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Analyzing Cash Flows of Master Limited Partnerships

Stock Quotes

BPL76.76  chart+0.06
BWP16.29  chart+0.09
EPD32.69  chart+0.15
ETP58.05  chart-0.20
KMI40.84  chart-0.20
MMP81.91  chart+0.51
NGLS43.67  chart-0.28
RGP23.78  chart-0.09
PAA49.86  chart+0.32
SPH44.79  chart+0.60
WPZ51.09  chart+0.53
NLY10.61  chart-0.07
AGNC21.36  chart-0.02
2015-03-05 16:00

PAA - A Closer Look at Plains All American Pipeline’s Distributable Cash Flow as of 4Q 2014

master limited partnership logos-PAA

Author: Ron Hiram

Published: March 2, 2015

Summary:

  • PAA’s sustainable cash flow in 2014 did not materially differ from reported DCF due to a number of offsetting items.
  • PAA is not financing its distributions via issuance of new units or debt.
  • The drop in the 2014 coverage ratio from the prior-year level was expected.
  • Revised guidance lowers not only the rate of distribution growth but also implies no excess coverage in 2015; this could significantly increase in PAA’s risk profile.
  • Recent unit issuance was done at significant cost to LPs; seems to mostly benefit PAGP; I will look for opportunities to reduce my position or switch to PAGP.

Continue reading PAA – A Closer Look at Plains All American Pipeline’s Distributable Cash Flow as of 4Q 2014

SPH - A Closer Look at Suburban Propane Partners' Results and Cash Flows as of 12/31/14.

master limited partnership logos-SPH

Author: Ron Hiram

Published: February 25, 2015

Summary:

  • 1QFY15 volumes and earnings were adversely by warmer than usual weather. But, together with sharply lower propane prices, there was a positive effect on working capital needs.
  • Adjusted EBITDA of around $320 million can be expected for fiscal 2015; should be more than sufficient to cover distributions and other cash needs without issuing new debt or equity.
  • For the past 12 months SPH’s current yield has been higher, its unit price volatility lower, and its price performance better compared to the Alerian MLP Index.
  • Susceptibility to weather conditions, volatile commodity costs and difficulties encountered in passing on higher propane costs to customers remain a concern; on balance, I remain on the sidelines.

Continue reading SPH – A Closer Look at Suburban Propane Partners’ Results and Cash Flows as of 12/31/14.

ETP - Preliminary review of Energy Transfer Partners' 4Q 2014 results

master limited partnership logos-ETP

Author: Ron Hiram

Published: February 23, 2015

Summary:

  • Segment Adjusted EBITDA has grown substantially over the past 4 quarters, both in absolute terms and on a per unit basis; but frequent occurrences of items characterized as “one-time” and “non-cash” mars the quality of the numbers.
  • With the portfolio of new and expansion projects at hand, the current growth levels at ETP and ETE can be sustained even in the current weak energy price environment.
  • Certain portions of the business could face challenges in terms of achieving project return targets at current energy price levels in some of the shale formations where ETP operates.
  • Concerns also include the economics of the RGP acquisition for ETP and the related-party transactions that split these projects among the various Energy Transfer entities.
  • I remain overweight on ETE vs. ETP.

Continue reading ETP – Preliminary review of Energy Transfer Partners’ 4Q 2014 results

NGLS - A Closer Look at Targa Resources Partners’ Distributable Cash Flow as of 4Q 2014

master limited partnership logos-NGLS

Author: Ron Hiram

Published: February 16, 2015

Summary:

  • Operating margins and Adjusted EBITDA increased in 4Q14, but at a far slower rate compared to the prior 4 consecutive quarters.
  • Coverage of reported and sustainable DCF in 4Q14 and 2014 was excellent, but is likely to fall from 1.5x in 2014 to 1.0x or even below that in 2015.
  • Multiple of enterprise value to TTM EBITDA appears very reasonable following significant pullbacks in NGLS and TRGP unit prices.

Continue reading NGLS – A Closer Look at Targa Resources Partners’ Distributable Cash Flow as of 4Q 2014

BPL - Preliminary review of Buckeye Partners' 4Q 2014 results

master limited partnership logos-BPL

Author: Ron Hiram

Published: February 12, 2015

Summary:

  • Overall, BPL’s business plans for 2015 are unchanged by the drop in oil prices; businesses adversely affected account for less than 5% of EBITDA.
  • Strong demand for storage of crude and refined products in 4Q14 driving increased utilization levels and expectation of increased rates, as capacity is re-contracted.
  • Coverage ratio was below 1x in 2014 and is expected to be below 1x in the first half of 2015.
  • BPL remains totally reliant on the capital markets to fund its growth projects.
  • BPL trades at a higher multiple of enterprise value to TTM EBITDA relative to better performing MLPs.

Continue reading BPL – Preliminary review of Buckeye Partners’ 4Q 2014 results