Thu, Nov. 5, 11:59 AM
- Plains All American Pipeline (PAA -2.3%) is downgraded to Neutral from Buy with a $38 price target, cut from $46, at Credit Suisse after PAA lowered its EBITDA guidance by ~13% and reiterated its outlook for “a tough 2016 in terms of volumes and margins.”
- On top of the downgrade, the firm also trims its price target for Plains GP Holdings (PAGP -3.1%) to $20 from $26.
- PAA also is downgraded to Hold from Buy at Stifel, as management undergoes a review to right size its 2016 growth budget, determine the best sources of capital and cut operating costs; as domestic crude oil production declines and competition increases, the firm expects PAA to experience lower transportation volume growth and margins.
Wed, Nov. 4, 10:45 AM
- Plains All American Pipeline (PAA -6.9%) opens sharply lower after Q3 earnings topped estimates while revenues fell nearly 50% Y/Y, as the oil price slump and production cutbacks ate into its profit.
- PAA says Q3 adjusted EBITDA - its preferred gauge of performance - fell to $497M, down 8% Y/Y but $17M above the midpoint of its guidance range, while Q3 net income slipped to $249M from $323M a year ago.
- The biggest hit came in the supply and logistics segment, where adjusted profit fell 33% Y/Y, mostly due to lower profit margins and less oil moving through the pipes PAA owns closest to the wellhead.
- PAA also says it will issue a quarterly distribution of $0.70/unit "next week," up 6.1% from the $0.66 paid in the year-ago quarter, while Plains GP Holdings (PAGP -15.9%) will pay a quarterly distribution of $0.231/share, up 21.1% Y/Y.
Thu, Oct. 22, 3:30 PM
- MLPs are under pressure following Kinder Morgan's (KMI -5.7%) disappointing Q3 report in which it cut guidance for 2016 distribution growth (I, II)
- KMI is no longer classified as an MLP but its relevance to the group remains strong, and MLPs have needed to rely on access to the capital markets; 24/7's Jon Ogg explains that KMI's vagueness about its plans to access new capital has dragged down the entire MLP sector today: MMP -3.5%, EPD -3.2%, ETP -3.1%, ETE -2.2%, WMB -1.8%, PAA -1.4%.
- "There is just no getting away from the fact that a major energy company with a market capitalization of $69B just said that its access to public equity now comes at such a cost that it will go elsewhere, [which] should cause at least a few ripples of concern across the industry," Bloomberg's Liam Denning writes.
- Brace for more waiting games from MLPs this quarter, Wunderlich's Jeff Birnbaum says, expecting many companies to delay providing their 2016 forecasts until later in the year when they have better indications from upstream companies about their plans, which could lead to renewed selling after a 20% gain in the Alerian MLP Index since it bottomed Sept. 29.
- ETFs: AMLP, AMJ, KYN, MLPL, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, MLPN, SRF, FEI, JMF, CBA, MLPX, GMZ, EMO, MLPS, TTP, CTR, AMU, CEN, GER, AMZA, SMM, MIE, DSE, ENFR, FPL, ATMP, JMLP
Thu, Sep. 3, 12:38 PM
- Holly Energy Partners (HEP +0.3%) agrees to acquire Enbridge’s (ENB +2.8%) 50% stake in the Frontier Pipeline for an undisclosed amount.
- The Frontier pipeline is a 296-mile crude oil route that runs from Casper, Wyo., to Frontier Station, Utah, and has a capacity of 72K bbl/day; the line brings Canadian and Rocky Mountain crude oils south to refineries in the Salt Lake City area.
- Plains All American (PAA +1.5%) owns the remaining 50% interest and will continue to operate the Frontier line.
Thu, Aug. 6, 3:58 PM
- Plains All American Pipeline (PAA -2.8%) suffers at least five analyst downgrades following yesterday's cut in 2015 distribution growth guidance to 6% from the 7% figure achieved in 2014, and that it is evaluating leaving the distribution flat in 2016 as a “transition year” before returning to distribution growth.
- "With PAA trading at a 7.7% yield, management may decide it is more effective to fund its substantial capex backlog with more internally generated cash vs. maintaining a below-average growth rate for PAA,” Wunderlich's Jeff Birnbaum writes in downgrading shares to Hold from Buy with a $37 price target, reduced from $56.
- With transportation and facilities projects ramping up, PAA's S&L margins could contract, the analyst adds.
- In downgrading PAA as well as Plains GP Holdings (PAGP -0.7%) to Neutral, Baird notes that much sooner than firm expected, the impact of infrastructure overbuild due to over-financed, overspending midstream players looks to reduce 2016 marketing margins as differentials collapse.
