×
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 17, 2012

Viewed 496 times

Week Thoughts: MLPs Coil, Coil Some More...Then Spring

Most of the time, MLPs get batted around by price movements outside of themselves, such as price action in the broader energy sector, the stock market, commodity prices, Europe, etc.  But this week, MLPs drove the bus, and the price action of the sector attracted attention from the financial media.  Also, traffic to my website from search terms like “why are MLPs going down” spiked.  I was even quoted by both the WSJ.com and Barrons Online by different reporters.

I would like to think that at some point all of the re-assuring research analyst notes, Seeking Alpha articles, CNBC guests, and even blog posts like mine served as fissures in the dam of fear around MLP fund flows.  But I don’t know.  Whatever the reason, around 11:45 Friday, the dam broke and buyers flooded MLPs.

By the time the market closed, the Index was up 3.3% on the day, and the MLP Index, which looked like a lock yesterday to finish down 5%+ for the week, finished the week down just 2.3%, which was less than last week’s 2.6% drop.  So, all of that talk about 5% weeks I wrote about yesterday is no longer relevant, which is fine with me.
+3% days like Friday are very rare, occurring on just 29 of the 4,252 trading days since the beginning of 1996, just 0.66% of the time.  In fact, since April 2009, there have been only 2 days with more than 3% returns on the Alerian MLP Index: May 10, 2010 (+3.3) and August 9, 2011 (+8.4%).  So, for whatever the reason, a 3% Friday is worth celebrating, especially because the trading pattern of the last few weeks is much more akin to the swoons in May 2010 and August 2011 than late 2008.  MLPs are still a long way from their highs for the year, but MLP investors are happier today than they were yesterday.
Quietly amidst all of the MLP noise, natural gas futures rose 8.3% to end the week at $3.79, just 5.5% away from $4.00, which is quite a reversal from below $2.00 earlier this year.  Oil was higher on escalating hostilities in the Middle East.  Pretty much everything else was down this week.

Winners & Losers

HCLP was cut down on news of a lost contract just 3 months after its IPO, it didn’t just dip below its IPO price, it plummeted.  That’s too bad, and will likely add some headwinds to future hopeful MLPs with oilfield services assets.  Targa was down sharply this week after issuing equity at the bottom of our two week MLP slide.  Other bright spots for the week were small caps like NKA, which dropped big last week.

For the year, the 3 worst MLPs to have owned at the beginning of the year are all coal MLPs.  NS returned to the bottom 5 this week after a 4.5% decline week over week.  NKA’s big week propelled it back into the top five.

I think I’ve reached my word limit for the week.  News wrap below, but that will be all for me for the next several days.

News of the (MLP) World


Equity                                     

  • Targa Resources (NGLS) prices public offering of 9.5mm common units at $36.00/unit, raising $342.0mm in gross proceeds
    • Total gross proceeds of $342mm
    • One day book build, with file to price decline of 7.7%
    • We are seeing more marketed follow ons that have a one day book build as opposed to overnight offerings, presumably because overnights wouldn’t work in this market, or because underwriters are trying to use that time to attract more institutional investors
  • Spectra Energy (SEP) prices public offering of 4.75mm common units at $27.60/unit, raising $131.1mm in gross proceeds
    • Gross proceeds of $131mm
    • Overnight deal, priced at 3.5% discount to prior close
  • Markwest Energy (MWE) prices public offering of 8.5mm common units at $46.50/unit, raising $395.3mm in gross proceeds
    • Gross proceeds of $395mm
    • One day book build, file to price decline of 6.4%
  • ONEOK Partners (OKS) files equity distribution agreement to sell up to $300mm in common units at the market

Debt

  • Mid-Con Energy (MCEP) announces increase in its borrowing base from $100mm to $130mm on its existing $250mm senior secured credit facility

