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Prior Updates June 06 May 06 Apr 06 Mar 06 Feb 06 Jan 06 2005 Updates Dec Nov Oct Sept Aug July Jun May Aprl Mar Feb Jan 2004 Updates Dec Nov Oct Sept Aug July Jun May Intro MLP & Energy News Oil Online MLP Blog Petro News Util/MLP Blog Yahoo News MLP Intro Wachovia Primer R James Primer Alerian Primer Market Stats MLPs at Yahoo MLPs at CNN MLPs at Excite MarketWatch MLPs at MSN MLPs at WSJ Factoids July Jun May Aprl Mar Feb Jan REIT Updates July Off/Ind July Retail July Triple's July Apt/Hosp Bank Updates July Jun May Aprl Mar Feb Jan |
New Additions for July In the first MLP spreadsheet, I have added a new column, on the far right, which tracks year to date changes in DCFs. There is a pretty good correlation between DCF changes and unit price changes. And in my spreadsheet for GPs, I have added two columns for Price/DCF. At this point in time, I am only using one brokerage for those DCF estimates for GPs. A Change that Could Confuse You This is a difficult period to post forward yields. Some 13 of the 20 MLPs that have announced distributions for Q3 have announced increases - with 26 MLPs being bracked at this site. Six Q3 announcements remain to be made. So for this interim period, my first spreadsheet has yields both based on the Q2 distributions - so one can compare apples to apples - and yields based on the Q3 distribution, to show the correct forward yield for those who have made their Q3 distribution announcements, but this is potentially an incorrect forward yield for those lagging in their announcements and will have increases. For those of you who find this confusing, I should let you know that this period of two posted yields will not last long. The spreadsheet below uses month ending data. The 'monthly change' column is for unit price changes, while the 'year to date' stats is for total return [distribution plus unit price gains]. This explains the jumps in year to date gains in the distribution heavy months of February and May without similar gains in those month's unit price gains.
Valero GP to IPO MarketWatch 7-05 Valero GP Holdings, LLC, the owner of the general partner of Valero L.P. , said Wednesday it will offfer 17.25 million units in its initial public offering. Valero GP Holdings, LLC has been approved to list its units on the New York Stock Exchange under the symbol "VEH". Valero GP Holdings plans to price the unit at $22-$24 a share for proceeds of about $398 million. [Shares climbed 47 cents to $22.47 in their Big Board debut 7-14, but closed back at $22.00.] Buckeye GP to IPO MarketWatch 7-05 Buckeye GP Holdings LP on Wednesday said it plans to offer 14.1 million common units at $19-$21 each in a bid to raise about $282 million. The pipeline holding company increased the size of the offering from 12.5 million units. The company has been authorized to list its units on the New York Stock Exchange under the symbol "BGH". Atlas Pipeline Holdings to IPO Market Wire 7-14 Atlas Pipeline Holdings, L.P. (AHD), which will own a 2% general partner interest, all the incentive distribution rights and 12.6% of the common units of APL, announced that it will commence an initial public offering of 3,600,000 of its common units. Energy Transfer Partners Reports Record Q3 and Increases 2006 EBITDA Guidance Business Wire 7-10 Energy Transfer Partners reported net income for Q3 ended May 31, 2006 of $111.9 million, as compared to income from continuing operations of $46.5 million for Q3-05. EBITDA, as adjusted for the third quarter of fiscal 2006 was $145.6 million versus the $105.3 million reported for the third quarter of fiscal 2005; an increase of $40.3 million or approximately 38%. As a result of these improved operating results, the Partnership is increasing its EBITDA guidance for fiscal 2006 from $710 million to $730 million. Energy Transfer Equity Reports Q3 Results Business Wire 7-17 ETE reported net income for the third quarter ended May 31, 2006 of $43.3 million, as compared to income from continuing operations of $24.4 million for the third quarter ended May 31, 2005, an increase of $18.9 million, or 77%. For the nine months ended May 31, 2006, net income was $107.3 million as compared to income from continuing operations of $76.0 million for the nine months ended May 31, 2005, an increase of $31.3 million, or 41%. For the three months ended May 31, 2006, ETE had Distributable Cash of $33.9 million and has declared a total distribution to its general and limited partners of $32.6 million, which will be paid on July 19, 2006. The current distribution of $0.2375 per unit (an annualized rate of $0.95 per unit) represents a 19% increase in the annualized unit distribution rate. Net income for the three and nine month periods ended May 31, 2006 was affected by a $33.4 million and $199.5 million increase, respectively, in