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 All content on this website is presented as of the date published, is not updated and may be superseded by subsequent market events or for other reasons Under no circumstances should a person act upon the information contained within without first conducting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

BWP - A Closer Look at Boardwalk Pipeline Partners’ 1Q 2016 results

master limited partnership logos-BWP


Author: Ron Hiram

Published: June 16, 2016


  • The trends in operating income and EBITDA per unit appear encouraging. For the past 3 consecutive quarters each metric increased vs. the comparable prior year period.
  • DCF coverage exceeds 4x; coverage is not an issue given that distributions were cut so drastically in February 2014 (from $0.5325 to $0.10).
  • Leverage remains high and is expected to increase as additional amounts required to complete expansion projects are borrowed.
  • Current yield and likelihood of distribution growth in the near future are low.
  • But in the second half of 2017 distributions may be increased, as the current slate of growth projects is closer to being fully operational at planned capacity.

Continue reading BWP – A Closer Look at Boardwalk Pipeline Partners’ 1Q 2016 results

SPH - A Closer Look at Suburban Propane Partners' 2QFY16 Results

master limited partnership logos-SPH


Author: Ron Hiram

Published: June 7, 2016


  • Volumes and gross margins are trending down, but gross margin percent is up because SPH did not pass on to its customers all the benefits of lower propane costs.
  • Coverage of distributions deteriorated substantially and was below 1x in the latest TTM period; distributions were funded from non-sustainable sources
  • Overall demand for propane is expected to be flat or to moderately decline over the next several years; while SPH may continue consolidating, that path can become harder.
  • Given demand outlook, negative distribution coverage, reluctance to speculate on the next winter being colder, and recent SPH outperformance, I would reduce my position were I an investor.

Continue reading SPH – A Closer Look at Suburban Propane Partners’ 2QFY16 Results

PAA - A Closer Look at Plains All American Pipeline's 1Q16 results

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Author: Ron Hiram

Published: June 3, 2016


  • Segment operating profit has declined for 5 consecutive quarters when comparing each quarter to the prior year period. The declines are mainly due to lower Supply & Logistics margins.
  • For the past 9 quarters, total dollars distributed have been growing more rapidly than DCF. The main beneficiary of the growth in distributions has been PAA’s general partner.
  • Coverage remains below 1x. In the TTM ending 3/31/16 PAA funded distributions by issuing debt and limited partnership units, and by reducing cash reserves.
  • Reductions in North American oil production, coupled with increased competition, compressed basis differentials, lower volumes and lower margins, present significant challenges to PAA.
  • I would consider reinvesting once the terms of the merger between PAA and PAGP are disclosed and if I see the combined coverage restored to >1x.

Continue reading PAA – A Closer Look at Plains All American Pipeline’s 1Q16 results

Taking issue with the argument that the MLP business model is unlikely to survive

Author: Ron Hiram

Published: June 1, 2016


  • Long asset lives is a unique feature of the business of midstream energy MLPs
  • It is too onerous and overly conservative to require them to cover the payments out of FCF as if the pipelines had 5 or 10-year lives
  • Investors need to bear in mind disclosure deficiencies and to carefully evaluate adjustments to OCF made by management in deriving DCF

Continue reading Taking issue with the argument that the MLP business model is unlikely to survive

BPL - A Closer Look at Buckeye Pipeline Partners' 1Q16 results

master limited partnership logos-BPL


Author: Ron Hiram

Published: May 28, 2016


  • Assets placed in service, higher average capacity utilization rates and expiring contracts renewed at higher rates or for longer periods increased Global Marine Terminals’ Adjusted EBITDA in 1Q16.
  • Pipelines & Terminals’ Adjusted EBITDA decreased lightly in 1Q16, reflecting lower volumes due to a milder winter and competitive pressures and lower butane blending margins due to declining commodity prices.
  • DCF increased 9.7% on a per unit basis vs. the TTM ended 3/31/15. The favorable comparison is partly due to the $26 million loss recorded by Merchant Services in 2Q14.
  • Sustainable DCF coverage improved, but is still below 1x in the latest TTM period; debt, equity and contributions from affiliates funded a portion of the distributions.
  • 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’ 1Q16 results