×
Triangles background
OUR COMPANY AND AFFILIATES
CBRE GLOBAL INVESTORS

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers providing real estate and infrastructure investment solutions to over 500 clients worldwide.

INVESTMENT MANAGEMENT

CBRE Global Investors

CBRE Clarion Securities

CBRE Caledon Capital Management

Trammell Crow Company

MLPguy
CBRE GROUP

CBRE Global Investors is the investment management division of CBRE Group, Inc. the world’s premier commercial real estate services and investment firm.  The company’s shares trade on the New York Stock Exchange under the symbol “CBRE.”

REAL ESTATE SERVICES

CBRE

CBRE Blueprint
Our Company and Affiliates

This website uses cookies to improve the user experience. By using our website you consent in accordance with our Cookie Policy. Read More

ACCEPT
Triangles background
Back to Insights

August 2, 2015

Viewed 1670 times

MLP Week Thoughts: Picking Up the Pieces

MLPs bounced back this week, with the Alerian MLP Index gaining 3.3% including distributions.  From last Thursday’s close to Wednesday, the index was up 6.7% over 4 straight positive days, before settling down with two 1%+ decline days to close the week.  Stabilizing oil prices helped MLPs continue the rally from last Friday, but then faded as ex-dates for MLP distributions and earnings releases began to hit later in the week.  Interest rates helped out this week, as the Fed inaction seemed to spark hope for further inaction in the coming months, sending U.S. treasury rates lower and utilities higher. Also, oil prices took a tumble to fresh multi-month lows on Friday, which didn’t help.  MLPs outperformed the S&P 500 (+1.2% this week) and underperformed utilities (4.1%).
Weekly Review_7-31
This week’s MLP price action seemed to be more discerning than last week’s broad selling.  Investors were willing to step back into smaller, oversold MLPs, and into small/mid-sized MLPs reporting positive 2Q results.  But larger MLPs struggled in the back half of the week, which seemed to be a function of ex-dates and broad market sentiment against energy and oil prices rather than an indication of their business prospects.
The MLP sector has been imbalanced to the downside for nearly a year now, and brief rallies have been breakable by any number of negative factors.  The MLP Index moved 1%+ each of the 5 trading days this week.  A sustained recovery in the face of so much negative sentiment will be fragile and subject to volatility, so was the strength early in the week the beginning of a fragile recovery, or just a pause in the ongoing MLP decline that resumed later in the week?
Fragile
Status Update
MLPs finished July with a negative 3.2% total return.  It was the third straight negative month for the MLP Index, 5th negative month so far in 2015 and the 9th in the last 11 months.
Status Update_7-31
Looking ahead, August has been a mixed month over the years, with 12 positive and 7 negative months and average returns of 0.7%.  Last year’s KMP merger-fueled 8.2% return for the MLP index was the best ever August.
Since the end of last August, the index has produced total returns of negative 25.6%.  At the end of next month, we will have gone a full year since reaching the last MLP Index all-time high (barring a 34.5% gain in for the index this August).
Winners & Losers
After leaving MEP to fend for itself over the last few years and delaying drop downs, MEP’s sponsor EEP this week announced steps to fix its natural gas gathering & processing MLP.  Read about those below in the news section, but the market reacted very positively.
On the downside, it was all about upstream MLP distribution suspensions.  NSLP (immediately) and LINE (by 3Q) both eliminated their distributions, which did not please the market.  LINE trades below $5/unit now, and has lost more than 90% of its value since early 2013, when it traded above $40/unit.
Top5Bottom5_7-31-15
ENBL made it 2 straight weeks in the top 5 with a 13% gain.  DKL bounced back from a spot in the bottom 5 last week to join the winners this week.  WPT had some very volatile days when rumors of forced-selling were swirling around and it recovered this week as well.
Top5Bottom5_7-31-15_chart
Year to date, upstream MLPs comprise the bottom 5, while the top 5 consists of a refinery MLP at the top and a mashup of smaller MLPs.
Top5Bottom5_7-31-15_YTD
DKL rejoined the top 5 this week, after a one week hiatus.  LINE dropped into the -50% total return club at the bottom of the sector performance chart.
Top5Bottom5_7-31-15_YTD_chart
General Partner Holding Companies
Last week, each and every GPs was down.  This week all but WMB were positive.  The median GP return underperformed the MLP Index, however.  PAGP led the way on the upside on no discernable news items.  AHGP, TEGP and EQGP all saw their MLP subsidiaries report good 2Q results.
Top5Bottom5GPs_7-31-15
Top5Bottom5GPs_7-31-15_chart
News of the (MLP) World
Earnings releases dominated news this week, with limited transactional news and no equity deals to report.  More of the same next week, although some brave MLP may try to test the capital markets.
News-of-the-World
Equity