minority interest expense. The minority interest expense primarily represents partnership interests in Energy Transfer Partners, L.P. that ETE does not own. An increase in the net income of ETP results in a greater amount of income attributable to the partnership interests not owned by ETE, thereby increasing the minority interest expense on ETE's books. Net income for the nine months ended May 31, 2006 was also affected by a non-cash expense of $52.9 million related to the issuance of the Partnership's Class B Units at the time of the Partnership's initial public offering in February 2006. Enterprise Announces Acquisition Business Wire 7-12 Enterprise Products Partners announced it has acquired certain natural gas gathering systems and related gathering and processing contracts from Cerrito Gathering Company, Ltd. an affiliate of Lewis Energy Group, L.P. headquartered in San Antonio, Texas. The total consideration paid of $325 million was comprised of $146.2 million in cash and approximately 7.1 million Enterprise common units. The Cerrito gathering systems, located near Laredo in South Texas, are comprised of approximately 484 miles of pipeline (including approximately 172 miles of pipe currently under lease from Enterprise) and 31,000 horsepower compression, and are connected to over 1,450 wells with an aggregate volume of over 100 million cubic feet per day of rich natural gas sourced from the Olmos and Wilcox Trends in South Texas. Volumes currently gathered by the Cerrito systems are delivered into Enterprise's South Texas pipeline infrastructure. KMI EPS $1.05 - Up 11% PRNewswire 7-19 Kinder Morgan, Inc. [KMI] reported second quarter income from continuing operations before certain items of $141.7 million, or $1.05 per diluted common share, compared to $117.3 million, or $0.95 per share, for the comparable quarter in 2005. This represents an increase in diluted earnings per share of 11%. Income from continuing operations including the certain items was $157.3 million, or $1.17 per diluted common share, compared to $121.6 million, or $0.99 per share, for the same period last year. KMP EPS $0.50 - Down a Penny from Q2-05 PRNewswire 7-19 KMP reported an 8 percent increase in second quarter net income before certain items to $242.2 million, or $0.50 per unit, compared to $224.8 million, or $0.51 per unit, for the same period last year. Net income for the second quarter including certain items was $247.1 million, or $0.53 per unit, compared to $221.8 million, or $0.50 per unit, for the comparable period a year ago. For the first six months of 2006, net income before certain items was $488.9 million compared to $475.5 for the same period in 2005. Net income for the first two quarters including certain items was $493.8 million, compared to $445.4 million for the first six months last year. The Products Pipelines segment generated second quarter earnings before DD&A of almost $130 million, up 5 percent from the comparable period a year ago. Results were driven by a strong performance from the Southeast Terminals, which contributed significantly higher earnings than in the second quarter last year. Central Florida Pipeline, the North System and Cypress all produced solid results compared to the same period a year ago, but earnings from the Transmix operations and the Cochin Pipeline declined from the second quarter of 2005. The Natural Gas Pipelines segment delivered an increase of 14 percent in second quarter earnings before DD&A to almost $131 million versus $115 million for the same period in 2005. "Growth for the quarter was driven by another outstanding performance from the Texas Intrastate Pipeline Group, as we continued to see strong demand for our services," Kinder said. "The intrastates' results increased significantly compared to the same period last year due to higher sales margins on renewal and incremental contracts and higher value from storage activities. This segment also benefited from strong gas gathering operations at Red Cedar and Casper-Douglas and good results from the TransColorado pipeline." Transport volumes for this segment increased by 13 percent compared to the second quarter last year. The CO2 segment produced second quarter earnings before DD&A of $125.9 million, up almost 10 percent from $114.8 million for the same period a year ago. Segment earnings were driven by strong oil production at the Yates Field and a 7 percent increase in CO2 delivery volumes system wide, but were offset somewhat by an expected decline in oil production at the SACROC Unit. Average oil production for the second quarter increased by 9 percent at Yates to 26.2 thousand barrels per day (MBbl/d) versus the same period last year, but decreased by 5 percent at the SACROC Unit to 30.8 MBbl/d. The Terminals segment reported a 31% increase in second quarter earnings before DD&A to $101.6 