Fri, Oct. 2, 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
Mon, Sep. 14, 2:56 PM
- ONEOK (OKE -2.2%) is initiated with a Neutral rating at Credit Suisse, but 24/7's Jon Ogg thinks the call seems almost like a Buy rating in that the $41 price target implies a nearly 20% upside from today's price, plus a ~7% dividend yield.
- The firm says OKE's prospects are improving sequentially, with a modest but improving distribution coverage ratio, and contract renegotiations could provide an added boost by year-end; another positive is a $4B-$5B capex backlog, on top of the $3B-$4B in execution.
- OKE is the pure-play general partner of ONEOK Partners (OKS -2.1%), which Credit Suisse rates at Outperform with a $40 price target.
Fri, Sep. 11, 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.
Wed, Aug. 12, 5:59 PM
- ONEOK Partners (NYSE:OKS) agrees to sell ~21.5M common units representing limited partner interests at a price of $30.17/unit in a private placement to parent company ONEOK (NYSE:OKE).
- OKS also will sell ~3.3M common units at the same price to funds managed by Kayne Anderson.
- To pay for its purchase, OKE plans to sell $500M of senior notes.
- OKS -3.1%, OKE -1.9% AH.
Tue, Aug. 11, 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
Mon, Aug. 10, 12:59 PM
- ONEOK Partners (OKS +1.9%) is upgraded to Outperform from Neutral with a $48 price target, raised from $45, at Credit Suisse, which believes that the worst is over for the company.
- OKS' Q2 EBITDA of $387M and distributed cash flow of $277M came in higher than estimates, and raised EBITDA and DCF estimates for 2015 by a respective 3% to $1.6B and by 4% to $1,15B; Credit Suisse expects coverage to stabilize at ~1.05x for the remainder of the year and distribution growth to resume in Q2 2016.
- The firm also upgrades Magellan Midstream Partners (MMP +6.7%)to Outperform from Neutral, with an $89 price target after MMP raised its 2015 distributable cash flow guidance by $10M to $880M and reiterated its distribution growth of 15% in 2015 and at least 10% in 2016.
Wed, Aug. 5, 5:42 PM
- ONEOK (OKE, OKS) CEO Terry Spencer says the company is on track to connect more than 700 wells in the Williston shale basin in North Dakota this year and expects to connect more than 600 in 2016.
- Spencer says OKE connected more than 260 new wells in the Williston during Q2, bringing its YTD total to more than 560 new connections.
- "We expect Williston Basin volume in the third quarter to reach ~650M cf/day as we continue to bring on additional field infrastructure," the CEO says.
- Spencer made the comments during a conference call a day after the release of the companies' Q2 earnings (I, II).
Tue, Aug. 4, 4:18 PM
Thu, Jul. 23, 5:08 PM
Mon, Jul. 13, 6:57 PM
- U.S. midstream MLPs rallied today following the news that MarkWest Energy (NYSE:MWE) was acquired by MPLX (NYSE:MPLX), as the deal is seen as a validation of the long-term demand potential for U.S. natural gas liquids infrastructure despite current depressed prices.
- Among today's gainers in the group: GEL +3.7%, DPM +3.3%, OKS +2.6%, NGLS +2.5%.
- SunTrust's Tristan Richardson believes the deal is particularly bullish for Enterprise Products Partners (NYSE:EPD), since speaks to the long term potential for the NGL market and the buildout of NGL infrastructure to new sources of market demand, where EPD is a leader with significant organic growth opportunities.
- MPLX fell 14.5% today, as investors worry that adding a nat gas company to MPLX, which had been growing rapidly, could hurt growth and add more volatility to earnings; however, many analysts believe the deal is a safe bet for MPLX because the company is diversifying its sources of income to help it survive the ups and downs of the commodity cycles.
Mon, Jun. 22, 3:30 PM
- Williams Cos. (WMB +23.8%) must either show its ability to stand on its own merit or accept a better takeout offer, analysts say after the company rejected a $48B buyout bid from Energy Transfer Equity (ETE -3.8%).
- Analysts suggest that given the limited number of potential buyers, ETE stands a good chance of eventual success, perhaps after raising its offer; Raymond James analyst Darren Horowitz, for one, expects a higher offer to come in, since pipelines remain a coveted, high-value infrastructure that is attractive to own even though oil and gas prices have plunged.
- Jefferies' Christopher Sighinolfi says disclosing the bid was a "defensive move" by WMB, and says he is waiting to learn of WMB's timetable for completing its strategic review.
- Argus says WMB management has demonstrated its ability to create shareholder value through both acquisitions and divestitures; the firm believes that the rejection of ETE's all-stock offer is prudent, and that ETE will need to raise its offer if it wishes to pursue the deal (Briefing.com).
- While WMB surges, Williams Partners (WPZ -6.9%) is sharply lower, since ETE's offer was contingent on the termination of WMB's pending absorption of WPZ.
- Analysts say other companies that run big pipelines may be merger candidates, including Oneok (OKE, OKS) and regional specialists such as Targa Resources (TRGP, NGLS).
Mon, May 18, 5:51 PM
- While Deutsche Bank starts coverage of several energy MLPs with Buy ratings, the firm initiates ONEOK (NYSE:OKE) and ONEOK Partners (NYSE:OKS) at Sell with respective $43 and $38 price targets, citing the risk of another guidance cut at the company.
- Deutsche Bank says the commodity downturn has highlighted OKE’s commodity sensitivity, resulting in breaking the track record of 22 consecutive quarterly distribution increases and an outlook of sub-1x coverage for 2015.
- Without an improvement in prices, OKS is positioned to come in at the low end of current guidance of 3%-5% distribution/unit growth, with the risk of a further guidance cut to nominal or no growth going into 2016, the firm says.
Tue, May 5, 4:22 PM
Wed, Apr. 1, 4:35 PM
- ONEOK Partners (OKS, OKE) says it is forming a 50-50 joint venture with a subsidiary of Mexico's Fermaca Infrastructure to construct a pipeline that will transport natural gas from the Permian Basin in west Texas to Mexico.
- The first phase of the project for 170MM cf/day of available capacity is scheduled for completion by Q1 2016; final completion is expected by 2019 and will increase available capacity on the pipeline to 640MM cf/day.
- OKS will manage project construction and become operator of the pipeline upon completion; the project is estimated to cost $450M-$500M.
Wed, Feb. 25, 11:59 AM
- ONEOK Partners (OKS +0.7%) is downgraded to Neutral from Outperform with a $48 price target at Credit Suisse following the recent uptick in OKS shares and the continuing weak commodity price backdrop.
- The firm says OKS' reduced guidance appears realistic in light of ongoing uncertainty in commodity prices, but guidance cuts were more draconian than expected, particularly the 57% capex cuts for 2015 to ~$1.2B.
- Credit Suisse says the deep capex cuts slows its distribution growth outlook on the assumption that the suspended plants are pushed back about a year.
Mon, Feb. 23, 4:08 PM
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