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The 2007 EPS estimates are in for most, but not all MLPs. So temporarily, I am posting the Price/EPS spreadsheet twice, one with the old but totally accurate numbers, and one with the 2007 numbers that include temp numbers for those without the estimates. Those without 2007 estimates are: APL, CPNO, HLND, MWE, XTEX, MMLP and TGP. For February, the MLP midstream sector was up 0.04%, with pipelines up 0.14%. The sector yielded 6.59% [vs. 6.56% at January's end - up 3 basis points], with the average pipeline yielding 6.50% [vs. 6.47% at January's end - up 3 basis points]. With the ten year treasury ending February 4.55%, the MLP midstream spread was at 204 basis points and the pipeline spread was 195. On Wednesday [2-15], the news from Oneok/NBP lifted the whole sector. The two MLPs which had IPOs this month for their GPs [ETP and MMP] both fell. Citigroup wrote that new equity issuance would be high in February. And both EPD and KMP ended the month announcing planned secondary offerings. I have yet to begin tracking expected Q2 distributions, so ETP [which is the only MLP that has announced a Q2 distribution increase] is not listed correctly at its current 'forward' yield. Distribution History has been updated based on Q1 year-over-year growth. This site will begin tracking selected valuations for GP's [ETE, EPE, MGG & XTXI - did I miss any?] in March. While the pipeline sector was up 4.85% for Janaury, its yield was still up 23 basis points. The total midstream sector was up 4.44% and the yield, at 6.56%, was up 20 basis points. During January, APL, BPL, EPD, ETP [for Q2], HEP, HLND, KMP, MMLP, MMP, PAA, PPX, SXL and XTEX announced distribution increases. As of 12-30, with the ten year treasury at 4.40% and the MLP sector yielding 6.92%, the spread of MLPs over the yield of the 10 year stood at 252 basis points. The spread on 11-30 stood at 230 basis points after ending October at 188, September at 174, August at 208, July at 159, June at 211, May at 216, April at 195, March at 156, February at 152 and ending January at 178. For 2005 the average [month-ending] spread was 193. Magellan Announces GP IPO PRNewswire 2-01 Magellan Midstream Holdings, the owner of the general partner interest and 100% of the incentive distribution rights in Magellan Midstream Partners (MMP), announced that it will commence an IPO of 17 million of its common units pursuant to a registration statement on Form S-1 previously filed with the SEC. This offering represents an approximate 27% limited partner interest in Magellan Holdings. The underwriters will be granted a 30-day option to purchase up to an additional 2.55 million common units. Magellan Holdings listed its common units on the NYSE under "MGG". Energy Transfer Equity IPOs 2-03 Reuters 2-02 The initial public offering of Energy Transfer Equity LP [ETE] priced at $21 per share on Thursday, at the top of a $19 to $21 forecast, according to an underwriter. The offer included 21 million shares and is worth $441 million. That exceeds the 17.5 million shares originally planned. Pacific Energy Reports 05 Net Income of $1.25/unit vs. $1.23/unit for 2004 Businesswire 2-02 Pacific Energy Partners announced that net income for Q4-05 was $11.8 million, or $0.30/unit, compared to net income of $8.6 million, or $0.29/ unit, for Q4-04. Recurring net income for Q4-05 was $12.3 million, or $0.31/LP unit, compared to recurring net income of $9.4 million, or $0.31/LP unit, in Q4-04. Recurring net income for Q4-05 excludes a $0.5 million write-down of an idle Pacific Terminals property and recurring net income for the fourth quarter of 2004 also excludes a similar write-down of $0.8 million. For 2005, net income was $39.6 million, or $1.25/unit, compared to $35.7 million, or $1.23/ unit for 2004. Recurring net income for 2005, was $47.0 million, or $1.42/unit, compared with $39.4 million, or $1.36/unit for 2004. On January 20, 2006, Pacific Energy declared a cash distribution of $0.555 per unit for Q4-05, or $2.22/unit annualized. This distribution is 8.3% greater than the distribution declared for Q3-05, and 11.0% greater than the distribution declared for Q4-04. Distributable cash flow to the limited partners for Q4-05 was $19.1 million. On a diluted, weighted average basis, there were 39,298,000 limited partner units outstanding during Q4-05, which is approximately 32% more than in Q3-04. The increase in units outstanding is attributable to the equity offerings Pacific Energy completed for the financing of the acquisition of assets from Valero L.P. The results for the quarter ended December 31, 2005, reflect the addition of assets acquired from Valero, increased margins for Pacific Marketing and Transportation, increased tank utilization for Pacific Terminals and increased pipeline volumes in the Rocky Mountains. These increases were partially offset by lower pipeline volumes and higher pipeline repair expense on the West Coast, as well as lower revenues on the Rangeland Pipeline system. Operating income for the West Coast Business Unit was $18.4 million for Q4-05, compared to $11.0 million in Q4-04. The largest portion of this increase was associated with the addition of the Northern California and East Coast terminals that were acquired on September 30, 2005, from Valero L.P. West Coast pipeline volumes to Los Angeles destinations for Q4-05, were approximately 23% lower than in Q4-04. During the 2005 