million. This compares to $77.6 million for the same period a year ago, and the segment is on track to exceed its published annual budget of 19% growth. "Growth in the Terminals business was driven by both organic growth and acquisitions," Kinder said. "Approximately $6 million of the growth in this segment was attributable to our purchase of Trans-Global Solutions on April 29, 2005. This increase was driven by the one additional month of ownership of TGS this quarter and an increase in throughput at these Texas facilities of 1.1 million tons in May and June compared to the same period last year." The TGS acquisition made KMP the largest independent handler of petroleum coke in the United States. Outlook - KMP's published budget calls for cash distributions of $3.28 per unit for 2006. The budget does not include any impact from rate reductions due to the SFPP rate case, which the company estimates will be approximately $20 million this year. KMP currently expects to distribute between $3.24 and $3.28 per unit for 2006 and still hopes to realize the top of that range. PAA Buys Some Chevron Assets PRNewswire 7-20 Plains All American Pipeline announced that Plains Pipeline L.P. has signed a definitive agreement to acquire three refined products pipeline systems from Chevron Pipe Line Company for approximately $65 million. The assets to be acquired consist of the following three refined product pipeline systems located in Texas and New Mexico: 1. El Paso to Albuquerque Products Pipeline system -- a 257 mile system 2. El Paso to Juarez Products Pipeline system -- a 2.5 mile pipeline and 3. Big Springs to Midland Products Pipeline system -- a 39.7 mile section of pipeline. "We are pleased to add these fee-based pipeline assets to our growing pipeline infrastructure," said Greg Armstrong, Chairman and CEO of the Partnership. "We believe these assets complement our existing activities in West Texas and New Mexico and provide an excellent initial entry into the refined products business." BPL Net Income $0.61 - Down a Five Cents from Q2-05 PRNewswire 7-19 Buckeye Partners reported financial results for the Partnership for Q2-06. Revenue in the Q2-06 increased to $111.5 million from revenue of $101.9 million in Q2-05. Operating income increased 8.8% in Q2-06 to $43.1 million from $39.6 million in Q2-05. BPL's Q2-06 net income was $24.2 million or $0.61/unit compared with net income of $24.4 million or $0.66/unit in Q2-05. Net income per LP unit results in Q2-06 also reflect an increase in the average number of LP units outstanding to 39.7 million from an average of 36.9 million LP units outstanding in Q2-05. Pipeline volumes in Q2-06 were 1,441,300 barrels per day, a 3.9% increase from 1,386,900 barrels per day in Q2-05. Costs and expenses in Q2-06 were $68.4 million compared to $62.3 million in Q2-05. Enterprise Reports Net Income $0.25 - Up from $0.14 in Q2-05 Businesswire 7-26 Enterprise reported net income of $126 million, or $0.25/unit for Q2-06, a 79% increase from net income of $71 million, or $0.14/unit in Q2-05. Net income for Q2-06 was reduced by approximately $6 million, or $0.01/unit, for a non-cash charge related to the recently passed Texas margin tax. Net income for Q2-05 included a non-recurring charge of $12 million, or $0.03/unit, for costs associated with the refinancing of project debt for the Cameron Highway Oil Pipeline System. Distributable cash flow for Q2-06 was $217 million compared to $220 million for Q2-05. Distributable cash flow for Q2-05 included a $48 million cash distribution received from Cameron Highway Oil Pipeline Company as part of the refinancing of its debt. On July 14, 2006. Revenue for Q2-06 increased 32%, to $3.5 billion compared to $2.7 billion Q2-05. Operating income for Q2-06 increased 48% to $186 million compared to $126 million for Q2-05. Gross operating margin increased 26% to $311 million for Q2-06 from $246 million for Q2-05. EBITDA for Q2-06 increased 31% to $299 million from $229 million for Q2-05. NGL Pipelines & Services - Gross operating margin for this segment increased 22% to $146 million in Q2-06 from $120 million in Q2-05. This increase was primarily due to EPD's natural gas processing and related marketing activities, which had a 45% increase in gross operating margin to $81 million in Q2-06 compared to $56 million for Q2-05. The increase was largely attributable to strong demand for NGLs" which resulted in higher processing margins and a 23% increase in natural gas volumes processed under fee-based contracts to 2.5 Bcfd from 2.0 Bcfd in Q2-05. Equity NGL production under our percentage of proceeds and margin sharing processing contracts was lower year over year reflecting lower inlet volumes in Louisiana as plant capacity returns and offshore volumes continue to recover. Onshore Natural Gas Pipelines & Services - Enterprise's onshore