Tag Archives: MLP

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

Kinder Morgan cuts dividend by 75%

Kinder Morgan, Inc. (NYSE: KMI) today announced that its Board of Directors has approved a plan pursuant to which it expects to pay quarterly dividends of $.125 per share to its common stockholders ($.50 annually), down from its current quarterly level of $.51, beginning with the fourth quarter 2015 dividend payable in February 2016. This dividend enables the company to use a significant portion of its large cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future and maintain a solid investment grade credit rating.

Source: Kinder Morgan Announces 2016 Outlook | Media & Investor Center

Kinder Morgan, NGPL And Natural Gas Markets – RBN Energy

There was a lot of hand wringing and gnashing of teeth last week in energy markets, and it had nothing to do with the OPEC non-event.  Instead, the focus was Kinder Morgan (KMI), granddaddy of U.S. midstream companies, and usually a darling of analysts and media.  Not this time.   Over the past few days the stock has been hammered, Moody’s downgraded its debt, and a lot of folks in the market have been trying to figure out what is going on.   Particularly since all the hubbub would seem to be about a relatively minor investment (in energy infrastructure terms) in a pipeline called Natural Gas Pipeline of America, or NGPL, one of the oldest of the long-line systems in the U.S., which came online 84 years ago and Kinder Morgan has owned all (or part of) since 1999.  In today’s blog, we look at this pipeline system and what it tells us about the current state of the natural gas markets.

Energy Transfer Eyes Texas, Appalachia Growth in Regency Merger, will become second-largest MLP in the United States

Energy Transfer Partners LP (ETP) and affiliate Regency Energy Partners LP on Monday agreed to merge in a transaction estimated to be worth $18 billion, creating one of the largest master limited partnerships (MLP) with operations in nearly all major producing areas of the United States.

Set to close by the end of June, the transaction includes a one-time cash payment to Regency unitholders and $6.8 billion in debt and liabilities. The combination would create the second-largest MLP in the United States after Kinder Morgan Energy Partners LP.

“ETP and Regency expect to capitalize on the full breadth of the combined gathering and processing platforms in several prolific producing regions, including the Permian Basin and Eagle Ford Shale,” management said. ETP altogether controls about 35,000 miles of natural gas and natural gas liquids (NGL) pipelines.

Among the benefits of the Regency merger “is the likelihood” of further NGL volume growth in Texas for their joint venture, Lone Star NGL LLC, which is expanding volumes into ETP’s intrastate pipeline system (see Daily GPI, Nov. 17, 2014).

Appalachia business also is seen benefiting with the merger, where Regency’s growing operations are seen as a complement to ETP’s 3.25 Bcf/d Rover pipeline now under construction (see Shale Daily, Oct. 31, 2014; Oct. 11, 2013).

“The presence of ETP and Regency in these shales will also be complemented by the significant activity of Sunoco Logistics Partners LP, another member of the Energy Transfer family, as it builds on its asset base in that area,” ETP management noted. ETP purchased Sunoco in 2012 (see Shale Daily, May 1, 2012). “Overall, ETP intends to become a major player in the Marcellus and Utica shales,” and said the Regency merger positions it to achieve that goal in the near term.

For Regency, the deal provides more financial assurance in uncertain times.

via Energy Transfer Eyes Texas, Appalachia Growth in Regency Merger | 2015-01-26 | Natural Gas Intelligence.

Shareholders easily approve Kinder Morgan merger megadeal

The $70 billion megadeal to combine the Kinder Morgan family of companies received more than 95 percent approval from shareholders and unitholders at special board meetings on Nov. 20.Founder, Chairman and CEO Rich Kinder is nearly done in his push for Kinder Morgan Inc. NYSE: KMI to acquire Kinder Morgan Energy Partners LP NYSE: KMP, Kinder Morgan Management LLC NYSE: KMR and El Paso Pipeline Partners LP NYSE: EPB. Not including debt, the deal is valued at about $44 billion.The deals are expected to close on Nov. 26, just before Thanksgiving. The deadline for KMP and EPB unitholders to elect the form of consideration they wish to receive in the pending mergers is 4 p.m. Nov. 24. As such, Nov. 26 is expected to be the last trading day for KMP and EPB units, as well as KMR shares.Although Kinder Morgan helped jumpstart the trend of rapidly growing master limited partnerships, Kinder Morgan will soon no longer have any MLPs.

via Shareholders easily approve Kinder Morgan merger megadeal – Houston Business Journal.