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July 15, 2011

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MLP Week Thoughts: I'm Still Unemployed

I’ve been unemployed for exactly 4 years today!
I guess I’ve become fixated on dates and anniversaries this week.  That probably continues until my 30th birthday in a few weeks.  Anyway, I haven’t had any W-2 income in exactly 4 years.  So, I guess I am included in that big U-6 number of 16.2% below.  I get paid in distributions from the company I own, but no salary or guaranteed payments.  I wonder if there are more people like me in the U.S. now than there were before the recession.  On the plus side for job creation, in the past 4 years since becoming an entrepreneur, I have helped create more than 25 full time jobs, through Curbstone, but also through my investments in FC Tampa Bay.  That feels good, almost as good as being unemployed.
U-6 Unemployment
Speaking of jobs, the unemployment report that came out last Friday seemed to weigh on the market this week.  MLPs did ok this week, with a 0.8% drop, compared with 2.0% decline for the S&P500.

It was a very active week for MLP announcements:

  • VNR announced the acquisition of ENP – VNR already owned the GP and some L.P. units, this deal will clean that structure chart up a bit.  ENP unitholders will get 0.75 VNR units for each ENP unit, which values ENP units at $21.94, or almost a 1% premium, but a 4.4% premium to the price back in March when ENP’s GP was acquired.  There were a number of complaints lodged by unitholders and their legal counsel throughout the week given the scant takeout premium.
  • XTEX announced a joint venture deal with APA to build a new gas processing facility in the Permian Basin for $85mm.
  • Oiltanking Partners priced its IPO at $21.50 (6.3% yield), and finished the week up 11% to $23.80 (5.6% yield).
  • Bidding war for SUG continued – WMB again topped an ETE bid, this time at $44 per share.  Some people on the MLP message board contend that this furious bidding war implies that MLPs in general (and pipeline MLPs specifically) are very undervalued.  Maybe.
  • GEL issued equity in a follow on for around $200 mm at $26.50.

Pretty good start to distribution announcement season this week:

  • TRGP raised dividend 6.7% quarter over quarter
  • NGLS raised distribution 2.2% quarter over quarter
  • PAA raised distribution 1.3% quarter over quarter
  • PNG kept distribution flat
  • GEL raised distribution 1.8% quarter over quarter
  • CPNO kept distribution flat
  • EPD raised distribution 1.3% quarter over quarter
  • DEP raised distribution 0.5% quarter over quarter

Earnings kick off Monday with KMP reporting first, as usual.  Stay tuned…
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.

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