natural gas pipeline and storage business earned gross operating margin of $87 million in Q2-06 compared to $85 million in Q2-05. The primary driver of this increase was higher transportation fees on Enterprise's Texas Intrastate pipelines due to significant basis differentials in Texas offset by approximately $4 million of expenses associated with the inspection, repairs and maintenance of our Wilson natural gas storage facility in Texas. EPD's Permian and San Juan pipelines also made strong contributions highlighting increased drilling in these areas. The Permian basin gathering systems experienced higher volumes and margins while the San Juan gathering system is beginning to benefit from the system optimization project completed in early 2006. Total onshore natural gas pipeline volumes were approximately 5.9 trillion British thermal units per day ("TBtud") during Q2-06 compared to 6.0 TBtud for Q2-05. Offshore Pipelines & Services - Gross operating margin for the Offshore Pipelines & Services segment was $21 million in Q2-06 compared to $22 million in Q2-05. Gross operating margin for Q2-05 included a one-time charge of $12 million for costs associated with the refinancing of project finance debt for the Cameron Highway Oil Pipeline Company which was partially offset by proceeds received from a $5 million settlement from the resolution of a transportation contract dispute. Gross operating margin decreased primarily because of lower natural gas transportation volumes due to the lingering effects of the 2005 hurricanes, production declines and a $5.1 million increase in insurance premiums. This decrease was partially offset by higher volumes at the Marco Polo and Poseidon oil pipelines and the start up of the Constitution oil and natural gas pipelines. Offshore natural gas pipeline volumes were 1.5 TBtud in the current quarter versus 2.2 TBtud for the second quarter last year. Petrochemical Services - Gross operating margin for this segment increased to a record $57 million for Q2-06 from $19 million reported for Q2-05. Each business in this segment reported significant increases in gross operating margin. The strong performance was driven principally by the partnership's octane enhancement business which posted a record gross operating margin of $21 million for Q2-06 as the result of seasonally strong demand for isooctane. This was a $27 million increase over Q2-05, which included start up expenses associated with the facility's returning to service after the completion of modifications to produce isooctane. This facility produced 9,000 BPD of gasoline additives in Q2-06 versus 8,000 BPD during Q2-05. EPD's propylene fractionation and pipeline business earned $16 million of gross operating margin in Q2-06 versus $7 million in Q2-05. Enterprise's butane isomerization business reported a 19% increase in gross operating margin to $21 million in Q2-06 compared to $17 million in Q2-05 primarily due to increased margins and fees. Isomerization volumes for Q2-06 were 83,000 BPD compared to 84,000 BPD in Q2-05. Sunoco Logistics Partners Reports Net Income $0.71 - Up from $0.68 in Q2-05 PRNewswire 7-27 Sunoco Logistics Partners announced record quarterly net income for Q2-06 of $26.3 million, or $0.81/unit on a diluted basis, compared with $17.8 million, or $0.68 per limited partner unit on a diluted basis, for Q2-05. Net income for the six months ended June 30, 2006 was $44.7 million, or $1.48/unit, compared with net income of $33.1 million, or $1.28/unit for the first half of 2005. Net income increased 47.9 percent, or $8.5 million, for Q2-06 compared to Q2-05, and 35.2%, or $11.6 million, for the six months ended June 30, 2006 over the prior year period. These increases were due mainly to higher Western Pipeline System lease acquisition margins, an increase in total shipments in the Eastern Pipeline System, and operating results from the acquisitions completed in 2005 and 2006 in the Western Pipeline System. These increases were partially offset by higher interest expense related to financing of both the recent acquisitions and the Partnership's internal expansion capital program, and higher selling, general and administrative costs related to the acquired assets. Operating income for the Eastern Pipeline System increased $3.2 million to $11.3 million for the second quarter 2006 from $8.1 million for the second quarter 2005. This increase was primarily the result of a $1.8 million increase in sales and other operating revenue and a $1.5 million decrease in operating expenses. Sales and other operating revenue increased from $23.4 million for the prior year's quarter to $25.2 million for the second quarter 2006 due to an increase in total shipments as well as higher revenue per barrel mile. Operating income for the Western Pipeline System increased $6.0 million to a record quarterly high