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April 21, 2012

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Winners & Losers: MLPs Up Despite New Lows for Natural Gas

MLPs outperformed the S&P 500 for the second week in a row, and this time when both were up, not down.  Natural gas continued down, closing the week well below $2.00 per mmbtu.  Variable distributon MLPs were down 3.5% on average, led by a 10% drop by everyone’s favorite Terra Nitrogen and a 6% drop for Dorchester Minerals (which went ex-date this week).  Royalty trusts on average were down as well, led by Mesa Royalty Trust (-11.4%) and Chesapeake Granite Wash Trust (-7.4%).
Anything with the name Chesapeake attached to it had a pretty bad week on the news that CEO Aubrey McClendon has $1.1 billion in previously unreported loans secured by his personal stake in CHK wells. CHK was down 12.6% and Chesapeake Midstream was down 8.1%.   MLP GPs had the best week of all on average up 2.0%, despite the biggest GP of them all, KMI being down 5.9% for the week.

As far as individual MLPs, NKA had a huge week, up 16.1%, and coal MLPs like ARLP and OXF continue to bounce after coal’s severe drubbing to start the year.  RNO was the exception, down 4.1%, which may have something to do its Utica exposure (Utica related stocks like CHK were all down mostly).  Compression MLPs EXLP and GSJK were down sharply as well, I can only assume on realization that earnings could be bad with drilling curtailments.

This week, oil-focused E&P MLP MCEP dropped out of the top 5 for the year, and NKA jumped up into the top 5.  No changes in the bottom 5 this week, still coal, propane and EROC.

MLPs are at this moment positive for the year (slightly) and, after two weeks of outperformance, MLPs are closing in on the S&P 500.  Variable distribution MLPs and GP holding companies remains in the lead.  Natural gas is still ugly.

In summary, there were no MLP equity issues this week, which combined with solid distribution announcements and decent earnings out of KMP helped MLPs outperform.  More in my next post on the week that was for MLPs.

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