About this website

The website explains how distributable cash flow (DCF) is defined and why it is important to analyze it and derive a sustainable measure of DCF. Results reported by master limited partnerships (MLPs) are analyzed. comparisons of reported DCF to sustainable DCF are generated, and various coverage ratios and reports analyzing performance are generated. Simplified sources and uses of funds statements are presented to focus readers' attention on key cash flow items. The website also features general articles about MLPs and about other topics of interest to yield-focused investors.



The documents and opinions in this website are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the securities mentioned or to solicit transactions or clients. The information in this website is believed, but not guaranteed, to be accurate. All content on this website is presented as of the date published, is not updated and may be superseded by subsequent market events or for other reasons Under no circumstances should a person act upon the information contained within without first conducting his/her own independent research and consulting with his/her investment advisor and tax professional as to whether such action is suitable based on the investor’s investment objectives, personal and financial situation, and specific legal or tax situation.

TRGP - A Closer Look at Targa Resources Corp.’s results for 2Q 2016

master limited partnership logos-NGLS

Author: Ron Hiram

Published: August 20, 2016


  • Fee-based gross margin as a percent of total gross margin has declined for the last 4 consecutive quarters.
  • Operating margin and Adjusted EBITDA declined in 2Q16 vs. 2Q15 in absolute terms and per share, primarily due to lower commodity prices; changes in throughput volumes were minor.
  • Although total dividends/distributions declared decreased by ~6% in 2Q16 vs. 2Q15, coverage remained very thin, whether measured on a sustainable or as reported basis
  • Dividend increases are unlikely before the debt-to-EBITDA ratio is reduced from 4.4x to around 3.5x. This could take several years.
  • But in about 5 years, TRGP may become a cash taxpayer, reducing amounts available for dividends.

Continue reading TRGP – A Closer Look at Targa Resources Corp.’s results for 2Q 2016

BPL - A Closer Look at Buckeye Pipeline Partners' 2Q16 results

master limited partnership logos-BPL


Author: Ron Hiram

Published: August 10, 2016


  • Assets placed in service, higher average capacity utilization rates and a one-time reduction in property tax accruals increased Global Marine Terminals’ Adjusted EBITDA in 2Q16.
  • Pipelines & Terminals’ Adjusted EBITDA increased despite a decline in volumes transported; it was driven by increased capacity utilization, higher average tariffs, longer haul shipments and new terminal services contracts.
  • Overall performance in 2Q16 was strong even before being boosted by one-time items; in the TTM ended 6/30/16, DCF per unit increased at a faster pace than distributions per unit.
  • Sustainable DCF coverage improved and is above 1x in the latest TTM period.
  • Investors wishing to broaden their exposure to midstream energy MLPs, or replace one MLP investment with another that exhibits better operational results, better prospects and lower leverage, should consider BPL.

Continue reading BPL – A Closer Look at Buckeye Pipeline Partners’ 2Q16 results

ETP - A Closer Look at Energy Transfer Partners' 2Q16 results

master limited partnership logos-ETP


Author: Ron Hiram

Published: August 8, 2016


  • Measured on a per unit basis, Adjusted EBITDA and DCF have been declining for the last 5-6 consecutive quarters vs. the corresponding prior year periods.
  • DCF does not cover distributions and coverage would have been even lower but for the IDR reduction agreed to by ETE.
  • Sustainable DCF coverage is substantially lower than the reported coverage.
  • ETP has been funding distributions by issuing debt and limited partnership units, by generating cash proceeds from asset sales, and by reducing cash reserves.
  • Maintenance capital expenditures are down 11% on a TTM basis, while investment in property plant and equipment is up significantly.

Continue reading ETP – A Closer Look at Energy Transfer Partners’ results for 2Q16

MMP - A Closer Look at Magellan Midstream Partners' results for 2Q16

master limited partnership logos-MMP

Author: Ron Hiram

Published: August 7, 2016


  • Operating margin in 2Q16 is up 6% vs. 2Q15; reliance on commodity-related activities has been diminishing; correspondingly, the fee-based portion is increasing.
  • For 7 of the last 9 quarters, distribution growth has outpaced DCF growth when measured on a per unit basis and each quarter is compared to the corresponding prior-year quarter.
  • Consequently, coverage ratios, while still very robust, are declining.
  • Projects under construction being placed into service in 2016 will increase EBITDA by ~9%; the 10% distribution growth guidance with 1.2x coverage for 2016 seems achievable.
  • By various qualitative and other measures, MMP receives top marks; I continue to hold it.

Continue reading MMP – A Closer Look at Magellan Midstream Partners’ results for 2Q16

EPD - A Closer Look at Enterprise Products Partners' results for 2Q 2016

master limited partnership logos-EPD


Author: Ron Hiram

Published: August 6, 2016


  • On a per unit basis, gross margins and EBITDA have been declining for 6 consecutive quarters; increases in units due to acquisitions are the major contributors to this trend.
  • DCF per unit in 2Q16 increased, albeit slightly, over the prior year quarter; the first such increase in 7 consecutive quarters.
  • For the last two years (since 2Q14), distribution growth has been outpacing DCF growth when both are measured on a per unit basis; correspondingly, excess coverage has declined.
  • Although trending lower, coverage ratios reported by EPD are generally still robust. But in 1Q16 and 2Q16, coverage ratios based on sustainable DCF are considerably thinner.
  • Despite some unfavorable trends, for reasons outlined in the article I continue to hold my position at the current price level.

Continue reading EPD – A Closer Look at Enterprise Products Partners’ results for 2Q 2016