of $11.8 million for the second quarter 2006 from $5.8 million for the second quarter 2005. The increase was primarily the result of higher lease acquisition margins, and higher crude oil pipeline volumes, mainly from the Corsicana to Wichita Falls, Texas crude oil pipeline acquired in August 2005, the 37.0 percent undivided interest in the Mesa Pipe Line System acquired in December 2005, and the Millennium and Kilgore pipelines acquired in March 2006. The Terminal Facilities business segment had record operating income of $9.9 million for the second quarter 2006, an increase of $0.6 million from $9.3 million for the prior year's second quarter. Total revenues increased $2.5 million from the prior year's second quarter to $30.4 million for the second quarter 2006 due primarily to increased revenues associated with the addition of ethanol blending at the balance of the Partnership's refined product terminals in May 2006, increased revenues at the Partnership's Nederland Terminal, and increased volumes at the refined product terminals. Operating expenses increased $1.0 million from the prior year's second quarter to $12.7 million for the second quarter 2006 due to the timing of scheduled maintenance activity and higher utility costs. Enbridge Energy Partners Reports Net Income $0.96 - Up from $0.32 in Q2-05 Primezone 7-28 Enbridge Energy Partners reported net income for Q2-06 of $70.4 million, or $0.96 per unit, compared with net income of $25.7 million, or $0.32 per unit, for Q2-05. For the first half of 2006, net income was $151.5 million, or $2.08 per unit, compared with $53.9 million [$0.69/unit] in the first half of 2005. Eliminating the impact of noncash mark-to-market charges and credits, EEP's adjusted net income for Q2-06 was $68.7 million [$0.93/unit] up from $33.4 million [$0.44/unit] in Q2-05. Adjusted EBITDA increased to $130.3 million in Q2-06 from $93.1 million in the same quarter last year. For the first half of 2006, adjusted net income was $122.1 million, or $1.65 per unit, compared with $68.6 million, or $0.92 per unit in the first half of 2005. EEP's financial results were stronger than expected in the first half of 2006, driven primarily by very healthy natural gas processing margins and improved liquids systems performance. As a result, Enbridge Partners now estimates that its full year adjusted operating income will be between $315 and $335 million in 2006 and that depreciation will be approximately $140 million. Adjusted net income is estimated to increase to between $210 and $230 million for the year. Distribuition Announcements Plains All American Pipeline [PAA] announced a cash distribution of $0.725 per unit [$2.90 annualized] on its outstanding limited partner units. The quarterly distribution to be paid in August 2006 represents an increase of approximately 11.5% over the quarterly distribution of $0.65 paid in August 2005 and approximately 2.5% over the May 2006 distribution of $0.7075. TEPPCO [TPP] declared a distribution of $0.675/unit [unchanged] payable 8-7-06, to unitholders of record on 7-31. Enterprise Products Partners [EPD] increased its distribution $0.4525/unit, to be paid on 8-10-06, to unitholders of 7-31. This distribution represents a 7.7% increase over the $0.42/unit distribution paid the second quarter of 2005. Enterprise GP Holdings [EPE] announced an increase in its distribution to $0.31/unit to be paid on 8-11-06, to unitholders of record as of the close of business on 7-31-06. This distribution represents a 5.1% increase over the $0.295/unit distribution paid in Q1-06 and a 24% increase over the $0.25/unit expected initial quarterly distribution as stated in the prospectus dated August 23, 2005. Pacific Energy Partners [PPX] declared a cash distribution of $0.5675/unit [unchanged] for the quarter ended June 30, 2006. The distribution is 10.7% greater than the distribution for the quarter ended June 30, 2005. ONEOK Partners [OKS] announced that it is increasing its quarterly cash distribution by 7 cents per unit to 95 cents per unit, effective for the second quarter 2006. The distribution is payable on 8-14-06, to unit holders of record as of 7-31-06. Copano Energy [CPNO] announced a cash distribution of $0.675/unit, payable on 8-14-06, to holders of record at the close of business on 8-1-06. This distribution represents an increase of 12.5% above the first quarter 2006 distribution amount. Kinder Morgan Energy Partners [KMP] declared a distribution $0.81 [unchanged] payable on 8-14-06, to unitholders of record as of 7-31-06. The distribution represents a 4% increase over the Q2-05 distribution of $0.78. KMP has increased the distribution in 27 of 37 quarters since current management took over in February of 1997. Magellan Midstream Holdings [MGG] has increased the partnership's quarterly cash distribution to $0.22/unit. The distribution