Disclosure: I am long ARP.

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