×
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 1020 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: MLP Erosion Resumes Stocks of all types were negative this short week (even utilities, barely), so despite a rally in commodity prices and a further drop in interest rates, midstream stocks were negative. MLPs were down for a 4th week in the last 5 weeks and were again the worst performing group in midstream.
MLPguy Post
Week Thoughts: Midstream Positive, Beyond Partnerships (BP) On the back of rebounding oil prices and an ever-higher stock market, midstream indexes were positive this week. In a familiar refrain, the broader AMNA index was well ahead of the MLP Index, reflecting better performance among corporations
MLPguy Post
Week Thoughts: Midstream Reprieve MLPs and midstream companies arrested their recent decline this week with a flattish week. The broad equity market had a strong week, helped by gains from some big tech firms on earnings results.
MLPguy Post
Week Thoughts: Somber Midstream, Market Mentality Midstream was negative this week, along with most other global equities and commodities.  Midstream outperformed broader energy stocks, but underperformed the S&P 500 and utilities, which continue to grind higher. 
MLPguy Post
Week Thoughts: Market Seeks Shelter, Not MLPs MLPs and midstream came back to earth this week, dragged down by oil and natural gas prices that were too weak to be ignored by midstream investors after 6 weeks of gains.
MLPguy Post
Week Thoughts: Midstream Phase Won Midstream gains kept rolling for a sixth straight week, again riding a strong broad equity market higher, and defying weakness in upstream energy stocks (XOP -3.6%).
MLPguy Post
Week Thoughts: Falling Tension, Rising Tide Lifts Midstream MLPs extended their winning streak to 5 weeks, but MLPs and midstream stocks were weaker towards the end of the week as oil prices and energy stock prices sank lower.
MLPguy Post
INFRASTRUCTURE DELIVERS MLPs have bounced 10%+ off the early December 2019 multi-year low and are enjoying a seasonal respite from fund outflows. Without the stress of daily extreme volatility and angst, now is an ideal time to re-evaluate midstream exposure and consider (or re-consider) listed infrastructure.
MLPguy Post
Week Thoughts: Clean Slate Midstream traded up for a 4th straight week since bottoming on December 3rd.  MLPs are up 12.7% from the bottom and the AMNA isn’t far behind with a 10% gain.
MLPguy Post
2019 Year-End Midstream Statistics The year ended this week, which you may have heard.  From this point forward, we forever will be closer to 2050 than 1990.  So, it is time to review the final results of 2019.
MLPguy Post
Week Thoughts: No Holiday Drama for Midstream Midstream traded up the first 3 days this week to cap a run of 7 positive days out of 8.  Then on a very low volume session Friday, midstream corporations and MLPs sold off a bit to finish the week slightly positive overall.  Midstream broadly was in-line with the broad stock market overall (S&P 500 +0.6%).
MLPguy Post
Week Thoughts: Pipelines Piping, MLPs A-Leaping Midstream’s bounce off the bottom continued this week. In basically a repeat of last week, the MLP Index gained 4.6% the first three days of the week and was flattish from Wednesday’s close through the end of the week.
MLPguy Post
Week Thoughts: Midstream Relieves Itself Midstream and MLPs ripped this week, continuing the rebound that began in the middle of last week. A benign broad market backdrop allowed midstream stocks and MLPs to rally on their own merits this week.
MLPguy Post
Week Thoughts: Midstream Trypophobia Midstream stocks took cues from the broad market this week, drifting lower early in the week before mounting a comeback later in the week, including a big Friday after the robust jobs report.
MLPguy Post
DECADENCE TO DECAY: A DECADE OF MLPguy As of this week, I have now been publishing thoughts on MLPs at MLPguy.com for more than 10 years. The usual end of the year reflection in the media and among investors will be magnified arbitrarily this year by the end of the decade.
MLPguy Post
Midstream Week Thoughts: Groundhog Day for Thanksgiving Monday was positive for midstream, capping a rare 3-day run of positive performance. But apathy reigned the rest of the week, as Midstream and MLPs traded down the rest of the holiday-shortened week.
MLPguy Post
Week Thoughts: Midstream Flattish, Finishes on Positive Note Midstream was almost positive week over week, but had to settle for two days of positive performance in a row.
MLPguy Post
Week Thoughts: Mariner Makes Midstream Mixed Midstream stocks were mixed across categories, with Canadian midstream outperformance offset by MLP weakness, but overall finished positive for the week, helped by broad market strength and income stock strength.
MLPguy Post
Week Thoughts: Midstream Captures More Downside The slow bleed in midstream continued this week. MLPs again lagged broader the Midstream Index (AMNA), because of Canadian midstream and a few large U.S. corporations. Higher commodity prices and strong broader equity market trading weren’t enough to get midstream moving higher...
MLPguy Post
Week Thoughts: Midstream Earnings Hit, Stocks Miss Midstream and MLPs were slight underperformers among energy stocks (XOP and XLE were largely flat) and underperformed general equities (as measured by S&P 500), which rallied 1.5%. Earnings, ex-dates for distributions and month-end strangeness whipped things around a bit in between a basically flat week.
MLPguy Post
Week Thoughts: MLPs Less Travelled Midstream basically kept pace with the broader market this week, while MLPs underperformed, again. Oil prices and broader equities were supportive, but that wasn’t enough to get MLPs moving ahead of EPD results Monday to kick off the meat of 3Q reporting season.
MLPguy Post
Week Thoughts: Midstream Inaction Quiet week in the stock market this week, which translated into a quiet week for midstream as well. The AMNA finished basically unchanged, while the MLP Index was slightly lower.
MLPguy Post
Week Thoughts: MLPs Brace for Earnings Midstream was negative across the board this week, and the MLP Index lost more ground to the other midstream indexes that include corporations. Lower oil prices, higher interest rates and general aversion to energy stocks were likely reasons for continued weakness for the sector.
MLPguy Post
Week Thoughts: Macro Noise Offsets MLP News After 5 straight negative days last week, midstream had three positive days this week, including an intra-day reversal Thursday and a positive Friday.