represents a 12.8% increase over the expected quarterly distribution rate of 19.5 cents stated in the partnership's IPO dated 2-9-06 and a 5.8% increase over the first-quarter 2006 distribution of 20.8 cents per unit. The new distribution will be paid 8-14-06 to unitholders of record at the close of business on 8-4-06. Magellan Midstream Partners [MMP] increased it's distribution to 57.75/unit, to be paid 8-14-06 to unitholders of record at the close of business on 8-4-06. This is a 16.1% increase over the Q2-05 distribution and a 2.2% increase over the Q1-06 distribution. Holly Energy Partners [HEP] announced an increase in its distribution to $0.655/unit from $0.64, to be paid 8-9-06 to unit holders of record 8-1-06. Martin Midstream Partners [MMLP] declared a distribution of $0.61/unit [unchanged], payable on 8-14-06 to unitholders of record as of the close of business on 7-31-06. The distribution is 11% greater than the distribution for the comparable quarter of the prior year. TransMontaigne [TLP] declared a distribution of $0.43/unit [unchanged] payable on 8-8 to the unitholders of record on 7-31. TC PipeLines [TCLP] declared a distribution of $0.575/unit [unchanged] payable on 8-14 to unitholders of record as of 7-31. Crosstex's [XTXI] dividend will increase from $0.60/share to $0.62/share, payable 8-15 to unitholders of record on 8-2. Crosstex's [XTEX] distribution will increase from $0.53/unit to $0.54/unit, payable 8-15 to unitholders of record on 8-2. Buckeye's [BPL] distribution will increase to $0.7625/unit payable on 8-31 to unitholders of record on 8-4. Hiland Partners [HLND] distribution will increase to $0.675/unit from $0.65/unit payable 8-14 to Unitholders of record on 8-4. MarkWest Energy Partners' [MWE]distribution will increase to $0.92/unit, payable 8-14 to unitholders of 8-7. Atlas Pipeline Partners [APL] distribution will increase to $0.85/unit, payable 8-14 to holders of 8-7. Williams Partners [WPZ] distribution will increase to $0.425/unit, payable 8-14 to holders of 8-7. Sunoco Logistics Partners [SXL] distribution will increase to $0.775/unit, payable 8-14 to holders of 8-7. Enbridge Energy Partners [EEP] declared a distribution of $0.925/unit [unchanged] payable on 8-14 to holders of 8-04. Quick Facts About $51 billion of junk-rated debt from 29 borrowers worldwide is poised to be upgraded to investment grade, up from $35 billion and 24 issuers in June, Standard & Poor's said in a report on Tuesday. Russian gas monopoly Gazprom, with $9.8 billion of debt, is the largest potential "rising star," or company likely to be upgraded from junk status, followed by U.S. utilities Enterprise Products Partners (EPD) and Allegheny Energy (AYE), the rating agency said. (Reuters 7-18) Analysts said the sale of PPX to PAA was driven by LB Pacific, an entity formed last year by Lehman Brothers to buy the 25% stake in Pacific Energy held by Denver billionaire Philip Anschutz. LB Pacific reportedly wanted to cash in its investment. Since 1998, PAA has completed approximately 42 acquisitions. (Gas Processors Report 7-10) Look for Anadarko Petroleum to package midstream assets to be obtained from its acquisition of Western Gas Resources and Kerr-McGee into an MLP, analysts told GPR. Anadarko said during a recent conference call. John Freeman of Raymond James notes that Western had for some time been mulling the possibility of spinning off its midstream assets this way. "Anadarko has now made the decision for them.' Midstream assets from Western, which for transactional purposes were listed at $1.6 billion, are undervalued, Freeman said. They were valued at a multiple of 5.6, which is far less than the multiple of about 10 that MLPs have experienced and that recent midstream buyers have paid. Ethan Bellamy of Stifel & Nicolaus issued a research note saying that the acquisitions would lead to the emergence of another multi-billion MLP. (Gas Processors Report 7-10) M&A activity in the midstream sector has been fast and furious. The midstream M&A market for 2005 was $5.3 billion and for the first quarter of 2006 was $3.9 billion, David Schulte, managing director of Tortoise Capital Advisors, told GPR. (Gas Processors Report 7-10) Pipeline Deals Up 30%, But Prices Turn Off Buyers Caroline Humer, Reuters 7-05 A spate of oil and gas pipeline deals has boosted mergers and acquisitions for the industry by nearly 30% this year, but soaring prices are turning off many potential buyers. Demand has driven up valuations for the limited supply of properties for sale, and many pipelines have become too expensive for the master limited partnerships that now dominate the field, bankers say. Five years ago, most growth came through acquisitions, but now MLPS are more interested in building than buying, said Rob Pierce, a managing director at Lehman Brothers. "Several MLPs have gotten larger and