- PAA also was downgraded at Goldman, Deutsche Bank and UBS.
Wed, Aug. 5, 3:21 PM
- Plains All American Pipeline (PAA -11.1%) and Plains GP Holdings (PAGP -20.4%) are both sharply lower even as the companies met analyst expectations for Q2 earnings (I, II).
- But PAA lowered its estimate for FY 2015 adjusted EBITDA by $50M to $2.278B, not including contributions from its Line 901, which ruptured and spilled oil along the California coastline in May; PAA booked a $65M Q2 charge related to the incident.
- PAA also issued a cautious outlook, saying high crude oil and refined product inventory levels will influence oilfield activity and crude oil production levels over the next 6-12 months.
- Even worse, management hinted on this morning's earnings conference call that distribution growth could be in jeopardy in 2016 as competition increases among pipelines while oil prices fall.
- In response, PAA is downgraded to Neutral from Buy at UBS.
Thu, May 21, 11:23 AM
- Cleanup teams continue to work around the clock to remove patches of crude oil that stained a beach and fouled Pacific waters near the Santa Barbara, Calif., coastline from a pipeline rupture that could become the biggest oil spill to hit the area since 1969.
- Tuesday's spill could be as large as 2,500 barrels (105K gallons), 5x more than the original estimate, in a worst-case scenario outlined by pipeline owner Plains All American Pipeline (PAA -3.2%), which also estimates 500 barrels may have reached the ocean.
- PAA says it is investigating if pump malfunctions along the line, which led to the line’s temporary shutdown, may have played a role in the spill.
- The pipe that burst was built in 1991 and had been tested a few weeks ago, but the results had not yet come in, the company says.
- California Gov. Brown has declared a state of emergency in Santa Barbara County, a move that frees up additional state funding and resources to help in the cleanup.
Wed, May 13, 3:49 PM
- Energy MLPs are trading with mixed results, which is not in line with an analyst's expectation that several names in the space may be outperformers today after Williams Cos. (WMB +6.2%) agreed to buy Williams Partners (WPZ +22.7%).
- In an earlier note to investors, Credit Suisse named Plains GP Holdings (PAGP +1%), Targa Resources (TRGP +1.1%), NuStar GP Holdings (NSH -0.1%) and Western Gas Equity (WGP -0.7%) as MLPs that could climb on the news.
- Meanwhile, Wells Fargo says the deal is positive, since it reduces the WMB's cost of capital, will immediately increase its profits, and enhances its dividend growth outlook.
- Among major energy MLPs: EPD -1.5%, ETP +0.9%, PAA +0.2%, EEP -0.2%, MWE +2.2%, MMP -0.3%.
Wed, May 6, 12:44 PM
- Plains All American Pipeline (PAA -2.9%) is lower after Q1 earnings beat expectations but fell 26% Y/Y on a nearly 50% drop in revenue.
- PAA said it will pay a quarterly distribution of $0.685/unit while Plains GP Holdings (NYSE:PAGP) will pay $0.222/share, representing respective 8.7% and 30.2% increases over comparative distributions paid in the year-ago quarter.
- Q1 total costs and expenses were cut in half to $5.57B from $11.19B.
- PAA said it has an optimistic intermediate- to long-term outlook for the North American crude oil industry but is cautious in the near term “as high crude oil inventory levels present a challenge for the industry."
- PAA also revised its 2015 capex guidance to $2.15B, 16% higher than the previous forecast.
- In today's earnings conference call, PAA says the energy downturn could get "worse before it gets better," citing the reduction in rig count, slowing production growth and high levels for crude oil.
Wed, Feb. 25, 4:35 PM
- Plains All American Pipeline (NYSE:PAA) -3.4% AH after announcing a public offering of 21M common units, with an underwriters option to purchase up 3.15M additional units.
- PAA says it plans to use the proceeds to repay outstanding borrowings under its commercial paper program and for general partnership purposes, including acquisitions, joint venture investments and other expansion capital expenditures.
Tue, Feb. 3, 2:49 PM
- Veteran energy analyst Christopher Eades recommends a half-dozen safe oil majors, oilfield services firms and transport MLPs as the best bets to ride out the current storm - Halliburton (HAL +4%), Pioneer Natural Resources (PXD +2.2%), Hess (HES +3.2%), Occidental Petroleum (OXY +2.1%), Enterprise Products Partners (EPD +1.4%) and Plains All American Pipeline (PAA +2.4%) - all companies with strong balance sheets, strong growth prospects, and healthy yield levels with no dividend cuts on the table.