quarter, volumes were impacted by refinery issues in Los Angeles, as well as declines in San Joaquin Valley and Outer Continental Shelf production. The effect on revenue of the decline in Los Angeles delivered volumes was partially offset by increased tariffs, as well as higher Bakersfield area deliveries. Pacific Energy continued to incur costs for pipeline repairs associated with last winter's record rainfall: $0.4 million of pipeline repair costs and $2.5 million of sustaining capital expenditures were incurred in Q4-05. Operating income for the Rocky Mountain Business Unit was $7.3 million for Q4-05, compared to $6.8 million in Q4-04. The Rocky Mountain Products Pipeline, formerly Valero L.P.'s West Pipeline, provided additional pipeline income for the quarter. In addition, increased crude oil demand by Salt Lake City refiners, as well as increased tariff rates, helped drive higher pipeline revenues. For 2006, Pacific Energy is forecasting net income of $1.55 to $1.70/ unit. For Q1-06, Pacific Energy is forecasting net income of $0.33 to $0.39/unit. Guidance for Q1 EBITDA is $31 million to $36 million and full year 2006 EBITDA of $142 million to $151 million. For the full year, Pacific Energy is budgeting total capital expenditures of $120 million, including $106 million for expansion projects, $6 million for transition capital projects, and $8 million to $9 million for sustaining capital projects. U.S. Shipping Partners Reports 05 Net Income of $1.28/unit vs. $0.18/unit for 2004 PRNewswire 2-03 U.S. Shipping Partners net income for 2005 increased $16.6 million to $18.1 million compared to 2004's net income of $1.4 million. Net income/ unit in 2005 was $1.28, as compared to $0.18/unit in 2004. The increase in net income is attributable to a $2.3 million increase in operating income, a $6.4 million loss on debt extinguishment experienced in 2004 and reductions in income tax expense of $3.8 million and interest expense of $3.6 million. The increase in operating income is due to a $5.4 million increase in net voyage revenue, partially offset by increased operating expenses of $3.1 million. Net voyage revenue was $107.3 million during 2005 compared to $101.9 million in 2004, which resulted from an increase in average time charter equivalent rates for the pre-existing fleet coupled with a $5.6 million increase due to a full year of operation for the Charleston, a $2.6 million increase for the Houston, partially offset by a $4.6 million reduction due to drydocking days and the reduction in charter-in revenue of $3.4 million. The addition of the Houston and related drydock contributed to increases in depreciation and amortization of $0.9 million and vessel operating expenses of $1.6 million. General and administrative expense increased $0.5 million due to additional costs of complying with the Sarbanes Oxley. For Q4-05, USS reported net income of $1.1 million, an increase of $7.1 million from Q4-004. Q4-04 included a $3.2 million charge for loss on debt extinguishment and a $3.2 million income tax charge attributable to a change in tax status of a USS subsidiary, both occurring as a result of USS's IPO. Net income/unit was $0.08 for Q4, as compared to a loss of $0.51/unit for Q4-04. EBITDA Q4-05 increased to $9.6 million from $5.0 million for Q4-04. The increase of $4.6 million is primarily attributable to reductions in Q4 general and administrative expenses of $2.2 million and the non-recurring loss on debt extinguishment of $3.2 million, partially offset by a decrease in net voyage revenue of $1.3 million. The decrease in net voyage revenue is primarily attributable to the scheduled drydocking of two vessels for a total 120 days during Q4, partially offset by the addition of the Houston, which was placed in service on October 13, 2005. USS's distributable cash flow for 2005 was $26.3 million, or approximately 1.04 times the amount needed to cover the total cash distributions of $25.3 million declared in respect of the 2005 periods. Distribution coverage for Q4-05 was 0.49, due to expected decreases in revenue days caused by scheduled drydockings coupled with the increase in income taxes paid. RGNC IPOs Businesswire/Dallas Business Journal 1-31 Regency Energy Partners L.P. commenced trading on the Nasdaq stock exchange Tuesday with an initial public offering valued at $275 million. Regency (Nasdaq: RGNC) is a growth-oriented, independent midstream energy partnership engaged in the gathering, processing, marketing, and transportation of natural gas and natural gas liquids in Texas, Louisiana, Oklahoma and Kansas. The company owns and operates five gas-gathering systems, one intrastate gas transmission system, and five cryogenic gas processing plants. The company's pipeline systems, anchored by contractual relationships with more than 500 major gas producers, connect approximately 2,800 wells to nearly 3,000 miles of pipeline with current throughput of approximately 450 MMcf/day. Its processing plants have aggregate capacity of 330 MMcf/day. Regency was formed in May 2003 from assets previously owned by El Paso Energy and Duke Energy. TEPPCO Reports 05 Net Income of $1.71/unit vs. $1.56/unit for 2004 Businesswire 2-07 TEPPCO reported record net income for 2005 of $162.5 million, a 17% increase, compared with net income of $138.5 million for 2004. Net income per unit amounts were $1.71 and $1.56 for the years ended 2005 and 2004, respectively. Net income for the years 2005 and 2004 