Master Limited Partnership

EnLink Midstream Partners LP, seeking to offset declining natural gas production in the Barnett Shale — where the master limited partnership (MLP) has extensive midstream holdings — has been implementing a strategic plan focused on acquisitions and expansions in the burgeoning STACK play in central Oklahoma and in the Permian’s Midland and Delaware basins in West Texas. The level of investment the plan requires has prevented increases in the MLP’s distributions to unit holders for nine consecutive quarters, which in turn has left EnLink’s share price languishing at about half of its 2014 high. The MLP has reported promising signs of growth in Oklahoma and the Permian as well as increased utilization of its southern Louisiana infrastructure, which it says could lead to a higher distribution to unit holders in 2018. Today, we preview our Spotlight Report on EnLink, which provides a detailed analysis of the company’s business segments to determine if its strategic plan will indeed generate real growth over the next four years.

The recently announced combination of DCP Midstream LLC and DCP Midstream Partners LP creates the nation’s largest natural gas processor and natural gas liquids producer at what may be a particularly opportune time. The newly formed DCP Midstream LP, operating as a master limited partnership, owns 61 gas processing plants with a combined capacity of 7.8 Bcf/d—enough to process more than 10% of current U.S. production—as well as 12 fractionation plants, 59,700 miles of gas gathering pipelines and 4,600 miles of NGL pipelines. Better yet, many of these assets serve some of the U.S.’s most prolific and promising production areas, including the Midland and Delaware basins within the Permian; the Denver-Julesburg (DJ); and the side-by-side SCOOP and STACK plays. In today’s blog, we review the combined entity’s assets and prospects for growth in what soon may be happier times for NGL processors.

Change continues to come fast and furious to midstream MLPs, with no master limited partnership facing a bigger shift than MPLX. MPLX LP, formed in 2012 by Marathon Petroleum Corp. (MPC), is no stranger to transformation. In 2015, MPLX acquired MarkWest Energy Partners for $14.7 billion, a move that in one fell swoop made the merged entity the fourth-largest MLP in the U.S. In October 2016, Marathon announced an aggressive “dropdown” strategy that will provide MPLX with additional assets that will generate about $1.4 billion in annual earnings by the end of 2019. MPLX also has a significant capital investment program that allocates $2.3-$2.8 billion to build out gathering and processing infrastructure and logistics and storage facilities in Appalachia and Texas. Today, we review our latest Spotlight analysis of one of the nation’s largest MLPs.

Energy Transfer Partners (ETP) is the nation’s second-largest master limited partnership (MLP), with a market capitalization of $19.6 billion, $39.7 billion in 2015 revenue and $8 billion in 2015 capital investments. ETP’s general partner is Energy Transfer Equity (ETE), whose once-promising merger deal with Williams bit the dust in June. ETP’s extensive holdings include several major interstate and intrastate natural gas pipelines, midstream natural gas services, and natural gas liquids (NGL) pipelines and services; it also holds approximately 27.5% of the limited partner interests and all of the general partner interest in Sunoco Logistics Partners (SXL). With ETP’s size, its huge portfolio of midstream assets, and its high-profile general partner, the MLP was an obvious choice for our Spotlight Report series.  Today we summarize Part Two of our ETP Spotlight Report, which focuses on the company’s Midstream and Liquids segments.

Energy Transfer Partners (ETP is the nation’s second-largest master limited partnership (MLP), with a market capitalization of $16.6 billion, $39.7 billion in 2015 revenue and $8 billion in 2015 capital investments, and a general partner—Energy Transfer Equity (ETE)—whose once-promising merger deal with Williams Cos. has turned ugly and may well be doomed. ETP’s extensive holdings include several major interstate and intrastate natural gas pipelines, midstream natural gas services, and natural gas liquids (NGL) pipelines and services; it also holds approximately 27.5% of the limited partner interests and all of the general partner interest in Sunoco Logistics Partners (SXL). With ETP’s size, its huge portfolio of midstream assets, and its high-profile general partner, the MLP was an obvious choice for our new Spotlight Report. Today, we provide the highlights of the report, which is available to RBN Backstage Pass subscribers.

General Partners Phillips 66 and Spectra Energy control midstream Master Limited Partnership (MLP) DCP Midstream Partners (DPM). The partnership owns midstream transportation and processing assets along the natural gas and natural gas liquids (NGL) supply chain. Similar to many MLPs its Limited Partner unit price has declined by more than 50% in the past year. Despite exposure to difficult market conditions in the Eagle Ford and East Texas, a strong performance from the NGL logistics segment is expected to propel a 20% gain in net income between 2015 and 2017. Today we review our latest spotlight analysis report on DPM.

Without the use of corporate structures called Master Limited Partnerships (MLPs) the midstream infrastructure build out that helped make the U.S. shale revolution possible over the past 5 years would have taken far longer to gain traction. MLPs were very successful as the market grew and high prices encouraged new oil and gas production. But along the way some of the businesses these structures were applied to crossed the line from toll-road fee based infrastructure into exposure to commodity prices. For this reason and others, today MLPs are struggling to attract growth capital in a low price environment. Today we conclude our series analyzing the future of MLPs.

It’s hard to imagine how the massive build out of pipelines and processing plants required to deliver shale hydrocarbon production to end use markets in the past 5 years could ever have occurred without the corporate structures known as Master Limited Partnerships (MLP’s). These tax-efficient vehicles financed shale infrastructure by selling partnership units to investors that offered income in the form of cash distributions as well as growth from increasing unit prices. But the leading Alerian AMZ Index of MLP market capitalization fell 46% from August 2014 to December 31, 2015 in the wake of the oil price crash. Today we begin a series looking at past success and future prospects for MLPs.

Valero is the latest in a long line of US midstream companies to file their Master Limited Partnerships (MLPs) for an IPO – expected early in the New Year. These popular tax efficient entities were created over 25 years ago to encourage energy infrastructure investment. In the last four years the number of MLPs has shot up 50 percent. Today we describe how Valero’s MLP is structured.

The specialized corporate structures called Master Limited Partnerships (MLP’s) have become part of the landscape for midstream energy companies. They have helped provide efficient access to investment capital to build out infrastructure that is now delivering new shale basin natural gas and oil production to market. MLP investors have enjoyed high yield returns from these tax-advantaged companies with low risk toll road income. Newer MLP structures appear to be moving away from the safety of toll road income into riskier commodity price exposure. Today we investigate this trend in the MLP market.