- Eades says he is "more enthusiastic about MLPs than I've been in some time," as the group has essentially given up two years’ worth of gains yet cash flow fundamentals have been largely unchanged - "to me, that sounds like a good opportunity, particularly in a world still so starved for yield."
Nov. 28, 2014, 10:20 AM| Nov. 28, 2014, 10:20 AM | 17 Comments
Oct. 15, 2014, 3:18 PM
- MLPs have been crushed this week, and today Citi warns that the rapid drop in oil prices has created a "negative feedback loop on spending” and that a 15% drop in oil-directed drilling activity would result in a 50% drop in oil production growth.
- It Brent oil prices stabilize at $85-$90, Citi thinks the MLPs exposed mostly to oil and natural gas liquids would rebound modestly as a new equilibrium is developed between producers and midstream companies on spending; if crude continues to slide, Citi says MLPs exposed to natural gas would outperform.
- Miller Howard, a money manager specializing in income-producing stocks, is blaming newbie investors who don't fully understand MLPs and are "in it for the yield."
- Most MLP contracts are very long term, meaning that a temporary change in the oil price has no effect on those sources of revenue, Howard says, adding that "there is far from enough infrastructure to serve the domestic energy industry, even if it slows a bit."
- Some big MLPs have turned higher even as most stocks plunge: KMI +1.8%, KMP +1.5%, EPD +4.8%, PAA +3.7%, ETP +4%, ETE +8.6%, RGP +7.2%, CQP +6.6%, TEP +5.2%, PSXP +4.1%, MMP +7.1%, PAGP +4.9%, EEP +2.1%.
- ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP, MLPW, AMZA, IMLP, OSMS
Oct. 14, 2014, 12:33 PM
- MLPs have been brutalized lately, with the benchmark Alerian MLP Index (AMJ +0.5%) plunging 13% in the past week and down another 3% earlier today, but at least some in the group have been trying to bounce back in the past hour or so.
- J.P. Morgan strategists are sticking with their bullish central thesis on MLPs, saying prolific production from unconventional energy plays will keep demand high for new energy infrastructure; the firm believes most core acreage in leading shale plays continues to be economic at current commodity prices, which should drive strong long-term growth prospects for MLPs.
- JPM favors MLPs owning high-quality, diversified assets with strong management teams and proven track records, naming Kinder Morgan (KMI -1.5%), Enterprise Products Partners (EPD +2.5%) and Plains All American Pipeline (PAA -1%).
- ETP +3.7% and OKS +2.5%, LINE +1.4%, but EROC -5.3%, CQP -4.5%, BBEP -2.5%, MMP -2.5%, TEP -2.1%, PSXP -2%, WPZ -1.1%, ACMP -0.5%.
- ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP, MLPW, IMLP, AMZA, OSMS
Oct. 14, 2014, 11:49 AM
- Energy Transfer Equity (ETE +8%) and Plains GP Holdings (PAGP +4.4%) are higher after Baird upgrades both stocks to Outperform from Neutral with respective price targets of $65 and $32.
- Baird notes the crude oil marketing at underlying partnerships Sunoco Logistics (NYSE:SXL) and Plains All American (NYSE:PAA) create partial crude price exposure to ETE and PAGP, but the firm says it is comfortable with the risk given that the marketing business is relatively less exposed to price levels.
- Spread volatility is most important for ETE and PAGP, and the firm expects increased volatility to partially offset any volumetric headwinds in the event crude continues to fall and remain there for a prolonged period.
Mar. 5, 2014, 11:59 AM
- Robert W. Baird refreshes its outlook for master limited partnerships with six downgrades: five high-growth partnerships that now look fairly valued - NGL Energy Partners (NGL -1.8%), New Source Energy (NSLP -4%), Plains GP Holdings (PAGP -0.3%), Summit Midstream Partners (SMLP -0.6%) and Tallgrass Energy Partners (TEP -2.7%) - and are cut to Neutral from Outperform, and a reduction for Whiting USA Trust II (WHZ -0.7%) to Underperform from Neutral on elevated commodity risk.
- The firm recommends recycling capital into its top investment ideas: ONEOK Partners (OKS -1.2%), Plains All American Pipeline (PAA +0.9%), Rose Rock Midstream (RRMS +0.2%) and Crosstex Energy LP (XTEX -1.5%)
- Despite downgrading multiple high-quality MLPs, Baird says its long-term bullish view on the sector remains unchanged (Briefing.com).
Plains All American Pipeline LP is engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids.
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