Thu, Jan. 15, 11:42 AM
- A new report from J.P. Morgan’s energy team reminds investors that despite the Q4 meltdown from declining crude oil prices, MLPs still clawed out a 5% total return in 2014, far better than the -8% total return for the overall energy sector.
- Still, the firm is sticking with top blue chip MLPs and defensive natural gas names, tabbing six Outperform-rated stocks that can stand some volatility as part of a growth and income portfolio: EPD, KMI, PAA, BWP, DM, EQM.
- Others are more pessimistic on the group: S&P Capital IQ's Stewart Glickman says there isn't a single E&P MLP that has healthy fundamentals, though some companies such as PAA and RGP are now cheap enough to be potentially good deals.
- Renaissance Capital's Nick Einhorn thinks a better alternative is to invest in funds that own groups of the MLPs.
- ETFs: AMLP, AMJ, MLPL, YMLP, MLPI, MLPA, MLPN, EMLP, MLPG, MLPX, MLPS, MLPY, AMU, YMLI, ZMLP, AMZA, ENFR, ATMP, MLPC, MLPW, IMLP, OSMS, YGRO, MLPO
Thu, Jan. 8, 9:14 AM| 5 Comments
Dec. 10, 2014, 7:15 PM
- Some energy limited partnerships - pipeline operators or wholesale distributors, with less risky business models than oil E&P companies - have escaped much of the carnage in energy stocks and may make attractive investments, MarketWatch's Philip Van Doorn writes.
- These 12 energy LPs, most of which fell today amid the energy sector rout, actually have posted gains since Nov. 1: TCP, EEQ, EEP, DM, BPL, SHLX, SGU, BIP, SRLP, APU, SEP, SPH.
- Credit Suisse analyst John Edwards recently said many energy LPs look oversold; his top picks in the sector include EEP as well as NGLS, GEL, OKS, CNNX, PAA, BWP and AM.
Dec. 2, 2014, 7:21 PM
- A fresh report this week from BofA Merrill Lynch’s MLP team highlights which MLPs may be mostly insulated from the carnage in oil prices, as long as the situation does not deteriorate further: Enterprise Products (NYSE:EPD), Magellan Midstream (NYSE:MMP), Buckeye Pipeline ([BPL), Energy Transfer (NYSE:ETP), Plains All American (NYSE:PAA), and - even though it is now a corporation rather than a parent of three MLP entities - Kinder Morgan (NYSE:KMI).
- The firm considers these MLPs as relatively lower-risk because of their diverse asset bases, investment grade balance sheets, low direct commodity sensitivity, seasoned management teams and solid organic growth outlook.
Nov. 28, 2014, 10:20 AM| 17 Comments
Nov. 24, 2014, 4:56 PM
- Plains All American Pipeline (NYSE:PAA) says it plans to provide additional pumps to increase the takeaway capacity of the Cactus Pipeline in response to higher regional production forecasts and shipper demand.
- Installation of booster stations along the Texas pipeline will result in an increase in throughput from ~250K bbl/day to ~330K bbl/day.
- The Cactus Pipeline is expected to be in service in April 2015; the expansion will be completed in Q4 2015.
Nov. 6, 2014, 7:43 AM
- Plains All American Pipeline (NYSE:PAA) agrees to acquire Occidental Petroleum's (NYSE:OXY) 50% stake in BridgeTex Pipeline for $1.075B.
- PAA says the acquisition of the new 300K bbl/day crude oil pipeline running from the Permian Basin to the Houston Gulf coast area will strengthen its access to the Gulf coast.
- Magellan Midstream Partners (NYSE:MMP), which owns the remaining 50% interest in BridgeTex, is buying the southern leg of the pipeline system running from Houston to Texas City for $75M.
- OXY says the deals are part of its attempt to streamline its business.
Nov. 5, 2014, 6:49 PM
- Plains All American Pipeline (NYSE:PAA) reported a 40% jump in Q3 earnings, as producers sent more crude through its transportation and storage facilities.