M&A / Growth Projects

  • Targa Resources (NGLS) announces $950mm acquisition of Williston Basin crude oil pipeline & terminal system and natural gas gathering & process assets from Saddle Butte Pipeline, LLC
    • Transaction expected to close in 4Q 2012, to be funded with a combination of debt and equity
    • NGLS anticipates the acquisition will add 10% to 15% of additional EBITDA to its current 2013 guidance
    • Acquisition expected to be accretive to distributable cash flow per unit beginning in 2014
    • NGLS expects the assets will require $250mm in growth capex in 2013 to support necessary expansions
    • Assets include:
      • 155 miles of crude oil pipelines
      • Combined crude storage capacity of 70,000 barrels
      • 95 miles of natural gas gathering pipelines
      • A 20 mmcf/d natural gas processing plant
  • Vanguard Natural Resources (VNR) announces acquisition of non-operated oil and natural gas assets in Montana for $131.0mm
    • Acquisition expected to close by 12/31/12, to be funded with borrowings under its existing reserve-based credit facility
    • Properties are in the Bakken trend, and are characterized by mature oil production with some associated natural gas production
    • Acquisition will be immediately accretive to cash flow and have current net production of approximately 1,100 BOE/day
  • Kinder Morgan Energy (KMP) announces 25-year transportation agreement to support development of $200mm pipeline to serve customers in Mexico with pipeline from Tucson, AZ to the U.S. – Mexico border

Corporate Actions

  • Vanguard Natural Resources (VNR) announced monthly distribution of $0.2025 / unit, an increase of 1.25% month over month
RELATED CONTENT
No posts matching your criteria
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.
MLPguy Post
Week Thoughts: Midstream Positive, Beyond Partnerships (BP) On the back of rebounding oil prices and an ever-higher stock market, midstream indexes were positive this week. In a familiar refrain, the broader AMNA index was well ahead of the MLP Index, reflecting better performance among corporations
MLPguy Post
Week Thoughts: Midstream Reprieve MLPs and midstream companies arrested their recent decline this week with a flattish week. The broad equity market had a strong week, helped by gains from some big tech firms on earnings results.
MLPguy Post
Week Thoughts: Somber Midstream, Market Mentality Midstream was negative this week, along with most other global equities and commodities.  Midstream outperformed broader energy stocks, but underperformed the S&P 500 and utilities, which continue to grind higher. 
MLPguy Post
Week Thoughts: Market Seeks Shelter, Not MLPs MLPs and midstream came back to earth this week, dragged down by oil and natural gas prices that were too weak to be ignored by midstream investors after 6 weeks of gains.
MLPguy Post
Week Thoughts: Midstream Phase Won Midstream gains kept rolling for a sixth straight week, again riding a strong broad equity market higher, and defying weakness in upstream energy stocks (XOP -3.6%).
MLPguy Post
Week Thoughts: Falling Tension, Rising Tide Lifts Midstream MLPs extended their winning streak to 5 weeks, but MLPs and midstream stocks were weaker towards the end of the week as oil prices and energy stock prices sank lower.
MLPguy Post
INFRASTRUCTURE DELIVERS MLPs have bounced 10%+ off the early December 2019 multi-year low and are enjoying a seasonal respite from fund outflows. Without the stress of daily extreme volatility and angst, now is an ideal time to re-evaluate midstream exposure and consider (or re-consider) listed infrastructure.
MLPguy Post
Week Thoughts: Clean Slate Midstream traded up for a 4th straight week since bottoming on December 3rd.  MLPs are up 12.7% from the bottom and the AMNA isn’t far behind with a 10% gain.
MLPguy Post
2019 Year-End Midstream Statistics The year ended this week, which you may have heard.  From this point forward, we forever will be closer to 2050 than 1990.  So, it is time to review the final results of 2019.
MLPguy Post
Week Thoughts: No Holiday Drama for Midstream Midstream traded up the first 3 days this week to cap a run of 7 positive days out of 8.  Then on a very low volume session Friday, midstream corporations and MLPs sold off a bit to finish the week slightly positive overall.  Midstream broadly was in-line with the broad stock market overall (S&P 500 +0.6%).
MLPguy Post
Week Thoughts: Pipelines Piping, MLPs A-Leaping 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.
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.