×
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

November 23, 2014

Viewed 786 times

Week Thoughts: MLP Weighting Game On

MLPs had their best week since early August, outpacing the broader equity markets as energy commodity prices stabilized.  The Alerian MLP Index was up 3.4%.  U.S. domestic oil price finished the week with back to back positive trading sessions to close the week up 1.2%.
Expect volatile oil price trading next week ahead of OPEC’s 11/27 meeting, when some expect OPEC will announce production cuts to support pricing.  If WTI oil drifts up to $80, it should be a nice tailwind for MLPs.  But even if oil prices revert back into the producer comfort zone of $85/bbl+ in the next few weeks, this selloff has woken the market up to the fact that demand for oil globally has a limit.
Weekly MLP Review_11-21
The Kinder family of MLPs will go away next week.  It’s all over but the taxes now.  This week was a nice bookend to the KMI transaction, because it was the best week for MLPs since the week the KMI deal was announced.
Alerian removed KMP and EPB from the MLP indices as was largely expected, but Alerian didn’t take this opportunity to expand the number of stocks included in the index.  With more than 120 energy MLPs trading today, a hard cap of 50 seems outdated in some respects, but so does the Dow Jones Industrial Average.  Chances are if the cap wasn’t expanded beyond 50 with the ex-Kinder rebalance, it won’t be expanded any time soon.
If you enjoyed this week’s rebalancing act, more index changes are in the offing the next few months, as a byproduct of consolidation.  OILT was added this week, but once EPD acquires the remaining units, OILT will need to be replaced.  WPZ and APL will also need to be replaced in the coming months as their respective mergers close.  The special rebalancing events will continue to be short term stock price drivers for MLPs that get added or see their weights grow.  Between IPOs, consolidations and rebalances, the sector continues to be as dynamic as ever.
Winners & Losers
None of the biggest winners and losers announced any company specific new this week.  NGL was the biggest winner from the Alerian announcements this week, benefitting from a step up from the Alerian MLP Index into the more exclusive Alerian MLP Infrastructure Index, which includes only 25 stocks and is tracked by the biggest MLP ETF.  NKA continues to be very volatile, up 38.6% after falling 15% last week.  NKA is still down 51% so far this year and sports a 24% yield.  On the downside, shipping MLPs were hit hard by a downgrade early in the week, many of them recovered but HMLP and DLNG did not.
Top5Bottom5_11-21-14
Top5Bottom5_11-21-14_chart
With less than 30 trading days left in 2014, PSXP holds a narrow lead on the sector for year to date returns.  TCP popped into the top 5 this week, displacing DM, on improving sentiment for the long-dormant TCP drop-down story.
Top5Bottom5_11-21-14_YTD
Top5Bottom5_11-21-14_YTD_chart
News of the (MLP) World
Energy Transfer’s analyst day was the news focus early in the week.  ETP did not disappoint, announcing a new large scale growth project plus asset shuffling involving IDRs and the Bakken pipeline project.  ETP also filed a fresh ATM, joined by MWE and OKS who also filed ATMs.  No marketed equity offerings, no MLP IPO filings and no big M&A announced this week.  Expect limited equity offerings in the next week, followed by a flurry of activity after Thanksgiving.  Later in the week, the focus shifted to the fallout of the Alerian MLP Index changes as a result of the KMI consolidation transaction.
News-of-the-World
Equity

  • Energy Transfer (ETP) filed equity distribution agreement to sell up to $1.5bn of common units at the market (filing)
  • Oneok Partners (OKS) filed equity distribution agreement to sell up to $650mm of common units at the market (filing)
  • MarkWest Energy (MWE) filed equity distribution agreement to sell up to $1.5bn of common units at the market (filing)
    • MWE also included 4.0mm of units owned by Energy Minerals Group in the ATM, down from 20.0mm that were originally issued to EMG back in December 2011

Debt

  • Boardwalk Pipeline (BWP) prices $350mm of 4.95% senior notes due 2024 (press release)
    • BWP will use the proceeds to retire $250mm of 5.05% senior notes due in 2015

