MLP Market Update
Commentary on Master Limited Partnerships

Monthly Archives: July 2011

Published
Jul 31st, 2011

Category:
MLP Market Post

Week Thoughts: Paralysis by Politics

MLPs, along with the rest of the market, were held hostage by what Jon Stewart calls Armadebtdon 2011.  At this point, still no resolution on the debt ceiling and no word on what the yet to be agreed upon deal will include in terms of tax changes, including potential MLP taxation (although that’s still very unlikely).  In the absence of a resolution to the debt ceiling issue, the market voted with its wallets as to what it thinks of the politics in Washington, with the S&P 500 down 3.9% on the week.  MLPs fell inline with that, but slightly less at down 3.1%.  Counter-intuitively, 10-year treasury rate declined this week, as treasuries are a safe haven even with a pending default or at least a downgrade.

For the month of July, MLPs were down 2.6%, after a rebound in June.  MLPs underperformed the S&P500 in July after significantly outperforming in June.  MLPs remain 7.2% below their YTD high of 390 on April 28th, and are now slightly negative on the year (not including distributions).

Outside of the (lack of) news in Washington, it was a busy week for earnings and distributions announcements.  The most interesting news items this week came from Chesapeake’s earnings call, when CEO Aubrey McClendon shared some information about how successful their early wells in the Utica Shale had been (see here).  $EVEP, which has significant acreage in the Utica shale, was up 9.4% this week on the news.

The biggest loser this week was $SPH, which has for the last few years been the best propane MLP to own.  It was down 12.2% this week on weak propane fundamentals and weak earnings.

28 more MLPs and 2 more GPs announced distributions for the second quarter this week.  Thus far, 58 MLPs that I follow have announced distributions, with 37 (64%) announcing quarter over quarter increases, 20 holding them flat, and 1 lowering distributions.  Median distribution growth is 1.3% quarter over quarter.   Out of the 7 pure-play general partner holding companies, all 7 have raised their distribution quarter over quarter, with ATLS on the high end at 100% increase, and NSH on the low end at 3.1% increase.  See below for this week’s announcements.

  • $QRE kept distribution flat quarter over quarter
  • $EEP raised distribution 3.6%
  • $PVR raised distribution 2.1%
  • $BBEP raised distribution 1.2%
  • $LGCY raised distribution 1.9%
  • $APL raised distribution 17.5%
  • $ATLS raised distribution 100%
  • $NS raised distribution 1.9%
  • $NSH raised distribution 3.1%
  • $NKA kept distribution flat
  • $ARLP raised distribution 3.7%
  • $AHGP raised distribution 5.0%
  • $ENP lowered distribution 6.0%
  • $EROC raised distribution 25.0%
  • $VNR raised distribution 0.9%
  • $MMLP kept distribution flat
  • $LINE raised distribution 4.5%
  • $SXL raised distribution 1.7%
  • $DPM raised distribution 1.2%
  • $CHKM raised distribution 3.6%
  • $CLMT raised distribution 4.2%
  • $WPZ raised distribution 2.1%
  • $NRGY kept distribution flat
  • $NMM raised distribution 2.3%
  • $RNO kept distribution flat
  • $APU kept distribution flat
  • $ETP kept distribution flat
  • $RGNC raised distribution 1.1%
  • $OKS raised distribution 1.7%
  • $EXLP raised distribution 1.0%

 

Disclosure: The information in this article is not meant to be financial advice, we are not your financial advisor and I am posting my comments for informational purposes only. 

Published
Jul 31st, 2011

Category:
General

8-1-81: Happy Birthday to Me and MTV

I was born on August 1, 1981, which aside from being my birthday and a very cool 8-1-81, also happened to be the first day MTV went on the air, 30 years ago tomorrow. So, me and MTV are both going to be 30.

August 1, 1981 was a Saturday, but in case you were wondering, the Dow closed at 952.34 that Friday, and would finish the year at 875, for a full year loss of more than 9%.  MLPs didn’t even exist at this point.

Other Securities Prices on 8/1/81:
S&P 500: 130.92
10-year treasury yield: 14.67%.
Gold: $406
Oil: roughly $35 per barrel

I grew up during the earliest days of MTV’s shift from music videos to original shows.  The era of Nirvana, Snoop Dogg, Michael Jackson (Remember the Time), Sir Mix a Lot and Green Jello (3 little pigs) videos.  Groundbreaking shows like Real World and Liquid TV started popping up.  Beavis and Butthead, the State were also huge. On location  Spring Break and summer shows from beach locales like South Padre Island and Jamaica were also a really big deal.  I was also a big fan of Yo MTV Raps and Headbangers Ball if you can believe that mix of tastes.  I never got much into TRL, but teenage girls clearly loved that show.

Anyway, I’m not real sure when, but at some point I stopped watching MTV.   At one time, however, it was a major influence on me and the rest of the youth of the world. The most incredible thing about MTV for me was how it enabled kids like me in Houston to know what was cool at roughly the same time as kids elsewhere in the country. I witnessed firsthand this phenomenon when I arrived at boarding school in CT as a freshman, and kids from Oakland, CA to Portland, ME and everywhere in between all were sort of on the same page culturally. The world is even flatter today than it was then, but I’d argue there is no longer the one central beacon of coolness that MTV was in the 80s and 90s.

So, you may have already read about MTV turning 30 from others (see below), but you probably haven’t heard about it from someone born on 8-1-81.

  • Josh Brown’s The Reformed Broker blog on MTV turning 30 here.
  • Village Voice on the return of Beavis and Butthead here.
  • Article on MTV turning 30 from Rolling Stone here.

Published
Jul 26th, 2011

Category:
MLP Market Post

MLP Equity, Debt and M&A Update

Capital markets remain wide open to MLPs.  Equity raised through June 30th totalled $9.5 billion.  Thus far in July, there have been 3 follow on equity offerings and 1 IPO for a total of $702 million.  If equity issuance continues at this pace, 2011 will be the biggest year ever for total MLP equity issuance (in total dollar terms, but probably not as a percentage of total market cap of the sector).  See below for a year by year breakdown with the number of deals and total amount of equity raised.

Likewise, MLP debt issuance has totalled $13.6 billion, also on pace for a record year, see below for year by year debt issuance.

MLP M&A activity is also at record levels, on total number of deals and announced value, see below for yearly breakdown of M&A deals and value.

Disclosure: The information in this article is not meant to be financial advice, we are not your financial advisor and I am posting my comments for informational purposes only.