are better able to finance more organic development without sacrificing their ability to maintain and increase their distributions over time," Pierce said. In recent years energy companies have been moving their cash-rich pipelines into publicly traded MLPs. For instance, Kinder Morgan Inc. (KMI), whose managers are now trying to take the corporate entity private in a $13 billion deal, moved its pipeline assets to Kinder Morgan Energy Partners LP (KMP) years ago. More recently, Duke Energy and ConocoPhillips moved many natural gas liquid and natural gas assets into a joint venture DCP Midstream Partners LP (DPM) that went public in December. Duke is also considering moving its natural gas pipeline assets into a separate MLP, it said last week. But pipelines with for-sale signs on them are scarce because many are owned by companies that already have plans to sell whatever assets they have to their own MLPs, or by the major oil producers such as Exxon Mobil that believe the assets are strategic. And those pipelines that have come onto the market are going through auction processes that push prices up. Given the stiff competition, companies are building new pipelines, often with their rivals. For instance, last month Oneok Partners said it would work with Boardwalk and Energy Transfer on a pipeline that connects Texas, Oklahoma, Arkansas and Mississippi. And Kinder Morgan is one of three companies building a more than $4 billion pipeline across the Rockies. "In MLPs, the companies that have control of their own destinies by building their own pipeline extensions ... are the ones that are being valued higher and given higher valuations," said Paul Murdock, a director in the global utility and chemical banking group at Deutsche Bank. Many of the MLP deals that have occurred involved financial sponsors who are trying to build up their investments in this area, and are willing to pay price-to-cash flow ratios as high as 14 times earnings before interest tax and depreciation, compared with eight times a couple of years ago. Stand-alone MLPs that do not have a link to a corporation that can move more assets into it or that are in a business that is not growing quickly enough, have been willing to pay the higher prices. Oil Rigs Stage Exodus From Gulf of Mexico Mike Spector, WSJ 7-05 The biggest long-term threat to oil and natural-gas production in the Gulf of Mexico isn't hurricanes. It is the dwindling supply of drilling equipment. Jack-up and deep-water rigs, the massive platforms and ships that drill for oil and gas in the ocean, are leaving the Gulf of Mexico for more lucrative jobs elsewhere. This is expected to accelerate production declines in the Gulf, putting upward pressure on domestic energy prices. The rig exodus is squeezing what was an already tight market for drilling equipment. In 2001, about 148 rigs were in the Gulf. Now, about 90 remain, and more are expected to leave soon. The rig migration will have the most pronounced effect on natural-gas production and prices because most of the rigs leaving the Gulf are jack-ups used to find gas in shallower waters. Gulf gas reservoirs are often quickly exhausted, so energy companies must keep punching new wells to maintain production. It "certainly puts an upward bias to natural-gas prices in the long-term," says Jeff Tillery, an analyst with Pickering Energy Partners. Why has the rig count dropped so sharply? The duo of hurricanes Katrina and Rita in 2005 destroyed five rigs. But the bigger factor is that drilling companies are signing long-term deals to send rigs overseas. Houston's GlobalSantaFe agreed late last month to send four jack-ups -- rigs that stand on stilts and are used in shallow waters -- to the Persian Gulf, where Aramco, the Saudi national oil company, will pay more than $160,000 a day to drill for oil and gas for four years. Ensco International will send a jack-up to Tunisia next year, where it will fetch day rates of more than $200,000 for as much as two years of work. Contracts for the larger deep-water rigs are fetching day rates exceeding $500,000. Federal offshore oil production, predominantly in the Gulf, decreased 19% between 2003 and 2005, to 458 million barrels a year, according to the EIA. Offshore natural-gas production fell to four trillion cubic feet a year in 2004 from 5.1 trillion cubic feet a year in 2001, according to the latest data. With the emergence of several offshore zones, the Gulf is being eclipsed by hotter prospects off the coasts of Africa, the Middle East and China. By contrast, many of the Gulf of Mexico's richest targets have already been drilled, leaving only expensive deep-water and ultradeep reservoirs untapped. Foreign oil companies have larger drilling programs and more conviction that they can keep a rig busy for four or five years. The demand has sparked a dramatic increase in