includes non-cash asset impairment charges of $2.6 million, or $0.03 per unit, and $4.4 million, or $0.05 per unit, respectively. Net income for the fourth quarter of 2005 increased by 19 percent to $44.6 million, compared to $37.4 million for the fourth quarter of 2004. Net income per unit amounts were $0.45 and $0.42 for Q4 2005 and 2004, respectively. The upstream segment includes crude oil transportation, storage, gathering and marketing activities, and distribution of lubrication oils and specialty chemicals. Operating income for the upstream segment was $11 million for the fourth quarter of 2005, compared with $9 million for the fourth quarter of 2004. The increase in operating income resulted primarily from increased marketing and transportation margins and contributions from assets acquired in April 2005. This was partially offset by increased operating expenses of acquired assets, increased insurance expense attributable to the hurricanes in 2005 and a $1 million settlement of an indemnity related to an acquisition in 2000. Total crude oil volumes marketed and handled during Q4-05 averaged 1.2 million barrels per day (bpd), compared with 1.03 million bpd for Q4-04, an increase of 17%. Equity earnings in the Seaway Crude Pipeline were $3.8 million for Q4-05, compared with $4.2 million for Q4-04. The decrease in equity earnings was primarily due to higher inventory sales and a favorable inventory settlement during 2004, and higher operating costs following a pipeline release in May 2005. Long-haul volumes on Seaway averaged a record 334,000 bpd for Q4-05, compared with 262,000 bpd for Q4-04. The midstream segment includes natural gas gathering services, and storage, transportation and fractionation of natural gas liquids (NGLs). Operating income for the midstream segment was $24.1 million for Q4-05, compared with $26.6 million for Q4-04. An increase in revenue attributable primarily to higher natural gas gathering and NGL volumes was more than offset by an increase in operating, general and administrative expenses, increased insurance expense attributable to the hurricanes in 2005, power costs, and depreciation and amortization expense. The increase in depreciation and amortization expense was primarily due to lower estimates of future production, which resulted in changes to the estimated useful lives of certain of the intangible assets associated with the Val Verde system. Total natural gas gathering volumes increased by approximately 19%, to approximately 1.73 billion cubic feet per day (Bcf/d) in Q4-05, compared with approximately 1.45 Bcf/d in Q4-04. The downstream segment includes the transportation and storage of refined products, liquefied petroleum gases (LPGs) and petrochemicals. Downstream operating income was $27 million for Q4-05, compared with $18.2 million for Q4-04. The increase in operating income resulted from an increase in revenues, primarily due to increased deliveries of propane as a result of system expansion projects completed in 2004 and colder weather in the Northeast during Q4-05, partially offset by lower margins on the sale of excess product inventory. This increase was partially offset by increases in insurance expense attributable to the hurricanes in 2005 and depreciation expense. LPG transportation volumes increased by 7% to 150,000 bpd in Q4-05, compared with 140,000 bpd in Q4-04. Equity losses from unconsolidated investments totaled $0.3 million for Q4-05, compared with an equity loss of $2 million Q4-04. Equity earnings from Mont Belvieu Storage Partners, L.P. totaled $2 million and $1.9 million for Q4 of 2005 and 2004, respectively. Equity losses from the Centennial Pipeline totaled $2.3 million and $4 million during Q4 of 2005 and 2004, respectively. 2006 Outlook The Phase 4 expansion of the Jonah Gas Gathering system is expected to be completed in February 2006. We expect increased volumes on this system with the continuation of strong drilling activity in the Jonah and Pinedale fields. Based on this, and our expectation of the continued strong performance of our upstream segment, growth in demand for Gulf Coast-sourced refined products in the Midwest markets and a normal pattern of LPG deliveries to the Midwest and Northeast markets in our downstream segment, we expect EBITDA in 2006 to be in the range of $400 million to $420 million, and net income per unit in the range of $1.70 to $1.90/unit. Expected results for 2006 include the effect of a decrease in TEPPCO's participation ratio in the cash flow of Seaway Crude Pipeline from 60% to 40%, effective May 13, 2006; an increase in pipeline integrity expenses; higher power expenses and expenses associated with the termination of a cash balance pension plan associated with the change in ownership of our GP. We anticipate that total capital expenditures for 2006 will be approximately $210 million, which will include approximately $147 million for organic growth projects and $38 million for maintenance capital expenditures, which includes $19 million for pipeline integrity. Additionally, we estimate $19 million in expenditures for system upgrades. Boardwalk Pipeline Partners Reports Results Businesswire 2-08 Boardwalk Pipeline Partners announced its financial results for Q4 and the year 2005, which included the following items: Net income for Q4-05 of $44.8 million, compared to net income of $16.9 million for Q4-04; Net income for 2005 of $100.9 million, compared to net income of $48.8 