First Quarter Results will be impressive

[dan_s]

Some of the MLPs we are tracking should report very impressive 1st quarter results. I get a weekly MLP report from Morgan Stanley. Here are a few of their comments.

PAA happens to be one of my favorites. MMP is also on our new MLP Watch List. - dan
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Oil opportunities will continue to surprise to the
upside and impact 1Q earnings favorably (e.g., PAA,
SXL, MMP). We believe MMP’s growing crude oil
asset profile should enable sustainable 9 – 10%
distribution growth through 2014. As such, we have
upped our price target to $78 from $72.
MLPs were flat last week, while the S&P 500
decreased 0.7%. We came away from MMP’s first ever
analyst day encouraged by future crude oil opportunities.
With a solid footprint around Permian, Eagle Ford, and
Oklahoma, we see potential for nearly $800m of future
oil expansion along with higher than expected returns on
capital.

PAA pre-announces 1Q12 EBITDA 15-20% higher
than previous guidance. We attribute the strong
performance largely to healthy oil market fundamentals
and better profits in its supply and logistics segment (i.e.,
trucks, railcars). Results for 1Q12 will not reflect any
cash flow contribution from PAA’s recently completed
$1.7b Canadian NGL acquisition from BP. Our move to
an Overweight rating on PAA in early January was
driven largely by our view that strong execution in the
coming quarters – particularly in PAA’s supply and oil
logistics business – would generate significant excess
cash flow supportive of distribution growth acceleration
to nearly 10%. We would stay long PAA as our $92 bull
case value offers over 20% total return.

Enhanced oil recovery in the Permian and demand
for CO2 continue to grow as KMP enters into five
new CO2 sales contracts. The volumes have a nearly
16-year average term and support new and existing CO2
enhanced oil recovery projects in the Permian Basin. In
response to increased CO2 demand given high crude oil
prices, KMP is expanding its Doe Canyon Unit CO2
source field in southwestern Colorado from 105 MMcf/d
to 170 MMcf/d under a previously announced $255mm
project. Primary compression is expected to be in
service by 4Q13 and booster compression by 2Q14.
KMP will also drill more wells during the next decade,
increasing production from 105 MMcf/d to 170 MMcf/d.