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April 27, 2012

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MLP Winners & Losers: Nat Gas & Inergy Bounce, Wide Angle Still Ugly

Everything was up this week, but MLPs were near the bottom of the list as shown below.  Natural gas futures were up more than 13% week over week, driving the energy sector higher (XLE was up 2.6%).  The S&P 500 was up 1.8%, breaking a 2 week streak of MLP outperformance.

Propane doesn’t look so bad this week, but its all about timing.  NRGY’s announcement of better than expected distribution cut (sort of like a weaker than expected punch in the face) and the announcement NRGY will exit the retail propane business sent it up 20.4% for the week to $19.08.  Widen the lens a bit, and the picture is not so bright, last April 27th NRGY closed at $40.24 per unit, so that’s more than 50% decline in value last 12 months.  But hey, could have been worse, and it appears NRGY plan to spin off NRGM with excessive IDRs, then morph NRGY into a pure play GP holdco may work.

In other names, CQP had a huge week even with higher natural gas prices, NKA continued its strong trading, and FGP caught the “propane may not be absolutely terrible” wave to a strong week as well.  NS had ok earnings, but flat distributions and not many very high growth expectations sent it lower.

Remember that wider lens we were talking about for NRGY and OXF?  Even with the sharp uptick this week, OXF and NRGY remain in the cellar on a year to date basis.  CQP is far and away the big winner this year to date.

 The wide look at year to date performance highlights that even with the great week natural gas had, natural gas remains the biggest loser.  With the S&P 500’s outperformance this week, MLPs are back to more than 10% underperformance year to date.  Note that doesn’t include distributions.  GPs are way out in front.

Distribution Announcements
30 MLPs and 3 GP holding companies announced distributions this week. So far this quarter, 60 MLPs have announced distributions, averaging 0.9% distribution growth quarter over quarter.  37 of those 60 MLPs have raised distributions.  6 out of 7 GP holding companies have announced distributions, 4 announced raises, average dividend / distribution growth of 4.2%.

  • LINE raised 5.1%
  • APU raised 4.9%
  • EROC raised 4.8%
  • ATLS raised 4.2%
  • MWE raised 3.9%
  • CHKM raised 3.8%
  • MMP raised 3.1%
  • OILT raised 2.9%
  • RRMS raised 2.8%
  • PVR raised 2.0%
  • PSE raised 2.0%
  • WPZ raised 2.0%
  • SXL raised 1.8%
  • APL raised 1.8%
  • DPM raised 1.5%
  • HEP raised 1.1%
  • EXLP raised 1.0%
  • VNR raised 0.9%
  • LGCY raised 0.9%
  • EVEP raised 0.1%
  • NRGY cuts distribution 46.8%
  • OXF held flat, but cuts subordinated distribution to $0.10 (77.1% less than common unit distribution of $0.4375, saves $3.5 million per quarter)
  • RGP, MMLP, CPLP, NKA, NS, NSH, STON, NMM, ETP, ETE, MCEP announced flat distributions

More to come in Week Thoughts tomorrow or Sunday on earnings this week and next.

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