million for 2004; Income before income taxes of $67.3 million and $160.5 million for the three and twelve months of 2005; and BWP declared a partial quarterly distribution of $0.1788/unit , reflecting a full quarterly distribution rate of $0.35/ unit. Fourth-quarter earnings were 35 cents a unit, with no comparable year-ago figure. Texas Gas Issues Limited Waiver on Storage Draws Reuters 2-13 Texas Gas Transmission LLC [a subsidiary of Boardwalk] said that due to warmer-than-normal winter temperatures in much of its U.S. market territory, it would issue a limited waiver on minimum planned storage withdrawal obligations. In a posting on the company's Web site late Friday, Texas Gas said that some customers may have difficulty complying with the required 68% of their maximum seasonal withdrawal obligation by the end of the winter season on April 1. Texas gas said it would waive the penalty for violations of any OFO (operational flow order) issued as a result of customers not complying with the minimum obligations in their service agreements, but added that it intended to waive the penalties for all no-notice and firm storage customers who have withdrawn at least 45 percent of their inventories by April 1. OFOs are mechanisms used by operators to prevent imbalances in pipelines or storage supplies.Customers who have not withdrawn at least 45 percent of their maximum seasonal storage quantity would still be subject to an OFO penalty for all quantities in their account on April 1 in excess of the 68 percent minimum seasonal withdrawal obligation. Gas traders have remained concerned about storage ratchets as winter winds down. So-called ratchets force some inventory owners to withdraw gas on a fixed schedule even during periods of light demand, adding more supply to an oversupplied market and pressuring prices. Traders expect the Texas Gas announcement will be one of many over the next few weeks. SXL Acquires Texas Crude Oil Pipeline From Alon PRNewswire 2-13 Sunoco Logistics Partners announced that it has signed an agreement to purchase a Texas crude oil pipeline system from Alon USA Energy for $68 million. The system consists of the Amdel Pipeline, a 503- mile, 10-inch, common carrier crude oil pipeline with 27,000 barrels per day operating capacity, originating at the Partnership's Nederland Terminal, and terminating at Midland, Texas; and the White Oil Pipeline, a 25-mile, 10- inch crude oil pipeline with 40,000 barrels per day capacity originating at the Amdel Pipeline and terminating at Alon USA's Big Spring, Texas refinery. Alon USA has also agreed to ship a minimum of 15,000 barrels per day under a 10-year throughput and deficiency agreement on the pipelines. These pipelines, currently idled, are scheduled to be returned to service on June 1, 2006. The Partnership also expects to complete an approximate $12 million program to expand capacity on the Amdel Pipeline from 27,000 to 40,000 barrels per day, and to construct new tankage at the Nederland Terminal to service these new volumes by the end of 2006. Closing of the transaction is expected by the end of the first quarter, 2006, subject to customary closing conditions. TCLP Reports 05 Net Income of $2.70/unit vs. $2.99/unit for 2004 Businesswire 2-15 TC PipeLines reported Q4-05 net income of $12.3 million or $0.65 per unit compared to $15.2 million or $0.82 per unit for the same period last year. The decrease in net income was primarily due to lower equity income from Northern Border Pipeline. Cash generated from operations, including return of capital from Northern Border Pipeline and Tuscarora, in Q4-05 was $18.2 million, an increase of $1.3 million, compared to $16.9 million for the same period last year. The increase in cash generated from investments was primarily due to higher distributions from Northern Border Pipeline, partially offset by lower distributions from Tuscarora. The increase in Northern Border Pipeline's distributions was attributable to the positive revenue impact experienced by Northern Border Pipeline during Q3-05 due to the recognition of $9.4 million ($2.8 million positive impact on TC PipeLines' net income) related to the sale of bankruptcy claims held against Enron and Enron North America. The decrease in distributions from Tuscarora was due to a one-time settlement payment received in Q4-04, related to termination of Tuscarora's 2005 expansion. TCLP reported net income of $50.2 million or $2.70 per unit for the year ended December 31, 2005, a decrease of $4.9 million compared to $55.1 million or $2.99 per unit for 2004. Oneok to Sell Pipeline and Storage Businesses to NBP - and Become GP AP 2-15 Oneok, which operates natural gas pipelines and sells the fuel in retail and wholesale markets, on Wednesday said it plans to sell its natural gas liquids, pipelines and storage businesses to Northern Border Partners LP for $3 billion. Oneok will receive about $1.35 billion in cash and about 36.5 million limited partner units valued at $1.65 billion as part of the transaction. Oneok's natural gas liquids and pipeline segments contributed about $266 million in operating income in 2006. The company said it plans to use the cash to buy out TransCanada Corp.'s general partner interest in Northern Border Partners for $30 million. When the deal closes, Oneok will own 100% of the general partner interest in Northern Border and will hold a 45.7% stake in the company. Shares of Oneok surged in midday trading, rising $3.30, or 12.4%. Northern Border shares also jumped $5.53, or 12.6%. From David Bogoslaw, Dow Jones Newswires 2-15: Both Oneok and Northern Border raised their earnings forecasts for 2006, with Oneok now projecting $2.23 to $2.29 a share, up from $1.97 to $2.03 a share, and Northern Border anticipating $4.43 to $4.69 a share, compared with a prior outlook of between $2.50 and $2.60 a share. The revised Northern Border estimate includes a gain of $1.44 per unit from the proposed sale of 20% of Northern Border Pipeline to TC Pipelines LP. HLND Reports Q4-05 Net Income of $0.50/unit vs. $0.28/unit for Q4-04 PRNewswire 2-21 Hiland Partners reported quarterly net income for Q4-05 of $4.1 million ($0.50 per limited partner unit) compared to net income of $2.3 million for Q4-04, an increase of 81%. EBITDA for Q4-05 was $9.6 million compared to $3.6 million for Q4-04, an increase of 165%. Total segment margin for Q4-05 was $12.8 million compared to $5.3 million for Q4-04, an increase of 140%. The increases are primarily attributable to higher average realized natural gas and NGL sales prices and the inclusion of the results of operations from the assets contributed to us by Hiland Partners, LLC (the Worland gathering system and compression assets) as part of our IPO on 2-15-05 and the acquisition of Hiland Partners, LLC (the Bakken gathering system) effective September 1, 2005. For the year 2005, HLND reported net income of $10.3 million compared to net income of $4.9 million for 2004, an increase of 110%. On January 24, 2006, the Partnership announced an approximate 22% increase in its cash distribution for the fourth quarter of 2005. The declared quarterly distributions on the Partnership's common and subordinated units increased from $0.5125 per unit (an annualized rate of $2.05 per unit) for the third quarter of 2005, to $0.625 per unit (an annualized rate of $2.50 per unit) for the fourth quarter of 2005. This distribution was paid on February 14, 2006 to unitholders of record on February 3, 2006. "We are pleased with our fourth quarter and year-end results, which include a full quarter of operations attributable to our Bakken acquisition," said Randy Moeder, President and Chief Executive Officer of Hiland Partners, LP. "In only our first year as a public partnership, we increased our distributions to unitholders by 39%, completed the Bakken acquisition and announced the Badlands expansion project. Both the Bakken acquisition and the Badlands expansion project will allow the Partnership significant opportunities for organic growth well beyond 2007. Through the use of financial hedges and forward sales contracts and with the fixed fee component of the new Badlands Agreement with Continental Resources, Inc., we have significantly reduced the overall impact of lower commodity prices to the Partnership. For the 2006 and 2007 period, approximately 50% and 75%, respectively, of the Partnership's gross margin are hedged or subject to fixed fee arrangements." Badlands Gathering Project: On February 1, 2006, the Partnership entered into a 5-year definitive purchase agreement with a producer to build additional compression facilities and to expand our existing gas gathering system into South Dakota. The gathering project, which is targeted for completion in the 2nd quarter of 2006, is expected to cost approximately $3.0 million, which the Partnership expects to fund using its existing bank credit facility. Once completed and operational, the Partnership expects the gathering project to generate approximately $1.6 million of EBITDA over the first twelve months of operation. Roman Nose Gas Plant Project: The Partnership intends to construct a 25 million cubic feet per day natural gas processing facility along our existing Matli Gas Gathering System. This facility will process the existing gas supply on our Matli system and will provide additional plant processing capacity for increased system volumes. The expansion project, which is targeted for completion in the 3rd quarter of 2006, is expected to cost approximately $2.8 million, which the Partnership expects to fund using its existing bank credit facility. Once completed and operational, the Partnership expects the expansion project to generate approximately $1.7 million of EBITDA during the first full year of operation. "These additional organic growth opportunities in our core area of operations provide attractive cash flows to the Partnership at very reasonable multiples," said Randy Moeder, President and Chief Executive Officer of Hiland Partners, LP. PAA Reports 05 Net Income of $2.72/unit vs. $1.89/unit for 2004 PRNewswire 2-22 Plains All American Pipeline reported net income of $53.7 million, or $0.64 per diluted limited partner unit, for Q4-05. These financial results represent an increase of 117% and 100%, respectively, over net income of $24.7 million, or $0.32 per diluted limited partner unit, for Q4-04. For the full year 2005, PAA reported net income of $217.8 million, or $2.72/diluted unit, an increase of 68% and 44%, respectively, over net income of $130.0 million, or $1.89/diluted unit, for the full year 2004. EBITDA for Q4-05 was $94.1 million, an increase of 50% as compared with EBITDA of $62.6 million forQ4-04. EBITDA for 2005 was $360.7 million, an increase of 47% as compared with EBITDA of $245.4 million for 2004. PAA's adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA for the full year of 2005 were $264.9 