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The Pipeline MLP sector, which ended July up 14.20% year-to-date and yielding 5.87%, ended August up 9.90% and yielding 6.10%. For the month the sector prices fell 3.76% and yields rose 23 basis points. Some MLPs fell disproportionately out of fear that Katrina had damaged their facilities or the facilities of their upstream providers. To put August price movements into perspective, during August, large-cap banks fell 1.62% to a year to date loss of 6.20% from July's loss of 4.65% and yields rose 17 basis point to 3.71% from July's 3.54%. During August, mid-cap banks fell 2.74% to a year-to-date loss of 2.71% from June's year to date rise of 0.13% and yields ended at 3.44% [vs July's 3.32% - a rise of 12 basis points]. The ten year treasury ended the month at 4.02% [vs 4.28% on 7-29 - a rise of 26 basis points]. I have yet to update REITs. After the first four weeks of August, the Pipeline MLP sector was down 4.54%. The two stocks that reported great Q2 results [CPNO and MWE] were still doing relatively well compared to the sector average, but the two stocks that reported major acquisitions [KMP and XTEX] had mostly lost their advantage. The two of the three stocks that were down over 10% for the month [ETP, HEP and MMP] on 8-17 had recovered to sector average losses. Pipeline sector average yields were 6.15% and the ten year closed yielding 4.19% - giving pipelines a spread of 196 basis points. After the first three weeks of August, the Pipeline MLP sector was down 4.83%, with it getting a good bounce on Friday and recovering from Wednesday's low of being down 6.36% - with the three MLPs that had been down over 10% for the month [ETP, HEP and MMP] all recovering well. Pipeline sector average yields were 6.17% and the ten year closed yielding 4.21% - giving pipelines a spread of 196 basis points vs. a spread of only 159 basis points at July's end. Month ending spreads for the prior two months - June: 211; and May: 178. DCF estimates for brokerages B [mid August data] and E [mid August data] were updated 8-15. A rare mid-week update done 8-17 due to rapidly falling stock prices. As of Wednesday's close, prices have fallen 6.36% for the month vs. being down 3.09% month to date after Friday. The two stocks that reported great Q2 results [CPNO and MWE] and the two stocks that reported major acquisitions [KMP and XTEX] are down less than the average. The three stocks that are down over 10% for the month [ETP, HEP and MMP] all have year to date returns above sector average and all ended July with below sector average yields. Several MLPs had falling DCF projections - and I recently added a spreadsheet to show those monthly changes. The MLP sector had an average yield of 5.87% at the close of July and an average yield of 6.27% as of 8-17 - a rise of 40 basis points. The ten year treasury ended July at 4.28% vs. 3.91% on 6-30 - a rise of 37 basis points. Coincidence? Not if the sector correction ends around this level. During July, MLPs gained around 5% as the treasury fell - so we may have a small bit more of an IOU to pay. And I would suspect a bit of an over-correction just because markets over-react. But so far, this correction has been proportionate - if one uses the ten year treasury as a guide. The Pipeline MLP sector was down 3.09% in the first two weeks of August - and some of that decline could be due to so many stocks going ex-distribution. The price plus dividend total return for the sector year to date is 14.96% vs. 17.42% at July's end - a decline of 2.46%. When REITs fall due to rising interest rates [as they did in the first week of the month], MLPs tend to fall a week or two later. And this is the most popular reason for MLPs falling again this week - that the higher interest rates, which rose in July, are only now hitting the sector. KMP offered of 5 million new shares this week. Atlas, Pacific Energy and Sunco offered new shares last week. Add to that an anticipated equity raise for CrossTex - and your have a sizeable burst of new shares. And new shares drive down prices too. So there you have it - three reasons for a small correction: [1] going ex-distribution (but with the distribution paid at mid-month, the ex-distribution date could have been in late July); [2] a delayed reaction to July's rise in interest rates; [3] a burst of new supply. We are lucky we have not fallen more. The Pipeline MLP sector was down 1.83% in the first week of August. The Pipeline