Tag Archives: energy private equity funds

Energy partnerships simplify business models to spur growth

Some publicly-traded U.S. energy pipeline and oil-storage partnerships are restructuring into simpler business models to help attract new investors and spur growth.

Rising oil and gas production has spawned billions of dollars of new transport, gathering and storage projects. But the companies most responsible for these projects can allocate up to 50 percent of their income to the general partner, leaving less for other holders or to invest in new projects.

Historically, these firms have passed most of their income along to holders and sold equity or debt to finance new projects or acquisitions. But in the last year, what they have had to offer investors has jumped. MPLX Energy Logistics LP, for instance, paid a 9.7 percent annualized distribution last quarter to its holders, up from 7.9 percent a year earlier, according to figures from investment firm East Daley Capital Advisors.

“The higher cash yield makes the economics of these projects a little tougher,” said Kendrick Rhea, an analyst at East Daley Capital. He estimates the cost of equity has risen nearly a third for some companies in the last year.

Source: NuStar, other energy partnerships simplify business models to spur growth

Facing Losses, Energy Funds Ask Investors for More Time, Money – WSJ

Rocked by the fall in oil-and-gas prices, some energy-focused private-equity funds are pleading with their investors for more time and money.

Source: Facing Losses, Energy Funds Ask Investors for More Time, Money – WSJ