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Prior Updates August 06 July 06 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 Sept Aug July Jun May Aprl Mar Feb Jan REIT Updates Aug Off/Ind Aug Retail Aug Triple's Aug Apt/Hosp Bank Updates Aug July Jun May Aprl Mar Feb Jan |
Quarterly Metric Update At the end of the spreadsheets I have placed the traditional quarter-ending metric update. New for Q3 are two spreadsheets: one showing the importance [or lack of importance] of forecasted EPS increases and another measuring the performance of those with high forecasted DCF increases. I thought both would be a slam-dunks - since growth sells at a discount in this sector, buy those who are forecasted to be the high growers. It did not work out that way due to some big errors in the forecasts. And one other important factoid - the six MLPs with distribution increases of less than 5% over Q3-05 [EEP, KMP, TCLP, TPP, VLI and USS]. have had an average unit price gain for the year of -2.81%. Site Changes and Improvements The DCF spreadsheet now has data/estimates from four brokerages. So my composit price/DCF ratios in the first spreadsheet and the valuations used in the 'Forecaster' spreadsheet have been updated - and now reflect opinion generated from more sources. I also changed the labeling of the four sources to make their origin less obscure. The fourth spreadsheet, 'Monthly Earnings Estimates Changes vs Price Changes', now has monthly prices changes calculated for four months instead of the previous two month time frame. That could assist one in picking up price trends. The spreadsheet below uses month ending data. The 'monthly price change' column is for unit price changes, while the 'year to date' stats is for total return [distributions plus unit price gains]. This explains the jumps in year to date gains in the distribution heavy months of February, May and August without similar gains in those month's unit prices. CEF numbers are for MLP and MLP-hybrid Closed-End Funds. The 'Ten Year Yield' numbers are for the US Treasury. Tracking the spread of the average MLP's yield to the Treasury [which I have done since January of 2005] has been a useful tool for timing of MLP purchases. I began tracking the CEF spread since April 2006, and it is way too early to tell if this number is meaningful, but time will tell.
Valero LP Will Change Name AP 9-07 Pipeline operator Valero LP said the company will be renamed later this year as part of efforts to distinguish it from oil refiner Valero Energy Corp. In July, Valero Energy subsidiary Valero GP Holdings LLC, which owns the general partner of Valero LP, completed its initial public offering. Valero Energy currently holds a 59 percent stake in Valero GP Holdings, but has said it will eventually sell off its interest in the company. Enterprise Products Files For Secondary Offering BullMarket.com 9-07 Enterprise Products Partners (EPD) filed a preliminary prospectus with the SEC to sell an additional 10 million of the company's common units, or shares, with an overallotment of 1.5 million shares. In the filing, the company said it would use the proceeds to pay down debt and for other corporate purposes. The newly issued units will add a 2-3% increase in the number of shares outstanding. The BullMarket investment newletter noted: "Our view is that in a period of rising rates, the reduction in debt should free up cash for other uses, including dividends, which could offset the increase in the shares outstanding and thus long term isn't a negative." Energy Transfer Partners to Acquire Transwestern Pipeline BusinessWire 9-15 On 9-15 Energy Transfer Partners announced that it has entered into agreements with GE Energy Financial Services and Southern Union Company to acquire the Transwestern Pipeline. The agreements provide for a series of transactions in which Energy Transfer Partners will acquire all of the member interests in CCE Holdings (CCEH) owned by GE Energy Financial Services and certain other investors. The member interests acquired will represent a 50% ownership in CCEH, which was formed in 2004 to purchase CrossCountry Energy. In the second transaction, CCEH will redeem the 50% ownership in CCEH of ETP in exchange for 100% ownership of Transwestern Pipeline Company, following which Southern Union will own all of the member interests of CCEH. The Transwestern assets primarily consist of the Transwestern Pipeline, a 2,500 mile interstate natural gas pipeline system. Transwestern Pipeline connects supply areas in the San Juan Basin in southern Colorado and northern New Mexico, the Anadarko Basin in the Mid-continent and the Permian Basin in west Texas to markets in the Midwest, Texas, Arizona, New Mexico and California. The series of transactions, valued at $1.465 billion, is subject to various regulatory approvals prior to closing. Energy Transfer Partners intends to finance more than 50% of the purchase price with equity, to be issued prior to or simultaneous with closing. Upon closing, Energy Transfer Partners expects the transaction to be immediately accretive to its common unitholders. "This is the Partnership's first acquisition in the interstate pipeline arena, and one which provides an additional platform for growth", said Mike Smith, Vice President-Mergers and Acquisitions. On 9-20 Energy Transfer Partners announces two internal growth projects, a natural gas processing facility in Johnson County, Texas and a 36-inch pipeline expansion connecting the Barnett Shale to the ETP 30" Texoma pipeline. ETP announced a few days later two new internal projects, a 385 MMcf/d processing facility to be built in two phases and a 135-mile pipline in Texas with initial capacity of 700 MMcf/d. After this announcement