million, $3.47/unit, and $407.8 million, respectively. For 2004, these same financial measures were $137.0 million, $2.00/diluted unit, and $252.4 million, respectively. Using this same basis for comparison, 2005 adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA increased 93%, 74% and 62%, respectively, over 2004. During the conference call, while PAA did not give specific distribution guidance, it did state that it had a goal of a 10% annual increase in its distributions, and stated with a degree of confidence that it had organic growth projects that should allow for the level of growth not only in 2006, but for 2007 and 2008 as well. PAA gave 2006 net income guidance of $2.26 to $2.70/unit, a decrease from 2005, when market conditions allowed for atypically large spreads. I wanted to come away from the call with concrete stats that showed PAA's commodity exposure led to its outsized EPS gains in 2005, and a return to trend was responsible for 2006's EPS fall. I did not get that stats, but I kept that impression. I had a bias against investing in PAA prior to the call due to the expected 2006 EPS fall - a fear of catching a falling knife of EPS. Hearing the call erased that concern. EPD Announces Offering Businesswire 2-27 Enterprise Products Partners announced that it has filed a preliminary prospectus supplement for an offering of 15,000,000 common units representing limited partner interests. The prospectus supplement also includes a 30-day option granted to the underwriters to purchase an additional 2,250,000 common units. Kinder Morgan Details Impact of Two Large Pipeline Projects PRNewswire 2-28 Kinder Morgan announced that the Rockies Express and Kinder Morgan Louisiana pipelines, two large projects that are being supported by long-term binding capacity agreements with shippers, will significantly impact the bottom line of both Kinder Morgan Energy Partners and Kinder Morgan, Inc. The over $4 billion Rockies Express project (see separate joint news release issued today by KMP and Sempra Energy) is a 1,323-mile pipeline that will transport up to 1.8 billion cubic feet per day (Bcf/d) of natural gas from the Rockies to eastern Ohio. KMP will operate the pipeline and owns two-thirds of the project, while Sempra Energy has one-third. The approximately $500 million Kinder Morgan Louisiana Pipeline is solely a KMP project and will provide 3.2 Bcf/d of takeaway capacity from the Cheniere liquefied natural gas facility in Louisiana and deliver natural gas into the country's pipeline network. While these assets will be part of the KMP portfolio, KMI will also benefit because of its ownership of the general partner of KMP. Once completed, the combined financial impact of these projects is expected to allow for an increase of $0.15 to $0.20 in cash distribution per unit at KMP and $0.50 to $0.60 in earnings per share at KMI. Subject to regulatory approvals, the entire Rockies Express project is expected to be completed by June 2009, and the entire Kinder Morgan Louisiana Pipeline is expected to be completed by April 1, 2009. KMP intends to finance the projects with 50 percent equity and 50 percent debt. The Big Three Pipeline Companies J. Tarquinio, NY Times 2-26 Companies with pipelines had a great run in the stock market last year. Long-term bulls predict a huge expansion in the industry in the next 15 years. In that period, some $25 billion may be needed to build new natural gas infrastructure in the United States - including interstate pipelines, storage facilities and marine terminals that reconvert liquefied natural gas back to its original state. A shift in supply-and-demand patterns is likely to be the most important cause of a building binge, said Anatol Feygin, a stock analyst at Banc of America Securities. Production in gas fields is expected to fall over the next decade in the Gulf Coast region and the Midwest, while rising sharply in the Rockies, he said. He added that some new marine terminals for receiving and processing liquefied natural gas would be coming on line over the next two to three years. Demand for natural gas, meanwhile, is slipping in the Rust Belt as factories move abroad, but it is rising in growing population centers like Florida and the Southwest. Most independent pipeline companies in the United States focus on transporting natural gas, because the energy giants tend to own their own pipelines for oil. Kinder Morgan owns 10,000 miles of pipelines for refined petroleum products. That makes it the largest independent. It has the second-largest natural gas pipeline network, after the El Paso Corporation. Kinder Morgan's two largest rivals are becoming more integrated production and transportation companies for natural gas: El Paso and the Williams Companies. Still, exploration and production account for less than 40% of operating income at both Williams and El Paso. Some of the enthusiasm for these stocks may have been misguided, analysts say, because pipeline revenues don't surge with the commodity prices of the gas or oil that they transport. But last year's share price run-up for both companies - especially Williams - stemmed from rising natural gas prices, which have roughly doubled over the last couple of years, to around $8 per thousand cubic feet. Feygin said, "If you look at Williams's stock price, it has performed exactly in line with more pure-play producers." Williams's share price rose about 40% last year. So he recommends selling