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Analyzing Cash Flows of Master Limited Partnerships

Stock Quotes

BPL70.79  chart-0.35
BWP16.42  chart-0.01
EPD25.46  chart-0.46
ETP33.73  chart-1.21
KMI17.26  chart-0.33
MMP71.29  chart-0.50
NGLSN/A  chartN/A
RGP23  chart+0
PAA21.56  chart-0.77
SPH29.25  chart-0.42
WPZ28.49  chart-2.20
NLY10.30  chart-0.11
AGNC18.15  chart-0.18
2016-05-03 16:00

BPL - Preliminary review of Buckeye Pipeline Partners' 4Q15 results

master limited partnership logos-BPL

Author: Ron Hiram

Published: February 15, 2016

Summary:

  • Overall results for 4Q15 and 2015 are impressive, given market conditions.
  • Adjusted EBITDA by segment in 4Q15 is up 9.4% in absolute dollar terms, vs. 4Q14, and up 7.6% on a per unit basis.
  • In 2015, DCF increased 16.3% in absolute dollar terms and 8.4% on a per unit basis vs. 2014. Coverage ratio of increased to 1.02x vs. 0.96x for 2014.
  • A comparison of full year 2015 to 2014 Adjusted EBITDA looks favorable also because of the one-time losses in 2014.
  • BPL’s cost of capital has increased far less than other MLPs; it can finance its growth capital plans and continue to increase distributions by $0.0125 per quarter in 2016.

Continue reading BPL – Preliminary review of Buckeye Pipeline Partners’ 4Q15 results

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

master limited partnership logos-MMP

Author: Ron Hiram

Published: February 7, 2016

Summary:

  • 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

Summary:

  • 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

Summary:

  • 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

Summary:

  • 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