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Analyzing Cash Flows of Master Limited Partnerships

Stock Quotes

BPL75.52  chart-0.84
BWP16.10  chart-0.04
EPD32.93  chart+0.02
ETP55.75  chart-0.68
KMI42.06  chart-0.01
MMP76.71  chart-2.33
NGLS41.36  chart+0.07
RGP22.87  chart-0.24
PAA48.77  chart+0.07
SPH42.97  chart+0.49
WPZ49.22  chart+0.01
NLY10.40  chart-0.05
AGNC21.33  chart-0.08
2015-03-31 16:01

MMP - A Closer Look at Magellan Midstream Partners' Distributable Cash Flow as of 4Q 2014

master limited partnership logos-MMP

Author: Ron Hiram

Published: March 28, 2015

Summary:

  • Differences between reported and sustainable DCF in the quarter and year ended 12/31/14 related principally to the exclusion of derivative gains and were not material.
  • Coverage ratios are among the strongest, if not the strongest, in the universe of midstream energy MLPs.
  • Favorable structure: no IDRs, low leverage, and no additional public issuances of partnership units in over 4 years.
  • Projected increases in distributions of 15% in 2015 and 10% in 2016 are underpinned by conservative assumptions leaving room for some upside. Saddlehorn enhances the outlook for 2017.
  • Premium price vs. other MLPs justified; accumulate on weakness.

Continue reading MMP – A Closer Look at Magellan Midstream Partners’ Distributable Cash Flow as of 4Q 2014

ETP - A Closer Look at Energy Transfer Partners' Distributable Cash Flow as of 4Q 2014

master limited partnership logos-ETP

Author: Ron Hiram

Published: March 17, 2015

Summary:

  • Coverage ratio, as reported by ETP, increased from1.03x in 2013 to 1.27x in 2014.
  • Through IDR relinquishment, ETE provides considerable help in achieving ETP’s coverage ratios.
  • Frequent occurrence of items characterized as “one-time” and “non-cash” mars the quality of the reported coverage numbers.
  • Sustainable DCF coverage in 2014 was below the 1x threshold; ETP funded part of its 2014 distributions by issuing partnership units and debt.

Continue reading ETP – A Closer Look at Energy Transfer Partners’ Distributable Cash Flow as of 4Q 2014

EPD - A Closer Look at Enterprise Products Partners' Distributable Cash Flow as of 4Q 2014

master limited partnership logos-EPD

Author: Ron Hiram

Published: March 10, 2015

Summary:

  • On a per unit basis, sustainable DCF decreased in 2014 and in 4Q14 vs. the corresponding prior year periods; however, coverage ratios still appear to be very strong.
  • Sustainable DCF substantially exceeded distributions, but grew more slowly in 2014.
  • Excess cash generated (~$6.7 billion over the past 5 years) enables EPD to reduce reliance on the issuance of additional partnership units or debt to fund expansion projects.
  • The dramatic declines in energy prices are likely to present significant challenges, but at least for the next two years, EPD is well positioned and remains a core MLP holding.

Continue reading EPD – A Closer Look at Enterprise Products Partners’ Distributable Cash Flow as of 4Q 2014

PAA - A Closer Look at Plains All American Pipeline’s Distributable Cash Flow as of 4Q 2014

master limited partnership logos-PAA

Author: Ron Hiram

Published: March 2, 2015

Summary:

  • PAA’s sustainable cash flow in 2014 did not materially differ from reported DCF due to a number of offsetting items.
  • PAA is not financing its distributions via issuance of new units or debt.
  • The drop in the 2014 coverage ratio from the prior-year level was expected.
  • Revised guidance lowers not only the rate of distribution growth but also implies no excess coverage in 2015; this could significantly increase in PAA’s risk profile.
  • Recent unit issuance was done at significant cost to LPs; seems to mostly benefit PAGP; I will look for opportunities to reduce my position or switch to PAGP.

Continue reading PAA – A Closer Look at Plains All American Pipeline’s Distributable Cash Flow as of 4Q 2014

SPH - A Closer Look at Suburban Propane Partners' Results and Cash Flows as of 12/31/14.

master limited partnership logos-SPH

Author: Ron Hiram

Published: February 25, 2015

Summary:

  • 1QFY15 volumes and earnings were adversely by warmer than usual weather. But, together with sharply lower propane prices, there was a positive effect on working capital needs.
  • Adjusted EBITDA of around $320 million can be expected for fiscal 2015; should be more than sufficient to cover distributions and other cash needs without issuing new debt or equity.
  • For the past 12 months SPH’s current yield has been higher, its unit price volatility lower, and its price performance better compared to the Alerian MLP Index.
  • Susceptibility to weather conditions, volatile commodity costs and difficulties encountered in passing on higher propane costs to customers remain a concern; on balance, I remain on the sidelines.

Continue reading SPH – A Closer Look at Suburban Propane Partners’ Results and Cash Flows as of 12/31/14.