UBS analyst Ronald Barone lowered hid 2007 EPU estimate to $3.25, from $3.67, as a larger GP interest in earnings more than offsets increased EBITDA. UBS also introduced their 2008 EPU estimate of $4.74. Boardwalk to Sell 5 Million Units BusinessWire 9-21 On 9-21 Boardwalk Pipeline Partners LP filed to sell 5 million units. Based on the stock's closing price of $27.32 a share on Wednesday, the pipeline company will raise about $137 million. Energy Transfer Partners Increases Distribution BusinessWire 9-21 On 9-21 Energy Transfer Partners, L.P. announced a $0.45 increase in the annual cash distribution paid on the Partnership's outstanding limited partner units, to $3.00 annually. This latest increase will go into effect with the Partnership's next quarterly distribution for the quarter ending August 31, 2006, making the quarterly distribution for such quarter equal to $0.75 per common unit. The new quarterly distribution of $0.75 per common unit will be paid on October 16, 2006 to Unitholders of record as of the close of business on October 5, 2006. Oneok Raises 2006 Guidance AP 9-22 Gas pipeline company Oneok Inc. and its partner Oneok Partners LP on Thursday raised their 2006 earnings guidance per unit due to better-than-expected performance in their gathering and processing and pipelines and storage segments. The partnership expects third-quarter earnings between 89 cents and 99 cents per unit and fourth-quarter income between 72 cents and 82 cents per unit. For the year, the partnership expects a profit of $4.77 to $4.90 per unit, compared with previous guidance of $4.43 to $4.69 per unit. Newfield & MarkWest Sign Agreement to Develop Oklahoma's Woodford Shale Play PRNewswire 9-26 Newfield Exploration announced the signing of an agreement with MarkWest Energy Partners to construct and operate gathering pipelines and related facilities associated with the development of Newfield's Woodford Shale Play in the Arkoma Basin of southeastern Oklahoma. MarkWest plans to invest up to $175 million by the end of 2007 and totaling up to $350 million over the next four years to build gathering infrastructure of approximately 200-square miles in a four county region. The gathering system will fully support Newfield's drilling efforts over its entire operating position in the Woodford Shale. The agreement will contribute significant long-term, fee-based growth opportunities to MarkWest from one of the premier resource plays in the U.S. Industry Closes In On New Oil Source in GOM Russell Gold, WSJ 9-05 The oil industry is on the verge of cracking open a deep-water region in the Gulf of Mexico that could become the nation's biggest new domestic source of oil since the discovery of Alaska's North Slope more than a generation ago. Chevron and partners Devon Energy and Statoil ASA announced today the first successful oil production from the region, a 300-mile-wide swath of the Gulf that lies below miles of water and deep within a bed of ancient rocks geologists call the lower tertiary. The company said the well sustained a flow rate of more than 6,000 barrels of crude oil a day during the production test. The test paves the way for the development of the three partners' Jack field, located 270 miles southwest of New Orleans, and ultimately for dozens of comparable discoveries under federal lease to companies that include Anadarko, Petróleo Brasileiro SA, Exxon Mobil, BP and Royal Dutch Shell. Chevron and Devon officials estimate that the recent discoveries in the Gulf of Mexico's lower-tertiary formations hold more than three billion barrels' and perhaps as much as 15 billion barrels' worth of oil and gas reserves. If the industry succeeds in finding 15 billion barrels of oil, it would boost the nation's current reserves of 29.3 billion barrels by 50%. And if all these new finds were successfully exploited, they could approach or perhaps exceed the output of Alaska's giant Prudhoe Bay, the largest U.S. oil field. While the new discoveries are sizable, they won't usher in an era of plentiful, low-priced oil. The Gulf's lower-tertiary reservoirs don't come close in size to the enormous oil fields of the Middle East or even Mexico's huge, but tired, Cantarell oil field in the waters off the Yucatán Peninsula. Still, a major new oil source in U.S. waters could help to cool the heated market for crude oil. The five-mile-deep Jack well, among the world's deepest production wells, is thought to have cost more than $100 million, according to industry officials. Developing Jack and the other lower-tertiary fields could cost several billion dollars for drilling, building platforms and laying pipelines to take the oil ashore. "The well test is an important milestone" in unlocking the new region's commercial potential, says Paul Siegele, who heads Chevron's deep-water Gulf exploration unit. "Based on the oil in place and the amount of structures yet to be drilled, this is exciting." Companies aren't disclosing how much oil they think they have found in most of the region's fields. Devon, however, says its four discoveries, including Jack, hold at least 300 million barrels each, making them among the largest fields discovered anywhere in the world in the past few years, according to Wood Mackenzie, an Edinburgh, Scotland, energy consulting firm. At a time when energy companies are struggling to replace reserves, the Gulf's deep-water lower-tertiary region "is one of the few exploration success stories where potentially world-class finds have been made in recent years," says Wood Mackenzie oil analyst Zoe Sutherland. Many of the finds in the region are still unexplored. There are four discoveries near Jack. Two hundred miles to the west, there are five discoveries clustered together, including