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Analyzing Cash Flows of Master Limited Partnerships

Stock Quotes

BPL79.75  chart+0.62
BWP16.75  chart+0.05
EPD33.84  chart+0.30
ETP55.67  chart+0.50
KMI44.34  chart-0.23
MMP82.31  chart+0.61
NGLS44.91  chart-0.34
RGP22.89  chart+0.28
PAA51.11  chart-0.08
SPH44.21  chart+0.24
WPZ50.30  chart-0.08
NLY10.25  chart-0.01
AGNC21.58  chart-0.02
2015-04-24 16:00

KMI - Preliminary review of Kinder Morgan’s results for 1Q 2015

master limited partnership logos-KMP

Author: Ron Hiram

Published: April 19, 2015

Summary:

  • Adjusted EBDA decreased slightly in 1Q15 vs. 1Q14; per unit amounts decreased sharply due to the increase in the number of shares outstanding following the merger transactions.
  • Coverage is strong in 1Q15 (1.21x), albeit less than 1Q14 (1.31x); coverage was 1.07x for the TTM ended 3/31/15 vs. 1.04x in the prior year.
  • DCF in 1Q15 is much higher than in prior quarters due to the merger transactions.
  • Sharp declines in oil and gas prices will have limited adverse impact in 2015 unless they significantly breach recent lows; subsequently, impact on KMI likely to be much more substantial.
  • KMI appears highly priced vs. its large cap peers on an EV/EBITDA basis.

Continue reading KMI – Preliminary review of Kinder Morgan’s results for 1Q 2015

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