Spectra Energy: Marcellus Footprint Makes This A Compelling Dividend Growth Stock
Michael Fitzsimmons • 15 Comments
Michael Fitzsimmons • 15 Comments
Thu, Jan. 14, 3:26 PM
- Energy stocks are broadly higher as U.S. crude oil bounces off $30/bbl to end pit trading at $31.22, +2.6%; the SPDR Energy ETF (XLE +5.1%) soars 5%, with 36 of its 40 equity components trading higher, after closing yesterday at its lowest level since September 2010.
- Exxon Mobil (XOM +5.5%) and Chevron (CVX +5.9%) are the Dow's top two gainers; and pipeline companies sport strong showings with Kinder Morgan (KMI +8.2%), Plains All American Pipeline (PAA +11.7%) and Williams Cos. (WMB +27.4%) among the biggest winners.
- Among other major energy movers: ETE +22.6%, BP +7.6%, MRO +7.5%, OXY +7.1%, PBR +7%, COP +7%, RDS.A +6.7%, SE +6.1%, PSX +6.1%, ETP +6.1%, EPD +5.3%, APA +5%, E +4.6%, HES +4.1%, MPC +4.1%.
- Amid overwhelmingly negative sentiment, a few analysts are venturing out to say the worst may be over or nearly so: Deutsche Bank’s Torsten Slok thinks "we now have the worst behind us in terms of the negative impact of falling oil prices on the economy," and Gluskin Sheff’s David Rosenberg argues that the oil selloff is getting “long in the tooth.”
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, BGR, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXI, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
Tue, Jan. 5, 8:41 AM
- Spectra Energy (NYSE:SE) declares $0.405/share quarterly dividend, 9.5% increase from prior dividend of $0.37.
- Forward yield 6.55%
- Payable March 8; for shareholders of record Feb. 12; ex-div Feb. 10.
Dec. 10, 2015, 7:18 PM
- Widespread MLP distribution cuts are "possible but unlikely," Fitch Ratings says, as most MLPs are not as highly leveraged as Kinder Morgan and do not have such large capital funding requirements.
- But some analysts are coming out with MLPs they say are in need of capital market funding options; Morningstar's Josh Peters, for example, "would be worried" about Plains All American Pipeline (NYSE:PAA) and Plains GP Holdings (NYSE:PAGP), as well as ONEOK (NYSE:OKE) and ONEOK Partners (NYSE:OKS).
- At the same time, Peters says he is "very comfortable and very confident" in Magellan Midstream Partners (NYSE:MMP), Spectra Energy (NYSE:SE), Spectra Energy Partners (NYSE:SEP) and Enterprise Products Partners (NYSE:EPD) - all of which were much more conservative than necessary in the boom days and are now set to benefit in the current environment.
- Christopher Sighinolfi of Jefferies, the analyst who suggested KMI cut its dividend to a penny, tells CNBC that the most imminently similar company to KMI is Targa Resources (NYSE:TRGP), which has a nearly 12% dividend yield and is down 70% YTD; he also raises the possibility of distribution cuts at EnLink Midstream (NYSE:ENLC), OKE, PAGP and SE.
- ETFs: AMLP, AMJ, KYN, MLPL, YMLP, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, MLPN, SRF, FEI, JMF, CBA, MLPG, MLPX, GMZ, EMO, MLPS, MLPY, TTP, CTR, YMLI, AMU, CEN, MLPJ, ZMLP, GER, AMZA, SMM, MIE, DSE, ENFR, FPL, ATMP, JMLP, MLPC, MLPW, IMLP
Nov. 4, 2015, 6:33 AM
- Spectra Energy (NYSE:SE): Q3 EPS of $0.23 beats by $0.01.
- Revenue of $1.10B (-9.1% Y/Y) misses by $200M.
Nov. 3, 2015, 5:30 PM
- AFAM, AGN, AMRN, ARCC, ARCO, ARQL, ARRY, AVA, AVP, AXAS, BDX, BIOS, BSFT, CBB, CDW, CECO, CHK, CLH, CRK, CRL, CRTO, CRZO, CST, CSTE, CTSH, DAVE, DDD, EE, EMES, FOR, FOXA, GDP, HAE, HEP, HMC, HSIC, HSNI, INXN, KELYA, KORS, LINC, LL, MEMP, MFA, MNTA, MSI, MWE, NAVB, NCT, NEWP, NRG, NYLD, REGN, SBGI, SCMP, SE, SHOP, SNH, SODA, SSYS, STNG, TESO, TMHC, TWX, USAK, VG, VOYA, VRTU, VSI, WCG, WD, WEC, WEN, WILN, WIX, WMC
Oct. 19, 2015, 8:58 AM
- Spectra Energy (NYSE:SE) agrees to acquire Spectra Energy Partners' (NYSE:SEP) one-third ownership interests in the Sand Hills and Southern Hills natural gas liquids pipelines in exchange for redemption and cancellation of 21.56M limited partner units and 440K general partner units.