offshore rig-building. Companies world-wide are currently building 91 major offshore rigs, up from fewer than 10 in 2003, according to ODS-Petrodata, an offshore-oil-and-gas market-analysis firm. But this wave of new rigs isn't expected to start plying the seas until 2009. And construction delays are common. "One of the questions being asked is, 'Will the rigs come out on time?' " says Tom Kellock, ODS-Petrodata's head of consulting and research in Houston. He noted that several rigs missed their completion dates during the last rig-building boom in the late 1980s and early 1990s. To build a jack-up rig costs $160 million to $190 million, and deep-water rigs can cost as much as $600 million, according to ODS-Petrodata. To compete with international markets, Gulf of Mexico producers will have to pay higher rates to lease rigs. In February, BP PLC agreed to pay Transocean $520,000 a day to keep a massive drill ship in the Gulf; the three-year contract starts at the end of 2007. BP leased the same ship in 2004 for $184,500 a day. The ship is nearly as long as three football fields and can drill in waters that are 10,000 feet deep. On 7-26 Lehman Brothers Initiated coverage of MWE at Overweight. On 6-08 AG Edwards Downgraded BWP from Buy to Hold. On 6-09 Stifel Nicolaus Initiated coverage of TYN at Buy. On 6-13 AG Edwards Downgraded PPX from Buy to Hold and Raymond James downgraded PAA to Market Performerorm. On 6-22 Lehman Brothers Initiated coverage of CPNO at Overweight. Enterprise GP Holdings announced 7-14 an increase in its quarterly cash distribution to partners to $0.31 per common unit, or $1.24 per common unit on an annual basis. The cash distribution will be paid on August 11th to unitholders of record as of July 31st. This distribution represents a 5.1% increase over the $0.295 per unit quarterly distribution paid in Q1-06 and a 24% increase over the $0.25 per unit expected initial quarterly distribution. Magellan Midstream Holdings [MGG] has increased it's distribution to $0.22/unit. The distribution represents a 12.8% increase over the expected quarterly distribution rate of 19.5 cents stated in the partnership's IPO dated 2-9-06 and a 5.8% increase over the first-quarter 2006 distribution of 20.8 cents per unit. The new distribution will be paid 8-14-06 to unitholders of record at the close of business on 8-4-06. Crosstex's [XTXI] dividend will increase from $0.60/share to $0.62/share, payable 8-15 to unitholders of record on 8-2. Magellan Midstream Holdings [MGG] reported on 7-27 Q2-06 operating profit was $67.5 million compared to $48.5 million for second quarter 2005, representing a 39.2% increase. Net income increased to $12.9 million during second quarter 2006 from $4.5 million in the corresponding 2005 period, a 186.7% increase. On 7-21 Kayne Anderson Energy Total Return Fund [KYE] announced its net asset value per share was was $24.86 based on 31.4 million shares outstanding. . On 7-05 Fiduciary/Claymore MLP Opportunity Fund [FMO] on July 3rd declared its quarterly dividend of $0.3125 per share. This represents a distribution rate of 6.88% based upon the closing price of $18.17 on 6-30-06. My records show the prior dividend was $0.3130 - which could be a rounding error from the Yahoo data base. And the div has never been increased, unlike every other CEF. On 7-03 Kayne Anderson MLP Investment Company [KYN] announced its net asset value at June 30, 2006 was $26.29, based on 37.6 million shares outstanding. On 7-03 Kayne Anderson Energy Total Return Fund [KYE] announced its net asset value at June 30, 2006 was $25.77 based on 31.5 million shares outstanding. NOTE #1: This page is ment to be a supplement for those already getting monthly sector updates from their broker. It hopes to provide more timely data - and cover a wider array of stocks and different valuation metrics. Data entry errors sporadically happen. These supplemental stats omit metrics like Debt/Market Cap and the GP/LP split ratios - but YOU should not. NOTE #2: The operator of this site owns units in BWP, EPD, ETP, MWE and PAA, and units in GP ETE - and this could distort the coverage of those MLPs. Candidates for future acquisition include CPNO and MMP - so news on those will disproportionately draw my attention. Those MLPs with slower distribution growth may have coverage that is slighted. NOTE #3: For MLPs to be in my coverage universe, I must be able to find DCF and EPS estimates for them, they must have been in existence since the first of the coverage year. This is why GEL is not in the universe, and why BWP, HLND, TGP, TLP, USS and WPZ were 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. The DCF numbers in the first spreadsheet and in the Forecaster spreadsheet users consensus DCF data that this site generates from three analysts/brokerages. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||