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April 15, 2011

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Week Thoughts

Happy almost tax day!  This week, as MLP investors everywhere are paying their recapture ordinary income taxes for MLPs sold in 2010, the market didn’t do much, and neither did MLPs.  The S&P 500 finished the week slightly lower than the previous week, while MLPs barely moved, down or 0.1%.   Interest rates were down this week as well.

The story of the week was the $525mm acquisition EROC announced, along with an indication that the company will raise its distribution to a run rate of $0.75 from $0.60 currently.  The stock shot up 12% on the week.  EVEP was knock down 3.0% on the week, the most of the E&P MLP group, although royalty trusts like SDT were down substantially more than that.  BPL did a $285mm equity offering, but finished the week off only 0.7%, which is a great result for them.
Next week should be fun with lots of distribution announcements and with the IPO of Tesoro Logistics (TLLP) pricing on Tuesday.  Midpoint of the range is 6.75% yield, probably prices higher than midpoint though.  TLLP gets all of its revenue from TSO at this point, but has third party upside in the Bakken shale area where largest of its assets are located.
Have a good weekend…

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