MLP sector ended July up 5.50% for the month of July, led by a monthly gains of 15.30% in XTEX, 10.68% in APL, 10.11% in PPX, 9.97% in ETP and 9.27% in CPNO. Atlas Pipeline Reports Second Quarter Results Business Wire 8-01 Atlas Pipeline Partners reported record earnings before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP measure, of $10.9 million for Q2-05 compared with $3.4 million for Q2-04, an increase of $7.5 million or 221%. Net income for Q2-05 was $3.6 million, or $0.20 per limited partner unit, compared with $2.8 million for Q2-04, or $0.47 per limited partner unit. The period over period increase in EBITDA was primarily related to contributions from the two acquisitions consummated since the prior year second quarter, including Spectrum Field Services, Inc. ("Spectrum") in July 2004 and the ETC Oklahoma Pipeline, Ltd. ("Elk City") in April 2005, and continued growth in our Appalachian operations. Total revenues for Q2-05 were $85.2 million compared with $4.5 million for Q2-04. The Mid-Continent segment was initiated upon acquisition of the Partnership's Velma system assets in July 2004. Revenues and segment operating profit for Q2-05 also include contributions from the Elk City system assets, which were acquired in April 2005. For Q2-05, the Velma system connected 25 new wells to its gas gathering system. Overall, 153 new wells were connected to the system for the twelve months ended 6-30-05. Gross natural gas processed averaged 68.3 million cubic feet per day ("mmcfd"), an increase of 8% from Q1-05. On the Elk City system, 9 new wells were connected from 4-14-05, its date of acquisition, to 6-30-05. Transmission and compression revenues for the Appalachian system increased to $5.4 million for Q2-05, a 20% increase from $4.5 million for Q2-04. Average transportation rate per thousand cubic feet ("mcf") rose to $1.08 for Q2-05 from $0.94 for Q2-04 due mainly to the rise in natural gas prices. Throughput volumes increased to 54.7 mmcfd for Q2-05, an increase of 4.3% from Q2-04. These increases were principally due to an increase in wells connected to the pipeline system. For Q2-05, 105 new wells were connected to the gathering system. Overall, 358 new wells were connected to the system for the twelve months ended June 30, 2005 compared with 310 wells connected for the twelve months ended 6-30-04. HEP Reports Second Quarter Results PRNewswire 8-01 Holly Energy Partners reported Q2 net income of $6.0 million ($0.40 per basic and diluted limited partner unit). For the six months ended June 30, 2005, net income was $12.4 million ($0.83 per basic and diluted limited partner unit). HEP commenced operations July 13, 2004 upon successful completion of its IPO. On July 29, 2005, HEP announced its cash distribution for Q2-05 of $0.575 per unit, an increase of 4.5% over the amount of $0.55 distributed per unit for Q1-05. EBITDA for the Q2 was $12.1 million, and after subtracting net interest expense of $2.0 million and maintenance capital expenditures of $30,000, distributable cash flow for the quarter was $10.1 million. The distribution declared for the quarter amounts to $9.5 million. Kinder-Morgan pays $3 billion for Terasen Tom Fowler, Houston Chronicle 8-02 Kinder Morgan has agreed to pay $3.1 billion in cash and stock to acquire a Canadian pipeline company that's tapped into the booming oilsands region. The deal for Vancouver-based Terasen will create a combined company with about 40,000 miles of natural gas transportation pipelines, more than 1.1 million natural gas customers and 150 transportation terminals. The combined companies will have a market value of about $19 billion. Kinder Morgan Chairman and CEO Rich Kinder says the deal will bring immediate results for the company, helping it to increase annual dividends from $3 this year to $3.50 next year, and increase earnings per share from an estimated $4.25 to $5 next year. Terasen's pipelines from the oilsands in Alberta are key assets in the deal as the area produces 1 million barrels per day of crude and is expected to double output in five years. It also owns a gas distribution company in British Columbia. Kinder Morgan will acquire all of Terasen's stock for about $3.1 billion and assume about $2.5 billion in debt. The deal will be 65 percent cash, 35 percent equity and provide a 20% premium over Terasen's 20 day average closing price, the company said. From PRNewswire: Kinder Morgan announced 8-10 that it has priced the public offering of 5,000,000 