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Analyzing Cash Flows of Master Limited Partnerships

Stock Quotes

BPL52.03  chart-2.53
BWP11.57  chart+0.60
EPD21.10  chart-0.23
ETP20.70  chart+0.89
KMI14.75  chart-0.17
MMP60.16  chart-1.59
NGLS10.94  chart-1.12
RGP23  chart+0
PAA16.12  chart-1.65
SPH22.27  chart-0.26
WPZ13.49  chart-0.90
NLY9.775  chart-0.055
AGNC17.70  chart-0.07
2016-02-09 15:07

MMP - Preliminary Review of Magellan Midstream Partners' 4Q15 Results

master limited partnership logos-MMP

Author: Ron Hiram

Published: February 7, 2016


  • The 12% decline in 4Q15 gross operating margin was driven by lower commodity prices and a comparison to the high commodity operating margins achieved in 4Q14.
  • Fee-based gross margin accounts for the bulk of the total and actually increased in 4Q15 vs. 4Q14.
  • Coverage ratio remained very strong in 4Q15 despite continued industry headwinds that adversely affected other MLPs.
  • The importance of MMP’s excess cash flow s magnified in the current environment that imposes a much higher cost of capital on all midstream energy MLPs.
  • Distributions are projected to increase 10% in 2016 and 8% in 2017 based on large scale projects commencing operations.

Continue reading MMP – Preliminary Review of Magellan Midstream Partners’ 4Q15 Results

EPD - Preliminary review of Enterprise Products Partners' results for 4Q 2015

master limited partnership logos-EPDAuthor: Ron Hiram

Published: February 1, 2016


  • EPD’s results held up remarkably well. 2015 operating margin increased in absolute terms over 2014 and declined only slightly measured on a per unit basis.
  • Mainly due to acquisitions, increases in distributions per unit have been accompanied by declines in DCF per unit; however the pace of decline slowed significantly in 4Q15.
  • DCF for 2015, excluding the proceeds from asset sales, provided 1.3 times coverage of the distributions declared with respect to 2015.
  • Given cash flows from new projects being placed into service, I do not see the current pace of quarterly distribution growth threatened at least through 2017.

Continue reading EPD – Preliminary review of Enterprise Products Partners’ results for 4Q 2015

KMI - Preliminary review of Kinder Morgan’s 4Q 2015 results

master limited partnership logos-KMP

Author: Ron Hiram

Published: January 24, 2016


  • Measured in absolute dollar terms, 4Q15 Adjusted EBITDA is roughly unchanged from 4Q14 despite highly unfavorable market conditions, but on a per share basis there was a 34% decline.
  • Large goodwill impairment charges ($1,150 million) and losses on sale of assets and project delays ($284 million) were the principal drivers of the $609 million loss in 4Q15.
  • Declines in 4Q15 DCF (-3.5% in absolute dollar terms and -8.3% on a per share) vs. 4Q14 are modest given the headwinds faced.
  • KMI is now on a much more solid footing; quarter to prior-year quarter EBITDA comparisons should begin to look better in 1Q16; still high leverage level will likely be reduced.

Continue reading KMI – Preliminary review of Kinder Morgan’s 4Q 2015 results

NGLS - A Closer Look at Targa Resource Partners’ 3Q15 Distributable Cash Flow

master limited partnership logos-NGLS


Author: Ron Hiram

Published: December 3, 2015


  • Distribution coverage is solid on a TTM basis; but operating margin, operating income, Adjusted EBITDA and DCF all declined on a per unit basis for the past three quarters.
  • The proposed acquisition of NGLS by TRGP entails a ~32% cut in NGLS distributions (from $0.825 per unit to $0.5642 per share).
  • Since the announcement, TRGP shares declined by 36.6%, and NGLS units declined by 29.3% vs. a 13.7% drop in the Alerian index over the same period.
  • The premium offered to NGLS unit holders has shrunk from $5.60 to $1.30.
  • NGLS and TRGP investors wishing to keep their exposure to MLPs unchanged should consider selling and using the proceeds to buy other MLPs.

Continue reading NGLS – A Closer Look at Targa Resource Partners’ 3Q15 Distributable Cash Flow

BPL - A Closer Look at Buckeye Partners' 3Q15 Distributable Cash Flow

master limited partnership logos-BPL


Author: Ron Hiram

Published: November 24, 2015


  • In 3Q15, the Global Marine Terminals segment benefited from strong customer demand, much higher capacity utilization, and higher rates on expiring contracts.
  • Adjusted EBITDA, DCF and coverage ratios improved markedly in the latest TTM period, but this is partially due to year-ago losses at Merchant Services.
  • The combination of increasing capacity (via expansion projects), higher utilization rates, and higher storage rates at Global Marine Terminals should lift results for the balance of the year.
  • BPL is not facing the same jump in cost of capital faced by other midstream MLPs and that bodes well for its ability to finance its growth capital plans and make acquisitions.
  • Investors wishing to broaden their exposure to midstream energy MLPs, or change the composition their MLP portfolio, should consider BPL.

Continue reading BPL – A Closer Look at Buckeye Partners’ 3Q15 Distributable Cash Flow