  • The yieldco IPO that launched last week (Terraform Global) ran into some challenges in its efforts to price this week, and has re-filed its prospectus to reduce the size of the deal and drop the price to $15 from $19-21/share (prospectus)
    • There is some investor overlap between MLPs and yieldcos, and it is clear capital markets remain challenged in the current environment, especially for externally funded growth stories

M&A / Growth Projects

  • Sunoco Logistics (SXL), Energy Transfer (ETP) and Phillips 66 (PSX) announced JV to construct oil pipeline from Nederland, TX to Louisiana refinery (press release)
    • Pipeline will be called the Bayou Bridge Pipeline, and will deliver crude oil from terminals in Nederland, TX to Lake Charles, Louisiana
    • The JV will launch an expansion open season for service to the market hub at St. James, Louisiana
    • JV ownership breakdown: PSX at 40%, ETP and SXL with 30% each
    • The Lake Charles portion of the pipeline is under construction and will be in service by 2016, with the St. James expansion expected to be in-service by 2H 2017
    • No financial details were released, but on PSX’s call management put an estimate of $700-900mm for the committed pipeline to Lake Charles
  • ONEOK Partners (OKS) announced plans to invest between $70mm and $100mm to expand its ONEOK WesTex Transmission intrastate natural gas pipeline system to serve markets in Mexico (press release)
    • 260 mmcf/d of additional capacity by 1Q 2017
    • Anchor shipper is Comision Federal de Electricidad, Mexico’s national electric utility, which has signed a 25-year take or pay contract
    • Project is expected to have an EBITDA multiple of 5-7x

