Midstream MLPs

[dan_s]

Zacks reiterated its neutral rating on shares of Enterprise Products Partners (EPD). They have a $54.00 price target on the stock. Zacks` analyst wrote, "We are maintaining our recommendation for Enterprise Products Partners at Neutral following its third quarter results. The partnership registered increased transportation of crude, natural gas and other commodities through its pipelines. A 9% year-over-year drop in total costs and expenses was an added incentive. Based on a broad and vertically integrated asset base, steady cash flow generation ability and financial strength for strategic growth, we believe that Enterprise is well positioned to deliver impressive returns going forward. However, we remain apprehensive about the lower NGL pricing environment. Enterprise also remains vulnerable to macro conditions and unstable oil & gas prices, which in turn could hurt its margins in NGL, natural gas and other businesses. "

EPD Units are trading at $51.40 this morning. Yield is over 5% and the company has a history of raising distributions year after year.

I really like the Midstream MLPs and EPD is one of our top picks on the MLP Watch List. Midstream MLPs have much less exposure to dips in commodity prices than the upstream companies. Most of their revenues are locked in by long-term transportation and processing agreements. - Dan

[danross70]

I believe that NTI (refinery at St. Paul MN) has great potential. First distribution, based on 2 months operation, is $1.48 on a sub-$23 price. The driver is the Clearbrook, MN crack spread, which has been huge. I expect it to stay high for some time, due to Baaken and Canadian production rising faster than the capacity to transport that oil to other refineries. If, as I have read, operations lag oil purchases by 38 to 45 days, Q4 is already in the bag at very good spreads and there is no reason to predict that the Clearbrook discount to WTI and LLS pricing will change much in Q1 or Q2. If you have access to ValueForum, the posts and analysis of glennwpeters on NTI are very good.

[dan_s]

That is a very good pick, thanks for posting it.

Hi-Crush (HCLP) also looks very good with a yield near 9% and distributions are expected to increase. Hi-Crush sells top quality frac sand and demand is very high.

We updated the MLP Watch List this week. Any of you looking for high yield should check it out.

[mdwitte]

NTI? What does this mean: Northern Tier Energy LP was incorporated in 2010 and is based in Ridgefield, Connecticut. As of December 1, 2010, Northern Tier Energy LP was taken private.

[danross70]

mdwitte, Northern Tier Ltd Partnership interests trade on the NYSE under the symbol NTI. It has operated as a publicly held entity since 1 Aug 2012. The first distribution, for the months of August and September 2012 was recently announced as $1.48.

[dan_s]

I will put the finishing on our profile on Plains All American Pipeline (NYSE: PAA) this weekend. I plan to highlight it in next week's newsletter.

[dan_s]

One of our members over at Morgan Stanley sends me a weekly report on MLPs. Amoung their Top Picks are ATLS, ETE, GMLP and MWE. I really like MWE's potential in the Utica Shale.