- SE also says it has executed an agreement with Phillips 66 (NYSE:PSX) and DCP Midstream (NYSE:DPM), under which it will contribute its interests in the Sand Hills and Southern Hills pipelines and Phillips 66 will contribute $1.5B, respectively, to DPM; DPM is the 50-50 joint venture between SE and PSX.
Oct. 8, 2015, 4:21 PM
- Spectra Energy (NYSE:SE) declares $0.37/share quarterly dividend, in line with previous.
- Forward yield 4.87%
- Payable Dec. 8; for shareholders of record Nov. 13; ex-div Nov. 10.
Oct. 2, 2015, 12:34 PM
- The bloom is off the rose for energy MLPs, as the Alerian MLP index hit its lowest level in more than five years this week and is down 30% YTD, far underperforming other yield-oriented indexes such as the MSCI REIT Index, which is down only 6%.
- Negative sentiment around commodities has overwhelmed the old narrative that MLPs fund generous payouts from pipelines backed by fee-based contracts, unsullied by the vagaries of energy prices; even if price risk is mitigated, revenue still takes a hit when less oil or gas flows through a pipeline whether due to increased competition or less drilling.
- Meanwhile, with debt markets increasingly difficult for energy firms, more borrowing comes at a steep price; Enbridge Energy Partners (NYSE:EEP) yesterday closed on $1.6B of new bonds at what S&P called “some of the highest absolute costs in recent years for investment-grade funds."
- MLPs have not bottomed yet, says Cumberland Advisors, noting that banks soon will take a fresh look at the value of energy assets for the purpose of renewing credit lines, which could prompt a washout in the overall energy industry.
- MKM Partners‘ chief market technician Jonathan Krinsky is starting to find some "downside extremes," and says he's buying EPD, ENB, SE, MMP and CQP, but he's selling OKS, DPM, SMLP, GMLP and GLOG.
- Earlier: MLP investors, worried over Williams deal, head for the exits (Sept. 28)
- 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, MLPW
Sep. 28, 2015, 11:39 AM
- Investors are balking at Energy Transfer Equity's (ETE -8.9%) just-announced merger with Williams Cos. (WMB -8.6%), as shares in the two oil and gas pipeline companies sell off sharply.
- WMB appears not to have needed to do much to sweeten its offer: "At first glance, it seems as if the bid matches ETE’s original offer made in June,” Raymond James analysts say - since both companies’ shares have fallen since the potential deal first became public, the headline deal number is now much lower than the $48B value announced in June.
- While plunging oil and natural gas prices have not hit pipeline operators as hard as other energy companies, analysts say the group is facing pressure to merge; prices also have fallen for fuels such as ethane and propane, which has hurt companies like WMB, which processes natural gas.
- Despite the immediate negative reaction, ETE claims the merger will enable it to capture $2.4B or more in commercial and cost-saving synergies over the next few years.
- Kinder Morgan (KMI -3.8%) and Spectra Energy (SE -3.4%) were among the other companies reportedly interested in acquiring WMB.
- Also: WPZ -7.7%, ETP -6.1%.
Sep. 11, 2015, 6:24 PM
- Spectra Energy (NYSE:SE) has exited the auction process for Williams Cos. (WMB, WPZ), increasing the possibility that Energy Transfer Equity (ETE, ETP) could succeed in buying the company, Reuters reports.
- ETE and WMB are said to be negotiating and trying to agree over the share portion of the offer, with ETE offering new shares that have never traded in the public market and WMB viewing the valuation for those shares as untested.
- ETE has hinted that it could launch a hostile takeover if discussions fall through.
Sep. 11, 2015, 12:44 PM
- While Goldman Sachs sees crude oil prices staying roughly flat at $45/bbl a year from now and warning of a potential collapse to $20, the firm also downgrades a wide swath of MLP and pipeline companies as it forecasts heightened risk to capital spending leading to lower distribution growth.
- The firm downgrades Plains All American (NYSE:PAA), ONEOK Partners (NYSE:OKS), Memorial Production Partners (NASDAQ:MEMP), Enable Midstream Partners (NYSE:ENBL) and Dominion Midstream (NYSE:DM) to Sell from Neutral; it cuts Emerge Energy (NYSE:EMES), Rose Rock Midstream (NYSE:RRMS), Concho Resources (NYSE:CXO) and RSP Permian (NYSE:RSPP) to Neutral from Buy.