M&A / Growth Projects

  • Lone Star NGL, a JV between Energy Transfer (ETP) and Regency Energy (RGP), announced plans to construct NGL pipeline from Permian Basin to Mont Belvieu (press release)
    • Lone Star will also convert its existing West Texas 12-inch NGL pipeline into crude oil/condensate service
    • All-in the pipeline and conversion are expected to cost $1.5-$1.8bn and are expected to be operational by 3Q 16 (pipeline) and 1Q 17 (conversion)
    • ETP owns 70% of Lone Star, RGP owns 30%
  • Energy Transfer (ETP) announced exchange with Energy Transfer Equity (ETE) of 40% interest in SXL’s IDRs for 30.8mm ETP units and 45% interest in its $5bn Bakken pipeline project (press release)
    • Transaction valued at $3.75bn
    • ETP will end up owning 75% of the Bakken pipeline project
    • ETE will own 90% of SXL’s IDR cash flow
    • ETP is expected to execute a similar transaction with SUN’s GP next year
    • Owning and being a seller of IDRs is a good position to be in, and ETP will be able to use those interests to fund growth projects
    • SXL will probably not participate in the Bakken pipeline project
  • Tallgrass Energy (TEP) and Hiland Crude, LLC announced joint open season for oil pipeline capacity from Montana and Wyoming receipt points to delivery points in Cushing, OK (press release)
    • Hiland will expand its Double H pipeline and Tallgrass will expand its Pony Express pipeline (33% owned by TEP) to accommodate shipper commitments they receive
    • Open season ends 12/12/14
  • Magellan Midstream (MMP) extends open season for Saddlehorn pipeline project (press release)
    • Open season will now close on 12/15/14, and will include 3 receipt points not included in original open season
  • Williams Partners (WPZ) announced FERC application to expand its Transco pipeline system (press release)
    • WPZ seeking to expand capacity in Alabama beginning in May 2017 and will add 1.13 dekatherms/day by 2021
    • Sabal Trail pipeline will lease 100% of the new capacity on a long-term basis
    • Part of the $4.5bn in planned capex related to the Transco pipeline system through 2017

