×
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 1785 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 Re-Run Energy stocks, midstream stocks, and MLPs ran back last week’s action with another big week. Like last week, it was 4 straight green days followed by a weaker Friday.
MLPguy Post
Week Thoughts: Big Score for Midstream Midstream broke a 4-week losing streak and rang in the new year with a bang, rallying 7-8% across the midstream indexes. The big week was just the 3rd best week for MLPs since the vaccine news turned things around in early November.
MLPguy Post
Week Thoughts: Another Lost Week, Year for Midstream The short final week of the year was good for most stocks, but Midstream stocks were left out again. The S&P 500, utilities and infrastructure stocks traded up, along with oil and natural gas prices.
MLPguy Post
Week Thoughts: Midstream Santa Rally Melts Midstream underperformed the market for a third straight week after its massive bounce in November and early December. The group is clinging to a positive month of performance with just 4 more trading days left...
MLPguy Post
Week Thoughts: Midstream Checks Out Stocks, oil prices and natural gas prices were all up this week, but midstream stocks took a step back and appear to be coasting to the finish line for the year after the rush to re-position over the last few months.
MLPguy Post
Week Thoughts: Midstream Stalls at Altitude Midstream was mixed this week, with MLPs closing slightly lower after 4 very strong weeks of positive performance. Positive performance from some of the larger corporations in the U.S. and Canada helped the broader midstream indexes finish positive and keep pace with energy stocks...
MLPguy Post
Week Thoughts: Midstream Furious Finish Midstream had another huge week on still more follow-through of positive sentiment shift that’s occurred over the last 5 weeks as positive vaccine news sparked a rotation into value and energy stocks.
MLPguy Post
Midstream Movember: Updated Returns Through Month End Because the end of the month fell on a Monday, we felt it might be useful to post a wrap up on monthly performance for midstream, outside of the normal weekly cycle.
MLPguy Post
Week Thoughts: Midstream Parade Goes On Energy stocks (midstream included) continued their recent run of positive stock performance in this short week, helped by ongoing positive vaccine data points. It was the best Thanksgiving week return for midstream since 2008 (when MLPs were up 20%).
MLPguy Post
Week Thoughts: Midstream Hosts Another Large Gathering Another vaccine update, another rally for energy stocks and midstream stocks. Midstream was green all week until taking a breather Friday. Stocks and the infrastructure index were slightly negative, and utilities were hit hard.
MLPguy Post
Week Thoughts: Midstream Goes Green on Vaccine Energy stocks were buoyed by the big vaccine news Monday, and the gains held for the week overall. XOP spiked 20.4% this week, XLE was up 17.1%. Midstream wasn’t quite that strong but posted with historically significant gains Monday and for the week
MLPguy Post
Week Thoughts: Stocks Get Mandate, Midstream Flips Red The market (and midstream for most of the week) seemed to shrug off the ongoing presidential election malaise this week.
MLPguy Post
Week Thoughts: Pain Distributed Across Markets, Midstream Midstream and MLPs returned to earth this week, following lower oil prices and the market lower. Solid earnings reports from some of the larger names weren’t enough to offset macro headwinds and ET’s large distribution cut.
MLPguy Post
Week Thoughts: MLPs Ramp into Earnings MLPs resumed their October rebound this week with their best week since early August. Energy stocks outside of midstream also had a strong week on the back of merger mania in upstream with another E&P merger announced this week and others rumored.
MLPguy Post
Week Thoughts: Midstream Flattens Friday Midstream and MLPs looked to be coasting to a third straight week of solid gains, but a sharp selloff across energy stocks Friday erased the gains for the week.
MLPguy Post
Week Thoughts: Midstream Unchained, MLP Eruption MLPs followed up last week’s modest bounce with a huge week in a risk-on surge for equity markets, commodity markets and everything else this week.
MLPguy Post
Week Thoughts: Midstream Asymptomatic as Oil Declines The stock market broke its losing streak, and MLPs and U.S. midstream came along for the ride this week, bouncing slightly after a rough week, month, quarter and year. Weakness in Canadian midstream dragged down the AMNA Index.
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.