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).
Mar. 4, 2014, 10:43 AM
- Utilities that meet takeover criteria outlined by Warren Buffett this weekend for another “major” acquisition after paying more than $5B last year for electricity provider NV Energy include Wisconsin Energy (WEC +1.8%) and Alliant Energy (LNT +1.1%), Bloomberg speculates.
- WEC and LNT operate in states with favorable regulatory environments, and LNT is expanding into renewable energy, which Buffett has signaled could be a focus for large investments, according to Morningstar; pipeline MLPs such as Plains All American (PAA) and MarkWest Energy (MWE) also could appeal to Buffett, a Baird analyst says.
- Berkshire Hathaway (BRK.A, BRK.B) “is likely looking at a lot of small, regulated utilities that have a lot of growth on the table where his low cost of capital is an incredible advantage,” Morningstar's Mark Barnett says.
Dec. 23, 2013, 3:53 PM
- Plains All American Pipeline (PAA +1%) and Plains GP Holdings (PAGP +1.7%) are initiated with Buy ratings at Wunderlich.
- PAA offers an attractive balance of current yield and visible near-term distribution growth, while the asset base located in a few of the most prolific U.S. basins is well positioned for long-term growth, the firm says; further, PAA's current price implies a relatively attractive market-based discount rate or annual internal rate of return of 10%.
- The firm says PAGP, a levered play on the underlying PAA MLP, offers strong return prospects underpinned by a fee-based crude oil infrastructure business with high growth potential and tax efficient C-Corp structure.
Oct. 22, 2013, 7:57 AM
- Plains All American Pipeline (PAA) agrees to acquire PAA Natural Gas Storage (PNG) through a unit-for-unit exchange which will make PNG a wholly-owned subsidiary of PAA.
- PNG's public unitholders will receive 0.445 common units of PAA per PNG common unit; PAA's August bid had offered 0.435 of its units for each PNG unit.
- PAA currently owns ~46% of PNG and also owns its general partner.
- The transaction is expected to result in ~14.7M additional common units being issued by PAA.
- PAA -3.2% AH.
Sep. 19, 2013, 2:39 PM
- Plains All American Pipeline (PAA +3.5%) and Enterprise Products Partners (EPD +1.9%) say they will expand their Eagle Ford crude oil pipeline, increasing capacity to 470K bbl/day of light and medium grades to accommodate additional volumes expected from PAA’s Cactus pipeline under construction.
- The pipeline expansion is expected to cost ~$120M; both the joint venture pipeline and the Cactus pipeline are expected to be in service in 2015.
Sep. 18, 2013, 2:32 PM
- Energy MLPs are spiking higher after the Fed decides not to taper, ensuring a longer period of lower-cost capital: KMP +2.9%, KMI +4.1%, ETP +2.1%, WPZ +1.2%, WMB +1.1%, EPD +1.9%, PAA +1.2%, EEP +1.3%, MWE +3.1%, MMP +2.4%, ACMP +2.9%, APL +1.8%, DPM +2.4%, SXL +1.5%, BPL +1.1%, PBA +2.3%, TLLP +1.7%.
- Relevant ETFs: AMJ, AMLP, MLPG, MLPI, MLPN, MLPY, MLPL, MLPW, MLPS, YMLP, MLPA, EMLP, AMU, IMLP, MLPJ, ATMP, YMLI.
Aug. 27, 2013, 5:38 PM
- PAA Natural Gas Storage (PNG) +6.7% AH after receiving a buyout proposal from Plains All American Pipeline (PAA) for all outstanding publicly held common units through a unit-for-unit exchange.
- The proposed consideration represents a value of $22.74/unit based on the trailing 10-day average closing price of PAA's common units through Aug. 26.
Aug. 5, 2013, 6:23 PM
- Plains All American's (PAA) Q2 earnings tumbled 23% Y/Y, while gas-storage affiliate PAA Natural Gas Storage's (PNG) Q2 earnings slipped 2.5% as the companies were hurt by higher operating costs.
- At Plains, operating margin fell to 3.7% from 4.7%; operating expenses increased 6.3%; again raised its capital spending view for the year, to $1.6B from $1.4B.
- At PAA Natural Gas, revenue from hub services and merchant storage, which includes natural gas sales, rose 22%; operating costs rose 18%.
- PAA -1.9% AH.
May. 6, 2013, 4:32 PM
Apr. 8, 2013, 12:08 PM
Dec. 13, 2012, 8:30 AMPlains All American (PAA) acquires Eagle Ford crude oil and condensate gathering assets from a subsidiary of Chesapeake Energy (CHK) for ~$125M. The acquired assets include ~40 miles of crude oil and condensate gathering pipelines with a throughput capacity of ~50K bbl/day; 150K barrels of existing storage capacity and 300K barrels of capacity under construction. PAA +1.8% premarket. | Comment!
Aug. 29, 2012, 12:09 PMSunoco Logistics (SXL +4.2%) is initiated at Outperform with a $53 target by Robert W. Baird, which says SXL could be used as an acquiring entity once it joins the Energy Transfer family. The firm expects the acquirer to boost distributions to increase partnership cash flow and drive unitholder value. Also started at Outperform: ETE, PAA. Started at Neutral: ETP, PNG, OKS. | 1 Comment
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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