Other

  • Alerian announced a number of changes this week:
    • OILT to replace QRE in the Alerian MLP Index (press release)
    • MMLP and VLP to replace KMP and EPB in the Alerian MLP Index (press release)
    • NGL and TCP to replace KMP and EPB in the Alerian MLP Infrastructure Index (press release)
  • Transcanada responds to activist hedge fund recommendations as “flawed” (press release)
    • Analyst day for TRP also happened this week, no change in the strategic drop-down plan
  • Exterran Holdings to spin off international business and become a pure play GP (press release)
RELATED CONTENT
No posts matching your criteria
MLPguy Post
Week Thoughts: Dakota Access Denied Midstream struggled in an otherwise strong week for the market, hurt by a court decision that rocked the Bakken while not offering much confidence for any midstream company seeking to develop energy infrastructure going forward.
MLPguy Post
Week Thoughts: Market Party, MLPs Stay Home Stocks of all kinds were positive in this pre-holiday week, except for MLPs. Midstream overall lagged the broad market, despite oil and natural gas price gains.
MLPguy Post
Week Thoughts: Midstream Dusted After a solid start to the week, midstream stocks collapsed over the last four days this week, including big declines Tuesday and Friday.
MLPguy Post
Week Thoughts: Midstream Bounce Faded It was an up and down week for midstream, but overall positive vs. last week, helped by a huge day Monday. The Supreme Court ruling in favor of pipeline development across the Appalachian Trail seemed to help midstream stocks broadly on Monday.
MLPguy Post
Week Thoughts: Midstream Paper Jam After an all-time good week across the sector last week, Midstream stocks gave it all back this week. Most of the damage came on Thursday, when the broad equity market dropped 6%.
MLPguy Post
INFRASTRUCTURE: ANOTHER MIDSTREAM EXIT OPPORTUNITY Midstream stocks and MLPs have bounced 100%+ off the latest multi-year low in late March, and they are enjoying a rare respite from fund outflows, despite fundamental challenges. Without the stress of daily extreme volatility and negative stock performance, now is an ideal time to re-evaluate midstream exposure and consider (or re-consider) listed infrastructure.
MLPguy Post
Week Thoughts: Midstream Breaks Out with No Brakes Midstream stocks had an all-time great week of stock performance, with double-digit returns across all three indexes, driven by a double-digit gain in oil prices and another surge in the broad stock market.
MLPguy Post
Week Thoughts: MLPs Lose Week, Win May It was a short week with not much news, so midstream and MLPs followed the broad equity market higher. The melt-up of the broader equity market continued, supported by stimulus and optimism that permeated the markets for most of the week as areas of the country opened back up.
MLPguy Post
Week Thoughts: Midstream Refreshed After Pause After pausing last week, the bounce back for midstream resumed in a big way this week. MLPs and the AMUS put up their biggest week of the year on the back of another big week of oil price gains and strength in the broader stock market.
MLPguy Post
Guest Q and A with ETF Expert on AMLP Guest Q&A with an expert on ETF structuring where we focus discussion on the most popular ETF in the midstream sector, AMLP.
MLPguy Post
Week Thoughts: Midstream Remains Resilient (Recently) The streak is over, midstream stocks traded down for the first time in 7 weeks. But positive sentiment for energy stocks due to higher oil prices helped MLPs (and to a lesser extent broader midstream stocks) outperform utilities and the S&P 500 slightly this week.
MLPguy Post
Week Thoughts: Midstream Stocks Up on Lower Guidance Midstream rallied for a 6th straight week, but this week was different than the prior 5. This week’s rally was led by larger, more integrated players in the U.S. and Canada, not by gathering & processing MLPs. This week was less about bottom fishing or short covering. Broad equity market strength and a 25% oil price gain helped.
MLPguy Post
Week Thoughts: Midstream Gains Again Midstream and MLPs ran their streak of positive weeks to 5, this time trading up with oil prices even as the broader equity market and utilities were negative. Late in the week, the market threw a couple of pails of cold water on the risk-on euphoria, sending midstream and MLPs lower Thursday and Friday.
MLPguy Post
Week Thoughts: Midstream Wins Mortal Monday Midstream is on pace for its best month ever after another big positive week. MLPs posted their 4th straight week with more than 7.5% gains, the best 4-week stretch ever (off a low base).
MLPguy Post
Midstream Week Thoughts: Extreme Retracement It was a big week for midstream again, this time better than the broad equity market, which was also up again. MLPs had their 8th best week ever, slightly better than last week’s 9.6% gain. Most of the rally came Friday when AMZ rallied 7%...
MLPguy Post
Week Thoughts: Market Staycation Supports Midstream Stocks, especially utilities, roared back in a holiday-shortened week, helped by additional stimulus measures and signs of hope from daily COVID-19 statistics. Midstream stocks (and to a lesser degree MLPs) came along for the ride. The midstream performance hierarchy returned to trend this week with AMNA outpacing AMZ.
MLPguy Post
Week Thoughts: Midstream Beats on Energy Tweet On the back of the best week for oil prices in recorded history, midstream traded up and outperformed the S&P 500 and utilities. MLPs (AMZ) outperformed broader midstream (AMNA) this week after trailing last week and last month and last year.
MLPguy Post
Week Thoughts: Market Relief, MLP Grief The market found some relief on the stimulus bill, but midstream and MLPs lagged this week. Canada midstream helped the AMNA outperform the other midstream indexes. Oil prices fell further, and the lack of places to put oil in this climate is concerning.
MLPguy Post
Midstream Week Thoughts: Remote Detonation While the entire country worked remotely this week, the market had its worst week since 2008. This led to another week of staggering losses in midstream and oil prices. MLPs actually outperformed utilities and the DJIA this week and were roughly inline with the S&P 500 decline.
MLPguy Post
MIDSTREAM ELEPHANTS COMING HOME TO ROOST The balance between supply and demand of MLP paper has always been delicate. In the past it was a balance between perpetually growing inflows and equity issuance. There were times when equity offerings temporarily overwhelmed investor appetite for MLPs. But as liquidity has diminished in recent years, the structural risks to this group to a stampede to the exits grew larger.
MLPguy Post
Week Thoughts: Market Suspended, MLPs Canceled What a week. The oil price collapse dragged MLPs and midstream stocks down again this week. The group finished down a staggering 30%, which leaves YTD returns in less than 3 months at negative 40-50%.
MLPguy Post
Week Thoughts: From Russia, No Love for Midstream Midstream captured more downside, selling off again this week but for a different reason. Last week, midstream was down alongside the rest of the stock market. This week the market finished flat, utilities finished sharply higher with a big interest rate drop, but midstream sold off again.
MLPguy Post
Midstream Week Thoughts: Selling Goes Viral Midstream joined in on the biggest and broadest equity selloff in recent memory this week. This was the worst week for the S&P 500 and for MLPs since 2008. Oil dropped to the mid-$40s, interest rates and natural gas prices dropped to fresh lows.
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.