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. Helping the sector sustain last week’s rate of gains was the announcement of a sweetened deal for Tallgrass Energy (TGE), and a positive market backdrop. MLP Index is now up more than 10% off the bottom and the total return index is back to early November levels.
Back-to-back 4% return weeks is very rare for the MLP Index. The last time it happened was the first two weeks of 2018 (about two years ago). The only other time it happened was in the two weeks after the downdraft associated with the week of 9/11/2001. Today’s MLP Index includes less of the overall midstream sector than at any point in the last decade, so the comparability of volatility today to prior periods is limited. The AMNA being up 3% for consecutive weeks is also quite rare, having happened only 4 times in the last 6 years of AMNA history.
Reflectivus for the Rest of Us
There are just 6 trading days and only one more full weekly post left in 2019. I thought it would be fun to reflect on some of the highlights for the year.
My Favorite Posts of 2019
My Favorite Analogies
My Favorite Title: “MLPs Less Travelled” October 26th
Most Popular Posts
EQM posted double digit returns for a second straight week to lead midstream MLP performance, helped by the guidance announcement early in the week that indicated distributions would be maintained through 2020. PSXP rallied hard on no news.
NS repeated in the bottom 5 this week. On the YTD leaderboard, PSXP’s huge move this week pushed it well ahead of the group for the overall lead with more than 58% return this year. USAC and EVA also gained ground and are in the running for top non-midstream MLP honors for the year.
Naturally, TGE led all midstream corporations in performance this week, after the announcement earlier of a sweetened takeout bid from sponsor Blackstone. AM, ENLC and ETRN each posted another double-digit week of gains as they make a late push to finish down less than 30% for the year, respectively. ENLC was helped by Devon’s Barnett Shale asset sale (ENLC services the assets). AM was helped by disclosure of relatively low price for the shares bought from AR.
While not in the top 5 this week, WMB and TRGP had strong returns among the larger names. LNG continues to lag the latest midstream rally, KMI and OKE repeated in the bottom 5.
On the YTD leaderboard, TRGP return is above 20% and WMB is approaching 15%, while OKE and KMI are comfortably ahead at more than 40% each. The bottom 2-4 has become a heated race between ENLC, ETRN and AM.
Overall positive week for Canadian midstream, with a tight grouping of performance in the 1-4% range. TRP was the overall leader for the week and continues to push higher on the YTD leaderboard, joining GEI above 50% return.
On the YTD leaderboard, now that KML has closed and will be removed from the chart next week, the surviving Canadian midstream stocks will each have produced greater than 30% total returns in USD in 2019. Pretty incredible run.
One big news item, and a few loose ends tied up heading into what hopefully will be a quiet few weeks.
Growth Projects / M&A