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June 16, 2012

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MLP Week Thoughts: No News

MLPs were down in an up week for stocks and for commodities.  Natural gas and NGLs were up sharply, while oil languished, down 0.5% for the week. The equity overhang I discussed last week continues to build for MLPs.  With the exception of the KMP and KMI bought / block trade deals a few weeks ago, its been a month since there’s been a marketed equity offering in the MLP space.

I’ll keep this post short, because there were no major transactions this week, and I’m hoping to use these quiet weeks to make some progress on my to-do list.
The only news recently has been a couple of positives on the regulatory side of things;

  1. Last week a very short bill called the Master Limited Partnerships Parity Act was introduced by Delaware Senator Chris Coons and Kansas Senator Jerry Moran that would level the playing field for renewable energy assets to be included as MLP-qualifying under section 7704 of the tax code.  Specifically, the following would be considered qualifying: wind, closed and open loop biomass, geothermal, solar, municipal solid waste, hydropower, marine and hydrokinetic, fuel cells, and combined heat and power (read more here).
  2. This week, a U.S. appeals court denied an appeal by environmentalists attempting to overturn the FERC’s approval of the MARC I pipeline, owned by NRGY.  The decision is good for NRGY / NRGM and is a good sign for future energy infrastructure projects.

The only other press release of note this week was the announcement that AMJ will be capped after it issued another $500mm in notes.  At current price, that’s around $4.7 billion.  Once AMJ gets capped, it will be interesting to see how the secondary market reacts and see if the tracking gets out of whack as a result (press release).
Winners & Losers
Propane and gathering & processing MLPs filled out the top five MLPs, with higher natural gas, ethane and propane prices likely driving the bus.  On the red side of the ledger, Niska Gas Storage (NKA) was the biggest loser this week, and dropped out of its top spot for the year (see below).  ARLP continues to get beaten down.

Year to date, coal remains in the dog house, while the top five are all a bit unusual in their assets (CQP, CPLP, NKA), location (BIP) or origin (ARP).

For the year, investors much prefer other investments to MLPs.  Falling natural gas and oil prices haven’t helped.

That’s it for this week.  If you are lucky enough to have kids, like me, then have a Happy Father’s Day.
In honor of this news-light week, enjoy the music video below from the mid-90s by LoneStar…

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