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.
Aug. 7, 2014, 6:49 PM
- Plains All American (NYSE:PAA) stopped short of saying during today's earnings conference call that it is seeking a ruling from the U.S. government on whether it can export crude condensate, but said it will be ready to do so.
- When an analyst asked if PAA had applied for a ruling, CEO Greg Armstrong declined comment, but when another analyst commented that there was no reason to think PAA's volumes wouldn't be eligible to be exported, the CEO said "the only thing that may get in our way is political arbitrariness."
- PAA has an 80K bbl/day condensate stabilizer in Gardendale, Tex., that is being expanded to 120K; its output can move to Corpus Christi or Houston via pipelines that are joint ventures with Enterprise Products Partners, one of the companies that received export approval from the Commerce Department.
Aug. 6, 2014, 6:23 PM
- Plains All American Pipeline (NYSE:PAA) reports Q2 earnings matched analyst expectations, as higher costs masked growth in the company's transportation segment.
- Q2 revenue rose 8.7% Y/Y to $11.2B, but total costs and expenses increased 9.3%.
- PAA's transportation business posted adjusted earnings growth of 37% to $229M, mostly on stronger crude pipeline volume; meanwhile, the facilities segment reported adjusted profit fell 10% to $138M, but adjusted earnings for the supply and logistics business slipped 6% to $144M.
- As a result of its H1 performance and its outlook for near baseline performance for the remainder of the year, PAA raises its full-year adjusted EBITDA guidance by $25M to a midpoint of $2.175B.
- Says it remains on track to achieve its 10% distribution growth objective for 2014.
Aug. 6, 2014, 5:13 PM| 3 Comments
Jul. 16, 2014, 3:18 PM
- Plains All American (PAA +1.2%) says it is considering building new condensate-only pipelines and storage tanks in the Permian Basin in west Texas as output increases, an issue that has taken on more urgency after the U.S. told two Eagle Ford operators that condensate could be exported if it has been run through a stabilizer.
- Condensate makes up much of the output from the Eagle Ford, where newer pipeline and storage infrastructure is better suited to segregate it from more traditional light crudes, PAA VP of pipeline business development Sam Brown says.
- While condensate has traditionally been mixed with other Permian crude as it moves to markets, Brown believes midstream companies will look at ways to segregate it as output volumes increase.
Jul. 14, 2014, 4:40 PM
- White Cliffs Pipeline plans to begin the commissioning this month of its expansion project, a looping of the existing crude oil pipeline from Platteville, Colo., to Cushing, Okla., to become fully operational in August.
- White Cliffs capacity will increase to ~150K bbl/day from 76K, helping to meet the rising demand for midstream services by offering long-haul transportation from the Denver Julesburg Basin.
- Rose Rock Midstream (NYSE:RRMS) will continue as pipeline operator; other owners are Plains All American Pipeline (NYSE:PAA), Western Gas Partners (NYSE:WES) and Noble Energy (NYSE:NBL).
Jun. 4, 2014, 5:59 PM
- Plains All American Pipeline (PAA) says it expects adjusted EBITDA for Q2 to exceed the mid-point of its quarterly guidance by 8%-10%, driven by continued strong fundamentals and favorable market conditions.
- Last month, PAA provided midpoint adjusted EBITDA guidance of $455M for Q2 based on a guidance range of $430M-$480M.
May 15, 2014, 10:57 AM
- The Los Angeles Fire Department says a ruptured oil pipe has caused ~10K gallons of crude oil to spill onto the city's streets.
- The oil covers a half-mile area and is knee-high in some places after spurting 15-20 feet into the air from a burst 20-inch pipe; the flow of oil to the pipe was remotely shut down within 10 minutes of the burst being detected, but the leak continued for another 45 minutes.
- A Bloomberg report says the pipeline is owned by Plains All American (PAA -0.8%).
Apr. 11, 2014, 11:46 AM
- The port of Corpus Christi, Tex., near the Eagle Ford oil fields of south Texas, is undergoing its biggest expansion in years as energy companies add docks so they can ship more crude to other U.S. ports and perhaps eventually to foreign ports.
- Pipeline company NuStar Energy (NS) officially opened a third ship dock at the port, doubling its loading capacity to 400K bbl/day and enabling NS to handle Panamax-class vessels, which can carry 350K-500K barrels, at loading rates of up to 30K bbl/hour.
- Other companies expanding or improving their Corpus Christi docks to move more Eagle Ford crude include Trafigura, Magellan Midstream Partners (MMP), Plains All American (PAA) and Martin Midstream Partners (MMLP).
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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