×
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

March 18, 2017

Viewed 1785 times

Week Thoughts: Get Pain While You Wait

MLPs made it two straight negative weeks with a 0.9% decline.  Oil prices finished up slightly on the week, stepping back from the abyss with a bullish inventory report Wednesday.  We got an oil relief rally, a FED relief rally, even a Canadian jacket company IPO.  Still, MLPs failed to attract broad-based buying.  NGL prices were down sharply, perhaps contributing to MLP weakness.  Or maybe weakness was due to this week being Spring Break across Texas and the beginning of the NCAA tournament…
Weekly_3-17-17
For March so far, MLPs are down 3.1%, but continue to cling to a small gain for the year so far.  The S&P 500 has retaken the MLP Index on year over year returns and is well ahead year to date.
Yield-Based Equities Rally, MLPs Fall Short
What was characterized as a “dovish” rate raise by the Fed was applauded by the market Wednesday.  MLPs were already up that morning after the oil inventory report.  MLPs, REITs and utilities rallied after  the Fed announcement that afternoon, but REITs and utilities caught and past MLPs by the end of the day and showed more follow-through the rest of the week, leaving MLPs as relative losers despite the rebound in oil prices that logically should have provided some positive beta for MLPs.
Dividend Stocks
The harsh reality is oil prices at $48.50/bbl doesn’t light a fire under those waiting on the sidelines, to the extent there are investors paying attention to MLPs and debating an allocation.  The sector has become an execution story that will play out during the second half of 2017.  In the meantime, investors bold enough to believe in volume recovery tied to a recovery of U.S. production will get paid to wait, if they can withstand some near-term pain.
Winners & Losers
Of the top 5 this week, just one (SPH) is in the MLP Index.  SRLP announced an acquisition, and SDLP got some contract relief on one of its assets and caught a bounce.  On the downside, CELP discussed a potential distribution cut next quarter and was punished for it.  ENLK and GEL were down on no news.
Top5Bottom5_3-17-17
Not pictured in the chart was Azure Midstream, which was up 215% this week to $0.47/unit on the pink sheets after EPD announced it would be acquiring assets in a bankruptcy auction for more than the stalking horse bid.  Azure remains down 98% from its peak and down 47% YTD.
Top5Bottom5_3-17-17_chart
YTD Leaderboard
Not much of a change on the YTD leaderboard.  OKS dropped back, presumably on weak NGL prices, but remains up 20.9% for the year.  On the downside, AMID and USDP replaced SPH and CNXC among the biggest losers.
Top5Bottom5_3-17-17_YTD
Top5Bottom5_3-17-17_YTD_chart
General Partners and Midstream Corporations
GPs and corporations outperformed this week overall, but it was a fairly even split of winners and losers.  ETE led the way, with strong showings from SEMG as well.  EQGP continues to be volatile week to week, and OKE had a rare off week.
Top5Bottom5GPs_3-17-17
Top5Bottom5GPs_3-17-17_chart
New of the (MLP) World
For a third week in a row, there were no public equity offerings in the MLP space, although there was a private placement.  EPD picked up a rounding error amount of assets that have some synergies.  A few more open seasons were announced, with Cheniere’s announcement of actual commitments probably the most material organic growth announcement this week.  TRP’s new mainline toll agreement was big news early in the week.
News-of-the-World
Capital Markets

  • Navios Maritime Partners (NMM) announced private placement of 47.6mm units at $2.10/unit, raising $100mm (press release)
    • Price represented 16% discount to prior closing price

Growth Projects / M&A

  • Enterprise Products (EPD) announced acquisition of Haynesville natural gas gathering assets from Azure Midstream Partners via bankruptcy auction for $189mm (press release)
    • Assets include over 960 miles of natural gas gathering pipelines, three natural gas processing facilities with aggregate capacity of 210 MMcf/d and two 10k bpd NGL pipelines
    • EPD has assets in the region that made them the logical buyer and presumably synergies drove their ability to outbid private equity firm Momentum (M5 Midstream), which reportedly had placed a bid (Fuel Fix)
    • M5 is the same group behind M2 Midstream that sold a natural gas gathering system in the Haynesville to EPD in 2010 for $1.2bn (press release)
  • Cheniere Energy (LNG) announced foundation shipper commitments to support construction of Midship Pipeline and announced binding open season for remaining capacity (press release)
    • Midship is planned to be a 200-mile, 36-inch natural gas pipeline to connect production from STACK/SCOOP resource plays in Oklahoma to Gulf Coast and Southeast markets
    • Commitments are from Cheniere, Devon Energy, Marathon Oil, and Gulfport Energy
  • Sprague Resources(SRLP) acquired two refined product terminals for $70mm (press release)
    • The transaction is expected to be accretive to DCF and generate $8-10mm of adjusted EBITDA annually, implying 7-9x EBITDA
    • Terminals are located in Inwood and Lawrence, NY with a combined gasoline, ethanol, and distillate storage capacity of 157k barrels
  • Phillips 66 (PSX) announced open season for West Texas crude oil pipeline (press release)
    • Not an expansion of Permian takeaway capacity, but does reduce potential for in-basin bottlenecks
    • The Reeves-Odessa Origination (Rodeo) Project will include a pipeline system for crude oil transportation for producers and other shippers in the Delaware Basin
    • The project will have an anticipated initial throughput capacity of up to 130k bpd with an ultimate potential capacity of 450k bpd
  • M2 Infrastructure and TransCanada (TRP-CA) to pursue development of 6.2mm barrels of new oil storage at Cushing (press release)
    • The new crude oil storage will be owned by M2 Infrastructure and operated by TRP
  • Ferrellgas (FGP) announced acquisition of Valley Center Propane (press release)
  • Spectra Energy Partners (SEP) reportedly acquired additional 10% stake in $1.2bn PennEast Pipeline development, bringing total ownership in the project to 20% (Midstream Business)
  • Calumet Specialty Products (CLMT) retains Tudor Pickering to explore potential sale of refinery in Superior, Wisconsin (Reuters)
    • CLMT purchased the refinery in 2011 for around $200mm, and Reuters reports the sale could be for as much as $500mm
  • Golar LNG (GMLP) announced new time charter for one of its LNG carriers, the Golar Grand, for up to 9 years (press release)

