×
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 749 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: Midstream Canceled Again The S&P 500 closed negative for a 4th straight week, while midstream had its worst week since June in what has been a brutal September so far.
MLPguy Post
Week Thoughts: Midstream Yield High, Interest Low Midstream stocks bounced back early in the week after two rough weeks, but then as the market rolled over later in the week, midstream and MLPs were dragged back down.
MLPguy Post
Week Thoughts: Another Setback Setback for Midstream Midstream struggled again this week, in a risk-off week for stocks and commodity prices.
MLPguy Post
Week Thoughts: Midstream, The Final Season With the market taking a very well-publicized breather this week, midstream followed the market and oil prices lower. MLPs were down each day this week and finished down 4.7%.
MLPguy Post
Week Thoughts: Stocks Up, Midstream Down MLPs staged a comeback effort late in the week (+3.7% Wednesday to Friday), but finished down vs. last week, and well below the S&P 500’s 3.3% gain.
MLPguy Post
Week Thoughts: Midstream Militia Retreats After a few weeks of positive performance, midstream rolled over this week. Energy stocks in general were negative, despite benign commodity price movements and strength among market indexes (which clearly are dominated by tech stocks).
MLPguy Post
Week Thoughts: Blue Flame Special for Midstream Midstream followed up last week’s big week with another strong week of price action. Midstream’s gains were mostly isolated to Monday and Wednesday, but those two days were good enough for a 3% week for the group overall, better than the S&P 500, utilities and infrastructure.
MLPguy Post
Week Thoughts: Midstream Restraint Rewarded Midstream was higher each of the first 4 days this week, before taking a breather Friday, to finish up 5-6% over last week. MLPs were particularly strong, especially gathering & processing stocks....
MLPguy Post
Week Thoughts: Midstream Still Waiting for Its Kodak Moment Midstream underperformed this week, even after counting the juicy dividends that were paid this week. Tech stocks, utilities and other sectors reported strong earnings and saw stock price gains as a result.
MLPguy Post
Week Thoughts: KMI Anthem Over, Play Ball! Midstream performance was mixed this week, with strength in MLPs offset by weakness among large U.S. corporations like WMB and KMI, the latter of which reported less than stellar 2Q results coupled with low energy commentary.
MLPguy Post
Week Thoughts: Positive Pipeline Performance Pre-Earnings Midstream bounced back this week, riding a strong market, stable oil prices and the ramp into distribution season.
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.