- However, Goldman sees some opportunities despite the challenging outlook, preferring "stocks with assets leveraged to demand-pull (vs. supply-push)" such as Kinder Morgan (NYSE:KMI); the firm also upgrades Spectra Energy (NYSE:SE), Whiting Petroleum (NYSE:WLL) and Encaca (NYSE:ECA) to Buy from Neutral, and BP, TransCanada (NYSE:TRP) and Gran Tierra Energy (NYSEMKT:GTE) to Neutral from Sell.
Sep. 8, 2015, 5:41 PM
- Phillips 66 (NYSE:PSX) and Spectra Energy (NYSE:SE) announce plans to prop up their troubled DCP Midstream (NYSE:DPM) natural gas liquids joint venture with $1.5B in cash and a share of two pipelines.
- PSX says it plans to send $1.5B to go toward paying down a portion of DCP’s debt, while SE sends its share in both the Sand Hills and Southern Hills NGL pipelines into the partnership; the companies say the moves are intended to shore up DCP’s balance sheet and ease its access to credit.
- PSX and SE say they will remain 50/50 JV owners of DCP after the deals.
Aug. 25, 2015, 6:45 PM
- Rose Rock Midstream (NYSE:RRMS) is downgraded to Hold from Buy with a $35 price target, cut from $57, by the MLP analyst team at U.S. Capital Advisors, which also reduces its price target for Semgroup (NYSE:SEMG) to $60 from $84.
- The firm says dropdowns are a major part of the RRMS story, as it struggles to see how SEMG can make accretive dropdowns into RRMS without taking meaningful asset writedowns; it also expects the White Cliffs pipeline to face margin and/or volume pressure once the new DJ Basin pipelines come online in 2016.
- The firm also cuts price targets on 11 other stocks: KMI, MMP, CPPL, SMLP, PAA, PAGP, SE, WPZ, NGLS, TRGP, NFG.
- Top picks include EPD, CQP, TEP and RMP.
Aug. 17, 2015, 8:11 AM
- Spectra Energy (NYSE:SE) is bidding for the whole of Williams Cos. (NYSE:WMB), despite its market cap being about half of the latter, Reuters reports.
- Kinder Morgan (NYSE:KMI) is also interested in the company, but would face potential antitrust issues if it proceeded with a bid.
- Williams put itself up for sale in June after rejecting a $53.1B all-stock takeover bid (including debt) from Energy Transfer Equity (NYSE:ETE).
- WMB +1.5% premarket
Aug. 11, 2015, 10:25 AM
- Credit Suisse upgrades the MLP sector to Overweight following the recent sharp selloff, saying reversion to mean yield ranges suggest a total return outlook of more than 40%.
- The firm notes that the overwhelming majority of distributions have been made, and MLPs are tracking to 7.8% Y/Y growth (excluding upstream and coal), above last year and at the high end of its 5%-8% forecast range for this year.
- Credit Suisse says its top picks in the group are Genesis Energy (NYSE:GEL), Tallgrass Energy Partners (NYSE:TEP) and Energy Transfer Equity (NYSE:ETE).
- The firm also says defensive names with low commodity exposure make the most sense going forward and have held up best in the current bear market, including pipeline-oriented MLPs such as Spectra Energy (NYSE:SE) and Kinder Morgan (NYSE:KMI), and the just-upgraded ONEOK Partners (NYSE:OKS) and Magellan Midstream (NYSE:MMP).
- Small cap Midcoast Energy Partners (NYSE:MEP) is vastly oversold, the firm says, noting it has garnered parental support for 2.5 years.
- Also viewed favorably: WES, CNNX, ENLK, EQM, PBFX, PSXP, WNRL, VLP
- ETFs: AMLP, AMJ, KYN, MLPL, YMLP, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, MLPN, SRF, FEI, JMF, CBA, MLPG, MLPX, GMZ, EMO, MLPS, MLPY, TTP, CTR
Aug. 5, 2015, 2:45 PM
- Energy Transfer Equity (ETE -2.9%) has progressed to the second round of bidding for Williams Cos. (WMB -1.7%), a key milestone in its efforts to clinch a friendly takeover, Reuters reports.
- WMB decided to put itself on the auction block after it rejected an acquisition proposal from ETE in June worth ~$53B at the time including the assumption of debt, aimed at disrupting WMB's plans to acquire its pipeline subsidiary Williams Partners (WPZ -3.6%).
- WMB reportedly has attracted other bidders, although it is not yet clear which other companies made it through to the second round; Kinder Morgan (KMI -3.5%) and Spectra Energy (SE +0.4%) reportedly have expressed interest in WMB, but KMI could face significant antitrust hurdles because of its size.
Spectra Energy Corp. provides natural gas and related energy trading and marketing services. The company manages its business through four reportable segments: Spectra Energy Partners, Distribution, Western Canada Transmission & Processing, and Field Services. The Spectra Energy Partners segment... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
Country: United States
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