shares of Williams, based solely on share price, while he recommends holding on to El Paso shares, which rose about 20% in 2005. Ronald Barone, a stock analyst at UBS, is more bullish on Williams because the company has much larger gas reserves than El Paso. He estimates that Williams could have reserves stretching beyond 2020, which he said might even make the company an acquisition target. But he estimated that El Paso might have only five or six years of reserves, even after its $834 million acquisition last year of Medicine Bow Energy, which drills for gas in the Rockies. "Williams is sitting on one of the best gas reserves in the Rockies," Mr. Barone said, "and the Rockies are the only basin in the United States where natural gas production is increasing." Some analysts say that natural gas fields in the Rocky Mountains may be the domestic energy industry's biggest growth story over the next decade. All three pipeline companies have made big commitments to either natural gas production or transportation there. Kinder and El Paso are working on two big new pipeline projects in the Rockies. They would follow different routes: El Paso is planning the "Continental Connector," 650 miles of new pipeline that will link the company's hub in Colorado to points both south and east. The Kinder Morgan project, called the "Rockies Express," would run 1,350 miles across the country from Colorado to Ohio. Kinder plans to build it as a joint venture with Sempra Energy. Earlier in this decade, some pipeline companies pursued quick gains in energy trading - a business they did not have the balance sheets to support. But Kinder Morgan never became involved with energy trading. CEO Richard Kinder founded the company in 1996 when he left Enron. He started Kinder Morgan with some of Enron's pipelines, which he bought when he left the company. But both El Paso and Williams were involved in energy trading. Today, they are much smaller companies after selling off assets to pay down debt. In December, El Paso agreed to sell the bulk of its trading book to Morgan Stanley for $440 million. Williams is a bit further along in paying down debt because Williams had more assets to sell. Williams had reduced its debt to 56.5% of capital, compared with El Paso's debt level of 76.5% of capital. There are several ways to invest in Kinder Morgan: in the stock of the company or in two limited partnerships. Kinder Morgan Energy Partners owns many of Kinder's pipelines; Kinder Morgan Management collects management fees for operating them. Kinder Morgan also owns pipelines outside the two partnerships, including some oil pipelines in Canada that it acquired last year when it bought Terasen. Terasen also runs a gas distribution utility in British Columbia. Mr. Feygin estimates that Terasen's retail gas distribution will account for 29% of Kinder's operating income this year. (He expects an additional 43% from its stake in the two limited partnerships, and the remaining 28% from the pipelines that it owns outside the partnerships.) Mr. Feygin said that such a hefty stake in utilities could slow the company's overall growth rate, "but that's the price Kinder was willing to pay to access the Canadian oil sands." Michael Cumming, an equity analyst at Morningstar, said he liked the yields on all three Kinder stocks: around 7% for the two partnerships and a little less than 4% for the parent. Both El Paso and Williams have yields of around 1.25%. Although Mr. Cumming suggests waiting for the share prices of El Paso and Williams to pull back, he said Kinder Morgan Inc. was still below his fair-value estimate of $100 a share; it now trades at $94.06. But over all, he said, he is optimistic about the industry's long-term outlook. "Commodity prices are bound to go down, so it's not a good time for long-term investors to get into commodities," he said. "But I think the pipelines still have some attractive growth prospects." How fast did sector distributions grow? It depends on who you ask. In 2005, the MLPs in our coverage universe increased their distributions by 6.9% on average. This compares to a historical growth rate for the MLP Composite of roughly 5.8%. We project distribution growth for the MLPs in our coverage universe should average about 7.9% in the current year. For 2006, we expect the MLP composite to generate a total return in the range of 16% to 18%. [John Tysseland, Citigroup 2-09] Citigroup does not include APL, HEP or XTEX - all fast distribution growers in 2005 and with strong expectations in 2006 - in their coverage universe. This accounts for the difference between Citigroup's number and the AG Edwards number posted below. Both fail to include CPNO and ETP. On average, distributions grew 10.3% during 2005 in the A.G. Edwards Universe of MLPs. The outlook for 2006 is for an average increase of 10%. [Londe, Reichman, Hayes & Morgan, AG Edwards 2-08-06] On average, pipeline MLPs grew distributions by over 7% in each of the last two years and should provide a repeat performance this year. [Eric Conklin, Credit Suisse 1-23-06] Strong operating performance and acquisition activity has allowed the group to increase distributions 6.6% annually on an equal weighted basis (1998-2004, excluding Star Gas). In 2005, the group experienced 10.4% distribution growth on average - the second best year for distribution growth. However, rising acquisition multiples may impact future accretion prospects; particularly affected