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January 11, 2013

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Week Thoughts: Rally Continues Amid MLP Press Release Party

MLPs had another strong week, with the Alerian MLP Index rising 2.1%, compared with a 0.4% increase in the S&P 500.  So far in 2013, the MLP Index is up 7 out of 8 days and a total of 7.4%. Oil and gas weren’t big movers, but NGLs were down sharply.  So, while MLPs continue to feel the effects of beginning of the year fund flows and yield chasers, ethane and propane continue to suffer from an over-supply or under-demand, depending on your perspective.

Weekly Review_1-11-13

This continued MLP strength is in the face of 3 follow-on offering totalling around $600mm in gross proceeds that priced this week, and nearly $1.0bn in MLP IPOs that are on the road, not to mention a slew of M&A and growth projects that were announced this week that will mean more capital funding in the future.  I don’t remember seeing 3 MLP IPOs on the road at the same time, certainly not in January, given that MLP IPO market is generally slow to get started each year.
GLP went from biggest underperformer last week to biggest performer this week, up 11.6% on its announced 5 year agreement with Phillips 66 for use of some of its Bakken assets.   TLLP and CLMT were down on their equity deals.

Top5Bottom5MLPs_1-11

Small-cap, high beta MLPs are off to a very fast start in the first 8 trading days of the year, with last year’s biggest loser, OXF, leading the sector.  TLLP leads the losers, but don’t expect that to last very long.

Top5Bottom5MLPs_1-11_13_YTD

MLPs are out to an early lead on basically everything this year.  Variable distribution MLPs have been mixed thus far, with strength in fertilizer MLPs balanced by weakness in the two variable refinery MLPs.

MLPs_World_1-11_13_YTD

News of the (MLP) World
News-of-the-World
Equity

  • Crosstex Energy (XTEX) announces pricing of 7.5mm unit offering at $15.15/unit and 2.7mm unit private placement, raising $152.9mm in total gross proceeds
  • Tesoro Logistics (TLLP) announces pricing of 8.5mm common unit offering at $41.70/unit, raising $354.5mm in gross proceeds
  • Calumet Specialty Products (CLMT) announces pricing of 5.0mm common unit offering at $31.81/unit, raising $159.1mm in gross proceeds
  • MLP IPOs Launched This Week:
    • CVR Refining (CVRR): 18.9% yield, $500mm gross proceeds expected
    • USA Compression (USAC): 8.5% yield, $200mm gross proceeds exp.
    • Suncoke Energy (SXCP): 8.25% yield, $270mm gross proceeds exp.

Debt – big week for debt, with $1.7bn pricing at some very nice coupon rates.

  • Markwest Energy (MWE) announces pricing of $1.0bn of 4.5% senior unsecured notes due 2023 at par
  • Sunoco Logistics (SXL) announces pricing of $350mm of 3.45% senior notes due 2023 and $350mm of 4.95% senior notes due 2043

M&A / Growth Projects

  • Rose Rock Midstream (RRMS) announces acquisition of 17% effective interest in White Cliffs Pipeline from Semgroup for $273.9mm
  • Summit Midstream (SMLP) announces acquisition of Bear Tracker Energy, LLC for $513mm from GSO Capital Partners
  • Crestwood Midstream (CMLP) announces acquisition of the remaining 65% interest in Crestwood Marcellus Midstream for $258mm
  • Targa Resources (NGLS) acquires $25mm of Houston Ship Channel property for development of terminal/propane export facilities
  • Global (GLP) announces 5-year agreement with Phillips 66 to use its rail transloading, logistics and transportation system to deliver crude oil from the Bakken to the Bayway refinery in New Jersey
  • NGL Energy (NGL) to acquire Third Coast Towing, LLC for $43mm, partially financed with NGL units
  • Capital Products (CPLP) announces acquisition of two 8,000 TEU container vessels, the sale of two VLCC tankers and the extension of the M/T Arionas time charter

Distribution Announcements:

  • PAA: $0.5625, +3.7% quarter over quarter
  • GEL: $0.485, +2.6%
  • PNG: $0.3575, flat
  • CPNO: $0.575, flat

That’s all for this week…GO PATS!

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