Other

  • TransCanada (TRP-CA) announced successful conclusion of its Canadian Mainline open season (press release)
    • Collectively, customers have signed 10-year contracts to transport 1.5 PJ/d of natural gas from the Empress receipt point in Alberta to the Dawn hub in southern Ontario, at a single toll of $0.77/GJ
    • This is a big deal for producers in Western Canada and potentially a big deal for U.S. northeast producers when considering markets for their gas
RELATED CONTENT
No posts matching your criteria
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.
MLPguy Post
Status Update: Midstream Green in September Given the end of the month and quarter fell on a Monday, I wanted to get a quick post out with updated month and quarter end numbers. I hope you’ll understand if the upcoming weekly post is a bit shorter as a result.
MLPguy Post
Week Thoughts: MLPs Selloff On Purpose Risk was definitively off this week across energy stocks, commodities and the broader stock market. Naturally, utilities and REITs caught a bid, and midstream did not. Within midstream, Canada held up well and helped AMNA outperform the AMZ and AMUS.
MLPguy Post
Week Thoughts: Midstream Stocks Sustain September Surge Midstream stocks traded up amid a strong backdrop for energy stocks and for income stocks...
MLPguy Post
Week Thoughts: Scarcity Value Rally in MLPs Midstream stocks outpaced the S&P 500 and utilities this week in the face of falling oil prices and rising interest rates. MLPs were the best performers within midstream, benefitting from the “value rally”...
MLPguy Post
Week Thoughts: Market Advances, Midstream Unmoved It was a short, but steady week for midstream, helped by strong Canadian midstream performance that more than offset weakness from MLPs. Midstream stocks underperformed utilities and the S&P 500...
MLPguy Post
Week Thoughts: Takeout Bid Stops Midstream Bleeding Midstream broke out of its 6-week slump this week, helped by a private equity bid lobbed in Tuesday night, but also helped by risk-on broad market action and rebounding commodity prices.
MLPguy Post
Week Thoughts: Midstream Checked, Market Unbalanced Midstream stocks declined for a 6th straight week, this time joined by a pretty scary broad stock market decline on Friday. Broad market fear appears to be joining the energy sector antipathy and midstream apathy we’ve seen all summer.
MLPguy Post
Five Years Since Midstream Peak: Universe Update and In Memoriam The end of next week, the last trading day of August, will be the 5-year anniversary of the peak of the Alerian MLP Index.
MLPguy Post
Week Thoughts: Yield Inversion, Midstream Aversion Midstream stocks were down inline with broad equities this week, after a rally Friday that almost salvaged the week. It was a 4th straight negative week for midstream, and the MLP Index (on a price basis) now sits 11.3% lower than its high for the quarter reached in mid-July.
MLPguy Post
Week Thoughts: Un-Navigable Midstream Midstream and MLP stock performance accelerated to the downside this week, finishing with bigger losses this week than last week. It was also the 4th consecutive negative week for midstream, the longest such streak since late December.
MLPguy Post
Week Thoughts: Midstream De-Rated It was an inauspicious start to August for the stock market, for oil prices, and for the midstream sector due to the overriding influence of interest rates and tariff rates this week. MLPs had their second worst week of the year and worst week since early February.
MLPguy Post
Week Thoughts: Midstream Flagging into Earnings Barrage Midstream started the week strong Monday, but the bounce back was short-lived as midstream sold off each of the remaining days of the week, even as oil prices stabilized and the broad market rallied. Canada and a few larger corporations dragged down broader midstream indexes relative to the MLP Index, which continues to hold up well in a backdrop of upstream carnage.