are those facing high incentive distribution rights for their general partners. [Mark Easterbrook, RBC Capital Markets 2-13] We expect the range of total returns to vary widely and urge investors to focus on MLPs that have long-term growth outlooks with quality assets. Acquisition multiples have risen to a point that will make it difficult for many MLPs to continue to grow distributions solely through acquiring other assets. We believe the ability to produce above average DCF growth on a long-term basis is contingent upon: 1) an integrated business model, 2) the ability to deploy capital on organic growth opportunities, and 3) a synergy focused acquisition strategy. [John Tysseland, Citigroup 2-09] FERC regulated pipelines are allowed to automatically adjust tariffs yearly based on the change in the PPI. Given the expected 2005 increase in the PPI, as of July 1, 2006, pipeline tariffs could increase approximately 4.8%. Every five years, the FERC has to review its indexing methodology. Initially, the index was the PPI minus 1%. After years of legal haggling, the FERC changed the index to just the change in the PPI. FERC is now in the process of reviewing the tariff indexing factor with a decision expected during the late spring of 2006. The pipeline companies have filed comments with FERC requesting that the indexing should be PPI plus 1.3%. The shippers have challenged a higher index. It is difficult to translate the higher index tariff to benefits derived by any one MLP because some pipelines have 'light-handed regulation' where tariffs are negotiated with shippers because there is meaningful competition in a specific region. However, the indexing of tariffs does help set a standard for negotiation with shippers that helps pipeline operators better cope with inflationary factors, such as power and pipeline integrity costs, and this in turn helps the MLP’s overall ability to grow distributions. [Londe, Reichman, Hayes & Morgan, AG Edwards 2-08-06] The tax advantage of the MLP structure continues to drive deal flow. As noncorporate taxpayers, MLPs enjoy a distinct advantage over traditional c-corps that continue to house 'MLPable' infrastructure. With MLP assets trading in some instances at multiples of 10-12 times forward EBITDA, a compelling case can be made for integrated oils, refiners, utilities, and exploration and production companies trading in the 6-8 times forward EBITDA range to unlock value through the movement of assets into a partnership structure. An MLP can distribute more free cash flow to its investor base, thereby warranting a higher trading multiple. As a rough estimate, only 20-25% of existing MLP-able assets are held within the partnership structure, allowing for ample sector growth for the foreseeable future. [Eric Conklin, Credit Suisse 1-23-06] Given the increasing competitiveness of the acquisition market, thanks in part to the strong push into the space by private equity firms, it is becoming more difficult for managements to bolt on mature acquisitions that offer little future development potential. As transaction multiples increase, the accretion offered by a nonorganic growth platform acquisition decreases. We continue to see more management teams pursuing in-house growth opportunities that offer a much higher return on capital versus an acquisition, and in many cases avoiding integration issues. Therefore, equity raised to fund an internal project with a possible 20-25% return on capital should be viewed differently from equity raised to fund a one-off nonstrategic acquisition that provides a quick pop to distribution growth in the year of the transaction, but offers little upside thereafter. [Eric Conklin, Credit Suisse 1-23-06] On 2-27 Harris Nesbitt Upgraded NBP from Underperform to Neutral and RBC Capital Mkts Downgraded PAA from Outperform to Sector Perform. On 1-13 KeyBanc Capital Mkts / McDonald Initiated coverage on BWP at Buy. On 1-17 Sanders Morris Harris Upgraded CPNO from Hold to Buy. On 1-23 Credit Suisse Initiated coverage on PPX at Outperform. NOTE #1: Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. This page is ment to be a supplement 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. Since these stats are only a 'supplement', is it OK for them to ignore stats like Debt/Market Cap and the GP/LP split ratios - but YOU should not ignore them. NOTE #2: The operator of this site owns units in BWP, EPD, ETP and XTEX - and this ownership could distort the coverage of those MLPs. Candidates for future acquisition include APL, MMP, PAA and SXL - so news on those will disproportionately draw my attention. My own research gives me a bias towards MLPs that are distribution growers - thus those MLPS with slower distribution growth [EEP, NBP, TCLP and TPP] may have coverage that is slighted. NOTE #3: For MLPs to be in my coverage universe, I must be able to find DCF estimates for them, they must have been in existence since the first of the coverage year, and Yahoo needs to have EPS and ratings data on them. This is why GEL is not in the universe, and why HLND, TGP, TLP, USS and WPZ are being added in 2006. NOTE #4: Those wishing to contribute DCF data to this site can do so by contacting Bob Martin at factoids@flash.net -- The only way we are going to get consensus DCF stats is if we build them ourselves, and that takes a team effort. This site frequently uses data provided by the members of the 'MLP and Royalty Trust' Yahoo group. |