common units representing limited partner interests at $51.25 per common unit, the closing price of the common units on the New York Stock Exchange on Aug. 10, 2005. KMP has granted to the underwriters an option to purchase up to 750,000 additional common units to cover over allotments. Crosstex Reports Second Quarter Results PRNewswire 8-04 Crosstex reported results for Q2-05 that are in-line with accomplishing goals for the year. XTEX reported net income of $4.5 million for Q2-05, or $0.17 per limited partner unit, compared to net income in Q2-04 of $5.9 million, or $0.24 per unit. Net income in Q2-05 was negatively impacted by a $1.0 million charge for non-cash stock based compensation, due to the exercise of Crosstex Energy, Inc. stock options by employees of the Partnership, and by $800,000 associated with the gas leak reported in the Q1's results. The Partnership's Distributable Cash Flow for the quarter was $13.4 million, 2.89 times the amount required to cover its Minimum Quarterly Distribution of $0.25 per unit, and 1.22 times the amount required to cover its distribution of $0.47 per unit. As previously disclosed, the Partnership has agreed to sell certain idle equipment for $9.0 million in 2005, and during the second quarter, the Partnership received the second $1.8 million deposit on such sale, which is included in Distributable Cash Flow for the quarter. The sales proceeds will not be reflected in net income until the sale closes, which is expected in the third quarter. Distributable Cash Flow for the quarter increased $3.4 million, or 34 percent, over Distributable Cash Flow of $10.0 million in the 2004 second quarter. Distributable Cash Flow is a non- GAAP financial measure and is explained in greater detail under "Non-GAAP Financial Information." Also, in the tables at the end of this release is a reconciliation of this measure to net income. In addition to the sale proceeds, the growth in Distributable Cash Flow was driven by growth in the Partnership's gross margin, to $34.7 million in Q2-05 compared to $29.4 million in Q2-04, an increase of 18%. Gross margin from the midstream segment increased by $2.4 million, or 11%, to $25 million, primarily due to a 25% increase in processed volumes and a five percent increase in on- system gathering and transmission volumes. Midstream margin growth was negatively impacted by the $800,000 loss associated with the gas leak previously mentioned. Gross margin from the Treating segment increased $3.2 million, or 53 percent, to $9.3 million. Plants in service increased to 100 at June 30, 2005 from 62 at June 30, 2004, contributing $2.2 million to the increase in gross margin. Plant expansions made up $0.5 million of the increase with increased volumes and fees contributed the remaining $0.5 million. "We are pleased that our organic growth and the cash we received from the sale of idle equipment allows us to continue our smooth distribution and dividend growth while we work to complete our North Texas Pipeline. With the results of the quarter, we feel comfortable with our current guidance for 2005," said Barry E. Davis, President and Chief Executive Officer of Crosstex Energy, L.P. "We think it is especially noteworthy to reach the milestone of having 100 treating plants in service. In the current environment, we expect to see our organic treating growth continue to accelerate." Sunoco Logistics Announces Pricing of 1.5 Million Units PRNewswire 8-05 Sunoco Logistics Partners announced the pricing on August 4, 2005 of 1.5 million common units at a public offering price of $39.00 per unit. The underwriters have been granted an option to purchase up to 225,000 additional common units to cover over-allotments, if any. The Partnership intends to use the net proceeds from this offering, including any units issued under the over-allotment option, to repay a portion of the indebtedness incurred under the Partnership's credit facility, to purchase the crude oil pipeline system and related crude oil facilities located in Texas, that the Partnership acquired from Mobil Pipe Line Company on August 1, 2005. That purchase consists primarily of a 187-mile, 16-inch pipeline, with an operating capacity of 125 mbpd, originating at the Corsicana, Texas terminal and terminating at Wichita Falls, Texas. The Corsicana Texas terminal consists of 2.9 million shell barrels of crude oil storage, while the Ringgold, Texas terminal consists of 0.5 million shell barrels of crude oil capacity. Copano Energy Reports Second Quarter 2005 Results PRNewswire 8-08 Copano Energy had a 113% improvement in Copano's operating income to $6.4 million forQ2-05 as compared to the same period in 2004. Copano achieved this substantial increase in operating income despite a $1.3 million increase in its general and administrative costs, of which $1.2 million will be reimbursed as a capital contribution by our pre-IPO investors pursuant to the 'G&A Cap' contained in our limited liability company agreement. Net income was $5.5 million, or $0.52 per unit on a diluted basis, for Q2-05 compared to a net loss of $0.6 million, or $0.42 per equivalent unit, for Q2-04. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for Q2-05 were $8.4 million, an increase of $3.7 million from EBITDA of $4.7 million for Q2-04. Revenue for Q2-05 increased approximately 9% to $109.1 million from $100.4 million in Q2-04. Total gross margin increased from $9.8 million in the second quarter of 2004 to $14.3 million in Q2-05. Total gross margin is a non-GAAP financial measure that is defined and reconciled to the most directly comparable GAAP measure at the end of this press release. Distributable cash flow for Q2-05 prior to any retained cash reserves established by Copano's board equaled $7.7 million, representing 162% coverage of the increased second quarter 2005 distribution based on the number of units outstanding at the end of the quarter and 99% coverage of the second quarter 2005 distribution based on the number of units outstanding on the distribution record date, including the units issued on August 1, 2005 in connection with the acquisition of ScissorTail Energy. XTEX Buys Louisiana Processing and Fractionation Facilities Factoids 8-08 El Paso Corporation on 8-08 sold certain South Louisiana midstream entities to Crosstex for $500 million. The sale includes interests in the Eunice, Pelican, Riverside, Sabine Pass, and Blue Water processing and fractionation facilities. The El Paso processing and liquids business in South Louisiana, will increase cash flow for XTEX by $56 million - XTEX paid 8.9 times cash flow on purchase. In a conference call, XTEX said that these are great assets with great synergies with our own assets - and potential for great future cash flow. XTEX sold puts to hedge commodity exposure for 2006 and 2007. Assuming 50% debt and 50% equity, this purchase will increase cash distributions for XTEX in 2006. From the current distribution, there was already anticipated a 22 increase from North Texas assets coming online. This purchase will add another 30 cent increase - so combined we anticipate a 52 cent increase in 2006. [Current XTEX distribution is 47 cents x 4 = $1.88/year - thus 2.40/year in 2006 - this is reconfirmed later in press conference.] For Crosstex Energy Inc - increase in distributions for 2006 from N Texas [90 cents] and from Louisiana [40 cents]. We can see EBDA growing significantly. Regulatory approval will be needed. 1.2 billion cu ft per day capacity from 3 plants - 850 million/day current thru put. XTEX has double the size of the company each year over the last 5 years. El Paso acquisition plus N Texas pipeline doubles XTEX in 2005. We have a proven ability to assimilate assets. In a question from John Freeman from Raymond James, XTEX responded that these assets move 1.8 DCF per day - we can max margins by moving gas from one place to another. Max efficiencies of plants via movement. John asked about the maintenance cap ex for this purchase and XTEX responded $5 million. In responses from a question by Ron Londe at AG Edwards, XTEX said that the GP's 2% share in the LP will be maintained. 45 million from GP will be going into LP $250 million in equity raise for this deal. In response to question from Mark Easterbrook at RBC Capital Markets, XTEX said the expected 2006 distribution for 2006 - partnership [LP] $2.40 / corporation at $3.00 [GP]. Pacific Energy Announces Private Placement of Equity Business Wire 8-09 Pacific Energy Partners announced that it has entered into an agreement for the private placement of approximately 4,300,000 common units to purchasers including Tortoise Capital Advisors, LLC, Kayne Anderson Energy Total Return Fund, Fiduciary Asset Management, Swank Advisors, LLC, and Strome Investment Management, LP. The units will be sold at a price of $30.75 per common unit, which was based on market conditions in mid-July 2005. MarkWest Energy Reports 2005 Second Quarter Results PRNewswire 8-09 MarkWest