Plains All American (PAA) is building a new 170-mile pipeline that will connect producers in the Mississippian Lime to refineries in Cushing. Marathon Petroleum is exploring an MLP option for its pipeline business, and Enterprise Products Partners (EPD) saw net income grew over 50% in 2011.
I am very bullish on the Midstream MLPs on our Watch List. They are definitely in a Sweet Spot.
See individual profiles under the MLP Tab.
MLPs
Re: MLPs
From Morgan Stanley
Last week, ETE made further progress toward
finalizing its proposed SUG merger, while ATLS
made a positive move forward with its E&P spin-off
and ETP, RGP and EPD all announced new projects.
MLPs increased 2.6% last week while the S&P 500
increased 1.4% and energy rose 1.8%. MLPs
continued their solid start to 2012 (up 4.7% YTD, trailing
the S&P and energy by 350 and 300 bps, respectively)
as more growth projects were announced.
ETE provided a number of important updates on
various levers to drive its long-term distribution
growth. Included in these announcements were
progress updates on its planned merger with SUG
(approvals, financing) and new capital projects to be
completed at ETP and RGP. Although near-term
headwinds from merger integration at ETE and
deleveraging and operating headwinds at ETP could
temporarily delay distribution growth resumption, we
believe the market will now begin to quantify the
longer-term cash impact of the merger with its
completion nearing. We recently revised our models to
reflect post-merger projections and our long-term
outlook for ETE and now expect ETE to grow its
distribution at a CAGR of 9.9% over the next three years
(raising again 4Q12), placing it among our Overweight
rated stocks.
Support for ethane prices could be on the way with
two large Mt. Belvieu, TX NGL fractionators likely
down for maintenance turnarounds in late April.
With downtime expected to last between 30-45 days,
En*Vantage projects 270 MBPD of lost capacity (115
MBPD of lost ethane extraction) in May should these
turnarounds occur, with other fractionators unable to
bridge the gap. Coupled with the expected end of
planned ethylene plant turnarounds by mid-May (some
of which include initiatives to enhance ethane cracking
ability, potentially adding 30-40 MBPD of incremental
demand by June), this could serve to significantly tighten
ethane balances and push ethane prices higher.
Last week, ETE made further progress toward
finalizing its proposed SUG merger, while ATLS
made a positive move forward with its E&P spin-off
and ETP, RGP and EPD all announced new projects.
MLPs increased 2.6% last week while the S&P 500
increased 1.4% and energy rose 1.8%. MLPs
continued their solid start to 2012 (up 4.7% YTD, trailing
the S&P and energy by 350 and 300 bps, respectively)
as more growth projects were announced.
ETE provided a number of important updates on
various levers to drive its long-term distribution
growth. Included in these announcements were
progress updates on its planned merger with SUG
(approvals, financing) and new capital projects to be
completed at ETP and RGP. Although near-term
headwinds from merger integration at ETE and
deleveraging and operating headwinds at ETP could
temporarily delay distribution growth resumption, we
believe the market will now begin to quantify the
longer-term cash impact of the merger with its
completion nearing. We recently revised our models to
reflect post-merger projections and our long-term
outlook for ETE and now expect ETE to grow its
distribution at a CAGR of 9.9% over the next three years
(raising again 4Q12), placing it among our Overweight
rated stocks.
Support for ethane prices could be on the way with
two large Mt. Belvieu, TX NGL fractionators likely
down for maintenance turnarounds in late April.
With downtime expected to last between 30-45 days,
En*Vantage projects 270 MBPD of lost capacity (115
MBPD of lost ethane extraction) in May should these
turnarounds occur, with other fractionators unable to
bridge the gap. Coupled with the expected end of
planned ethylene plant turnarounds by mid-May (some
of which include initiatives to enhance ethane cracking
ability, potentially adding 30-40 MBPD of incremental
demand by June), this could serve to significantly tighten
ethane balances and push ethane prices higher.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: MLPs
ATLS formally approves spin-off of E&P assets as
new MLP. ATLS has approved distribution to ATLS
unitholders of 5.24m common units (19.6% limited
partner interest) in Atlas Resource Partners, L.P. (NYSE:
ARP), a new MLP to be formed to hold substantially all of
ATLS’ E&P assets, including its retail drilling partnership
program. The stock distribution will take place March 13,
2012 to ATLS unitholders of record as of February 28,
2012, with ATLS unitholders receiving 0.1021 ARP
common units for each ATLS common unit held (and
cash in lieu of fractional units, which will be aggregated
and sold on their behalf by ATLS’ transfer agent). This
follows completion of the SEC’s review of ARP’s Form 10
registration statement, which has now been declared
effective. Trading of ARP units on a “when issued” basis
(symbol ARP.wi) will begin shortly before the record date
and run through March 14, 2012, at which point “regular
way” trading will begin. Following the spin-off, ATLS will
hold a 78.4% limited partner interest and the general
partner interest and associated incentive distribution
rights in ARP.
new MLP. ATLS has approved distribution to ATLS
unitholders of 5.24m common units (19.6% limited
partner interest) in Atlas Resource Partners, L.P. (NYSE:
ARP), a new MLP to be formed to hold substantially all of
ATLS’ E&P assets, including its retail drilling partnership
program. The stock distribution will take place March 13,
2012 to ATLS unitholders of record as of February 28,
2012, with ATLS unitholders receiving 0.1021 ARP
common units for each ATLS common unit held (and
cash in lieu of fractional units, which will be aggregated
and sold on their behalf by ATLS’ transfer agent). This
follows completion of the SEC’s review of ARP’s Form 10
registration statement, which has now been declared
effective. Trading of ARP units on a “when issued” basis
(symbol ARP.wi) will begin shortly before the record date
and run through March 14, 2012, at which point “regular
way” trading will begin. Following the spin-off, ATLS will
hold a 78.4% limited partner interest and the general
partner interest and associated incentive distribution
rights in ARP.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group