Royal Dutch Shell's Great White field, which Wood Mackenzie estimates holds the equivalent of 500 million barrels' worth of oil and natural gas. The area in between has recently yielded its first strike -- and potentially the largest yet. On Thursday, BP said its exploratory Kaskida well had passed through 800 feet of oil-bearing rock, the second-thickest oil zone ever found in the Gulf of Mexico. Last year, a team of Chevron geologists estimated that between three billion and 15 billion barrels of oil could be extracted from the Gulf of Mexico's lower-tertiary rocks. "I suspect today that is on the low side," says Larry Nichols, Devon's chairman and chief executive. Chevron agrees that the three-billion-barrel end of the range is probably low. Devon stands to benefit the most from the emerging oil reserves in the Gulf's lower tertiary. After Chevron, it holds the second-largest number of exploration leases in the region. Company officials said they believe Devon's fractional interest in four discoveries, including Jack and Kaskida, could yield 900 million barrels of reserves -- a 43% increase to its year-end booked reserves. With the Jack well, Chevron and its partners are hoping to kick off a new wave of Gulf of Mexico exploration. Since the first oil derricks went up in Gulf waters in 1947, more than 99% of the oil and natural-gas molecules have been sucked out of rocks no more than 24 million years old. The Jack well and others in the region are drilled into older rocks that remain largely unexplored. Technological gains have made the new wells possible. Today's floating oil rigs can drill deeper than their predecessors, and advances in seismic exploration -- the use of sound waves to map underground oil and gas formations -- have made it possible to detect oil below the massive salt canopies that typically sit atop the Gulf's lower-tertiary rock formations. Until recently, seismic images from below these salt formations were muffled and largely useless. The oil companies, however, developed new mathematical formulas that allow them to interpret the images, bringing potential new troves of oil and gas into focus. Oil companies still face technical challenges in tapping the lower tertiary, which requires them to penetrate unprecedented depths. Before the test of the Jack well, one of the biggest concerns had been that the rocks in the lower tertiary might be so tight that pulling the oil out would be prohibitively expensive. Now, "that is not a concern," says Mr. Nichols of Devon. "You will be able to flow these wells at a commercial rate." For more information, see "Deepwater Gulf of Mexico 2006: America's Expanding Frontier" The [Chevron/Devon] wells are located in deep water and will not be served by underground GOM pipelines. The oil will be pumped directly to tankers. Pipelines are faster and more efficient, and tankers will put a higher price and limited the amount of oil pumped out. [And] it is likely that there are political motivations behind the announcement, as the vote to open offshore drilling in the United States is upcoming in the US Senate. The US Senate is weeks away from voting on the lifting of the 25-year ban on offshore drilling off the majority of the coasts in the US. A large potential oil discovery in the Gulf provides evidence that the passing of the offshore oil bill would be beneficial. (Randy Kirk, senior financial analyst at Private Wealth Partners in www.energybulletin.net 9-6) Texas Rig Count The number of working rigs in the Barnett Shale stood at 167 last week, up from 109 a year earlier. The Cotton Valley in East Texas is the state's second most productive natural gas field. [But do not think of fields are being a horizonal location - but more like a depth]. Two fields considered to be contenders as the "next Barnett Shale" are the Woodford Shale in Oklahoma and the Fayetteville Shale in Arkansas. (Dan Piller, Ft-Worth Star-Telegram 9-10) From the Federal Reserve Bank of Dallas update of June 2005: "The Cotton Valley sand formation is found throughout East Texas. Important gas-bearing sandstone is found in the Overton field in Gregg, Rusk and Smith counties, and in the Carthage field of Panola County. The Bossier sand of East Texas is a continuous play of multiple fields and multiple pay zones - with current activity centering in Freestone, Henderson and Anderson counties. New development is also occurring in the Travis Peak formation in the Joaquin field of Shelby County. And in some areas, such as the Freestone Trend in Freestone, Limestone and Robertson counties, a single well can find multiple pay zones of Cotton Valley, Bossier and other sand formations." On 9-06 UBS cut ETP To Neutral. On 9-13 Wachovia Initiated coverage of VLI at Market Perform. On 9-13 Merrill Lynch raised its rating on Magellan Midstream Holdings [MGG] to "buy" from "neutral." In a research note, the brokerage said it sees the energy company as attractive in the general partnership space, driven by growth prospects at its underlying master limited partnership, among other factors. Also on 9-13 Hiland Holdings GP LP, which owns a 57% limited partner interest in natural gas processor Hiland Partners LP [HLND], cut the size of its planned initial public offering to 7 million common units from 8.7 million common units. On 9-27 Lehman Brothers Downgraded XTEX from Overweight to Equal-weight. On 8-03 Goldman Sachs Downgraded XTXI from Buy to Neutral. On 8-15 AG Edwards Initiated coverage of WPZ at Buy. On 8-16 RBC Capital Markets reiterated its Outperform rating on MMLP. On 8-23 Lehman Brothers Initiated coverage of VLI at Overweight. On 7-26 Lehman Brothers Initiated coverage of MWE at Overweight. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||