- Profit at PAA’s transportation business rose 16% Y/Y due to higher crude oil production in the areas it serves and the company’s own recently completed growth projects; supply and logistics saw a 14% gain driven by a favorable crude market and growth in crude oil lease gathering volumes.
- PAA maintains its FY 2014 EBITDA forecast of $2.175B and sets its 2015 preliminary adjusted EBITDA guidance at $2.35B-$2.5B, which it says "reflects a cautious and prudent approach that acknowledges uncertainties associated with the recent decreases in oil prices and related differentials as well as the potential drilling reductions by producers in various crude oil resource plays."
- Says it will pay a distribution of $0.66/unit for the period, up 10% Y/Y.
- PAA also announces plans to construct a new 226-mile pipeline from the Plains Basin pipeline system at Duncan, Okla., to Longview, Tex., supported by long-term commitments.
Nov. 5, 2014, 5:31 PM| Comment!
Oct. 31, 2014, 6:50 PM
- The recent wild behavior in the energy MLP sector - tumbling nearly 3x more than the S&P 500 during the first 10 trading days of October before rallying this week, with an assist from Shell Midstream Partners (NYSE:SHLX), which went public in a $1.1B offering and gained 46% - should not weaken the investment case for those who are choosy and hold for the long term, analysts say.
- Investors worry that some E&P companies won’t be able to make money in a low oil price environment, and MLPs in the same business face tough times, but those upstream MLPs make up only ~5% of the total value of the sector, perhaps suggesting that the across-the-board decline was too extreme.
- MLPs may remain expensive relative to their own history, but their average distribution of 5.5% in annual income - which should grow at ~7%/year in the next few years to 12%-plus - is plenty attractive relative to everything else.
- To steer clear of the risk that lower energy prices will crimp profits, analysts advise concentrating on midstream operators; among the most stable are ETP, ETE, EQM, MMP, PAA, PAGP and SXL.
- ETFs: AMLP, AMJ, MLPL, YMLP, MLPI, MLPA, MLPN, EMLP, MLPG, MLPX, MLPS, MLPY
Oct. 30, 2014, 1:11 PM
- Marathon Petroleum (MPC +4.8%) says it is studying options for the future of the 1.2M bbl/day Capline crude pipeline, the biggest in the mainland U.S., including reversing the pipeline.
- Shipping volumes on the pipeline, which runs south to north from the Gulf coast to Illinois, have fallen sharply in recent years as midwestern refiners tap into the growing supply of Canadian and North Dakota crude to replace costly imports via Capline.
- The 632-mile 40-inch pipeline includes more than 10M barrels of storage capacity and 16 mainline pumping stations; MPC operates the line; Plains All American Pipeline (PAA +1.1%) and BP (BP +0.1%) are co-owners.
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.
Oct. 1, 2014, 12:59 PM
- Plains All American Pipeline (PAA +0.2%) subsidiary Plains Midstream Canada faces a potential shutdown of its operations on allegations it did not comply with the National Energy Board, which says it is investigating the company.
- The NEB says Plains Midstream Canada is not in compliance with a corrective action plan the regulator first demanded from the company after a 2010 audit; it then followed up in January and March of this year and determined the plan had still not been put in place.
- Until last month, Plains had been closely monitored by Alberta energy regulators over two oil spills in the province dating back to 2011, but the reason for the new federal probe is unclear.
Aug. 21, 2014, 11:35 AM
- Plains All American Pipeline (PAA -0.5%) announces plans to construct a 440-mile pipeline from its Cushing, Okla., terminal to Valero's (VLO +0.2%) Memphis refinery, to provide capacity of up to 200K bbl/day of domestic sweet crude.
- PAA expects total project investment of ~$900M and completion in late 2016.
- PAA says the Diamond pipeline project is underpinned by a long-term shipping agreement with VLO and a related contract for storage and terminalling services at the Cushing terminal.
- VLO holds an option until Jan. 2016 to become a partner in the pipeline and purchase a 50% interest.
PAA vs. ETF Alternatives
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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