Other

  • Cheniere Energy, Inc. (LNG) announced 20-year LNG offtake agreement with Chile’s Central El Campesino for 0.6 million tons per annum beginning in 2019 (press release)
  • Enbridge Energy (EEP) announced actions to support subsidiary MLP Midcoast Energy (MEP) and ensure 1.0x distribution coverage each quarter and 5% distribution CAGR through the end of 2017 (press release)
  • Distribution increases:
    • PBFX +5.7%
    • WNRL +5.0%
    • DKL +3.8%
    • ARCX +3.7%
    • VTTI +3.5%
    • SRLP +3.2%
    • AHGP +2.4%
    • EEP +2.3%
    • ARLP +1.9%
    • BPL +1.1%
    • EXLP +0.9%
    • USDP +0.9%
  • Flat: MEMP, NAP, NMM, SXE, SDLP, AZUR, APU, GMLP, JPEP, EVEP, CPPL, RIGP
  • Cut: NSLP suspended distributions, LINE announced intent to suspend distributions
RELATED CONTENT
No posts matching your criteria
MLPguy Post
Week Thoughts: Midstream Canceled Again The S&P 500 closed negative for a 4th straight week, while midstream had its worst week since June in what has been a brutal September so far.
MLPguy Post
Week Thoughts: Midstream Yield High, Interest Low Midstream stocks bounced back early in the week after two rough weeks, but then as the market rolled over later in the week, midstream and MLPs were dragged back down.
MLPguy Post
Week Thoughts: Another Setback Setback for Midstream Midstream struggled again this week, in a risk-off week for stocks and commodity prices.
MLPguy Post
Week Thoughts: Midstream, The Final Season With the market taking a very well-publicized breather this week, midstream followed the market and oil prices lower. MLPs were down each day this week and finished down 4.7%.
MLPguy Post
Week Thoughts: Stocks Up, Midstream Down MLPs staged a comeback effort late in the week (+3.7% Wednesday to Friday), but finished down vs. last week, and well below the S&P 500’s 3.3% gain.
MLPguy Post
Week Thoughts: Midstream Militia Retreats After a few weeks of positive performance, midstream rolled over this week. Energy stocks in general were negative, despite benign commodity price movements and strength among market indexes (which clearly are dominated by tech stocks).
MLPguy Post
Week Thoughts: Blue Flame Special for Midstream Midstream followed up last week’s big week with another strong week of price action. Midstream’s gains were mostly isolated to Monday and Wednesday, but those two days were good enough for a 3% week for the group overall, better than the S&P 500, utilities and infrastructure.
MLPguy Post
Week Thoughts: Midstream Restraint Rewarded Midstream was higher each of the first 4 days this week, before taking a breather Friday, to finish up 5-6% over last week. MLPs were particularly strong, especially gathering & processing stocks....
MLPguy Post
Week Thoughts: Midstream Still Waiting for Its Kodak Moment Midstream underperformed this week, even after counting the juicy dividends that were paid this week. Tech stocks, utilities and other sectors reported strong earnings and saw stock price gains as a result.
MLPguy Post
Week Thoughts: KMI Anthem Over, Play Ball! Midstream performance was mixed this week, with strength in MLPs offset by weakness among large U.S. corporations like WMB and KMI, the latter of which reported less than stellar 2Q results coupled with low energy commentary.
MLPguy Post
Week Thoughts: Positive Pipeline Performance Pre-Earnings Midstream bounced back this week, riding a strong market, stable oil prices and the ramp into distribution season.
MLPguy Post
Week Thoughts: Dakota Access Denied Midstream struggled in an otherwise strong week for the market, hurt by a court decision that rocked the Bakken while not offering much confidence for any midstream company seeking to develop energy infrastructure going forward.
MLPguy Post
Week Thoughts: Market Party, MLPs Stay Home Stocks of all kinds were positive in this pre-holiday week, except for MLPs. Midstream overall lagged the broad market, despite oil and natural gas price gains.
MLPguy Post
Week Thoughts: Midstream Dusted After a solid start to the week, midstream stocks collapsed over the last four days this week, including big declines Tuesday and Friday.
MLPguy Post
Week Thoughts: Midstream Bounce Faded It was an up and down week for midstream, but overall positive vs. last week, helped by a huge day Monday. The Supreme Court ruling in favor of pipeline development across the Appalachian Trail seemed to help midstream stocks broadly on Monday.
MLPguy Post
Week Thoughts: Midstream Paper Jam After an all-time good week across the sector last week, Midstream stocks gave it all back this week. Most of the damage came on Thursday, when the broad equity market dropped 6%.
MLPguy Post
INFRASTRUCTURE: ANOTHER MIDSTREAM EXIT OPPORTUNITY Midstream stocks and MLPs have bounced 100%+ off the latest multi-year low in late March, and they are enjoying a rare respite from fund outflows, despite fundamental challenges. Without the stress of daily extreme volatility and negative stock performance, now is an ideal time to re-evaluate midstream exposure and consider (or re-consider) listed infrastructure.
MLPguy Post
Week Thoughts: Midstream Breaks Out with No Brakes Midstream stocks had an all-time great week of stock performance, with double-digit returns across all three indexes, driven by a double-digit gain in oil prices and another surge in the broad stock market.
MLPguy Post
Week Thoughts: MLPs Lose Week, Win May It was a short week with not much news, so midstream and MLPs followed the broad equity market higher. The melt-up of the broader equity market continued, supported by stimulus and optimism that permeated the markets for most of the week as areas of the country opened back up.
MLPguy Post
Week Thoughts: Midstream Refreshed After Pause After pausing last week, the bounce back for midstream resumed in a big way this week. MLPs and the AMUS put up their biggest week of the year on the back of another big week of oil price gains and strength in the broader stock market.
MLPguy Post
Guest Q and A with ETF Expert on AMLP Guest Q&A with an expert on ETF structuring where we focus discussion on the most popular ETF in the midstream sector, AMLP.
MLPguy Post
Week Thoughts: Midstream Remains Resilient (Recently) The streak is over, midstream stocks traded down for the first time in 7 weeks. But positive sentiment for energy stocks due to higher oil prices helped MLPs (and to a lesser extent broader midstream stocks) outperform utilities and the S&P 500 slightly this week.
MLPguy Post
Week Thoughts: Midstream Stocks Up on Lower Guidance Midstream rallied for a 6th straight week, but this week was different than the prior 5. This week’s rally was led by larger, more integrated players in the U.S. and Canada, not by gathering & processing MLPs. This week was less about bottom fishing or short covering. Broad equity market strength and a 25% oil price gain helped.
MLPguy Post
Week Thoughts: Midstream Gains Again Midstream and MLPs ran their streak of positive weeks to 5, this time trading up with oil prices even as the broader equity market and utilities were negative. Late in the week, the market threw a couple of pails of cold water on the risk-on euphoria, sending midstream and MLPs lower Thursday and Friday.