Energy Partners reported net income of $0.7 million for the three months ended June 30, 2005, or $0.04 per diluted limited partner unit, compared to net income of $3.3 million, or $0.43 per diluted limited partner unit, for Q2-04. As a Master Limited Partnership, cash distributions to limited partners are largely determined based on Distributable Cash Flow (DCF). For the three months ended June 30, 2005, DCF was $7.7 million, compared to $6.4 million for the three months ended June 30, 2004. Tortoise Energy Announces Third Quarter Dividend Business Wire 8-12 The Board of Directors of Tortoise Energy Infrastructure (TYG - an MLP with less than a one year history and thus not a regular part of these updates) declared the Company's Q3 dividend of $0.45 per share, compared to $0.445 in Q2. The dividend will be distributed on September 1, 2005 to stockholders of record on August 23, 2005. The dividend represents an annualized dividend rate of $1.80. Kinder Morgan & Sempra Propose New Interstate Pipeline PRNewswire 8-17 Kinder Morgan Energy and Sempra Pipelines & Storage, a unit of Sempra Energy ( SRE ), announced they have entered into a Memorandum of Understanding to pursue development of a proposed new natural gas pipeline that would link producing areas in the Rocky Mountain region to the upper Midwest and Eastern United States. As designed, the 42-inch diameter pipeline would have capacity of up to 2 billion cubic feet per day and is estimated to cost $3 billion. The preliminary route of the 1,500-mile pipeline would originate at the Wamsutter Hub in Wyoming and extend to eastern Ohio with an ultimate route to be selected based on shipper interest. Plains All American to Recommend Distribution Hike Reuters 8-22 Plains All American on Monday said its management would recommend the board of directors approve an increase in the company's distribution per unit of 2.5 cents per quarter, or 10 cents per year. Plains said its annual distribution would be $2.70 per unit if the increase were approved. U.S. Orders Kinder Morgan to Analyze Pipelines Reuters 8-26 Kinder Morgan Energy Partners must submit a new plan to improve its pipeline integrity procedures, according to an order issued by the U.S. Department of Transportation this week. The action against the company follows a string of 44 accidents at its 3,900-mile Pacific Operations network since the beginning of 2003, the DOT said in a statement released on Thursday. Of those incidents, 14 resulted in the release of more than five barrels of refined petroleum products, some in or near environmentally sensitive areas or near transportation corridors, the DOT said. Under the Corrective Action Order, KMEP must have a revised integrity management plan approved by the DOT's Pipeline and Hazardous Materials Safety Administration within 120 days or face civil penalties as high as $100,000 a day. The company must undertake a thorough analysis of the recent incidents, conduct a third-party review of its operations and procedural practices and restructure its internal inspection process. Energy Transfer Partners Increases Distribution Business Wire 9-02 Energy Transfer Partners announced today an increase in the quarterly cash distribution paid on the Partnership's outstanding limited partner units to $0.50 per common unit (an annualized rate of $2.00 per common unit) for the quarter ended August 31, 2005. This latest increase represents an increase of $0.05 per common unit on an annualized basis. The new quarterly distribution of $0.50 per common unit will be paid on October 14, 2005 to Unitholders of record as of the close of business on September 30, 2005. Monthly Rating Changes On 7-28 RBC Capital Mkts Downgradee MMP from Outperform to Sector Perform. On 7-26 Harris Nesbitt Initiated EPD at Neutral. On 7-21 RBC Capital Mkts Downgraded KMP from Outperform to Sector Perform. On 7-19 Goldman Sachs Downgraded NBP from Outperform to In-Line. On 7-18 Raymond James Upgraded MMP to Outperform from Strong Buy. On 7-08 Deutsche Securities initiated EPD and KMP at Hold. On 7-20 Wachovia Initiated APL at Outperform. On 7-08 Deutsche Securities Initiated KMP at Hold. NOTE: Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. The page is ment to be a supliment for those already getting monthly sector updates from their broker. It is the goal of this page to provide more timely data - and perhaps cover a wider array of stocks and different valuation metrics. Data entry errors sporadically happen. |