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 All content on this website is presented as of the date published, is not updated and may be superseded by subsequent market events or for other reasons Under no circumstances should a person act upon the information contained within without first conducting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.

ETP - Closer Look at Energy Transfer Partners' results for 4Q 2016


Author: Ron Hiram

Published: March 10, 2017


  • Despite spending ~$14.6 billion (net of dispositions) in the two-year period ended 12/31/16 (~$15.6 billion in the two year period ended 12/31/15), results have been dismal.
  • Per unit Adjusted EBITDA in 2016 is roughly the same as it was in 2012; DCF per unit in 2016 was below its level in 2013.
  • ETP has been funding distributions by issuing debt and limited partnership units, by selling assets sales, and by reducing cash reserves.
  • Synergies from the merger are likely to be modest; leverage for the combined entity will remain high, as will cost of capital because the IDRs will still be in place.
  • For many years I held positions in both ETP and ETE (significantly overweighed to the latter), but I lost confidence in management and no longer hold the units. Continue reading ETP – Closer Look at Energy Transfer Partners’ results for 4Q 2016

BPL - A Closer Look at Buckeye Pipeline Partners' 4Q16 results


Author: Ron Hiram

Published: March 6, 2017


  • BPL has substantially underperformed the Alerian MLP index since announcing the VTTI transaction, possibly due to concerns regarding this deal.
  • DCF outgrew distributions per unit in 8 of the past 9 quarters; but in 4Q16 DCF per unit decreased due to the VTTI transaction. Special items impacted 4Q16 results.
  • In the TTM period ending 12/31/16 BPL funded a small portion its distributions (~$53 million) by issuing debt and limited partnership units.
  • Coverage ratios based on reported DCF improved markedly and were above 1x in 2016; coverage based on sustainable DCF in that period was just under 1x
  • Distributions are unlikely to increase in 2017, but financial metrics will likely improve; the leverage ratio should come down coverage ratios should improve modestly.

Continue reading BPL – A Closer Look at Buckeye Pipeline Partners’ results for 4Q 2016

EPD - A Closer Look at Enterprise Products Partners' results for 4Q 2016


Author: Ron Hiram

Published: February 28, 2017


  • Despite projects totaling ~$9 billion placed into service in the last three years, gross operating margins and Adjusted EBITDA per unit have been declining for eight consecutive quarters.
  • For the last two and a half years (since 2Q14), distribution growth has been outpacing DCF growth on a per unit basis; consequently coverage ratios are declining.
  • Nonetheless, coverage remains solid and is one of the highest among midstream energy MLPs.
  • Projects being placed into service and a more favorable business environment are expected to reverse some of the unfavorable trends.

Continue reading EPD – A Closer Look at Enterprise Products Partners’ results for 4Q 2016

KMI - A Closer Look at Kinder Morgan’s results for 4Q 2016


Author: Ron Hiram

Published: February 25, 2017


  • Adjusted EBDA declined 6.2% in 4Q16 and 3.7% in 2016, mostly due to sharply lower gas-gathering volumes and crude/condensate gathering volumes.
  • Cash generated by operating activities declined 28.1% in 4Q16 and 9.7% in 2016; consequently, reported and sustainable DCF were also lower.
  • Management‘s 2017 guidance indicates no substantial improvement over 2016 in terms of Adjusted EBDA, DCF and leverage.
  • Management seems to be planning to announce a substantial dividend increase late in 2017; it may be premature to do so before showing significant improvement in key operational parameters.
  • KMI is now on a much more solid financial footing; growth projects are being funded with internally generated cash flow without needing to access equity markets.

Continue reading KMI – A Closer Look at Kinder Morgan’s results for 4Q 2016

MMP - A Closer Look at Magellan Midstream Partners' results for 4Q16

Author: Ron Hiram

Published: February 22, 2017


  • Crude Oil segment operating margins increased 17.9% in 4Q16; higher average rates, in part resulting from deficiency revenues, more than offset lower shipment volumes. Storage revenues also increased.
  • Refined Products’ operating margin decreased 6.4 due to mark-to-market losses on hedges; but total volume shipped increased 5.9% and revenue per barrel shipped increased 2.2%.
  • Distribution coverage ratios remain strong and well above industry peers, whether calculated on a sustainable basis or as reported.
  • The condensate splitter dispute reflects a rare management stumble, but is not of a magnitude that affects MMP’s ability to achieve 8% distribution growth in 2017-2018 with solid coverage.
  • Distribution growth has been outpacing DCF growth; consequently, coverage ratios, while still very robust, are declining.

Continue reading MMP – A Closer Look at Magellan Midstream Partners’ results for 4Q16