Seeking High Income Energy
The cheapest source of expansion funds is always internally generated cash. So it’s no great surprise that many energy sector management teams are still choosing to “right size” dividend distributions, rather than issue new debt and equity into what remain largely hostile capital markets.
Endangered Dividends List
Foresight Energy LP (NYSE: FELP) is eliminating its quarterly distribution. That follows a poor first quarter during which the coal mining MLP experienced sharp increases in transportation costs because of flooding and “an accelerated decline in export prices” for its output.
An Update on Oil Prices
In the December 19, 2018 issue of Energy & Income Advisor “Oil: It’s Not 2014,” we took a deep-dive look at the global oil market and came to the following conclusion:
“While it’s tough to catch the proverbial falling knife or call an exact bottom in crude, we believe oil is approaching a crucial bottom and will recover into the first half of 2019. Specifically, we could see Brent rallying back over $70/bbl and WTI reaching the mid $60’s by the second quarter of 2019.
Endangered Dividends List
Blueknight Energy Partners (NSDQ: BKEP) is cutting its quarterly distribution for the second time in a year, from 8 to 4 cents per unit. Unfortunately, even after that large of a reduction, the payout still isn’t safe. In fact, the consensus of analysts tracked by Bloomberg is the July distribution will be cut to just a penny a unit.
Endangered Dividends List
Amerigas Partners’ (NYSE: APU) merger terms with general partner UGI Corp (NYSE: UGI) imply a roughly 83 percent cut in the dividend when the deal closes. That eventuality has been known by investors for two weeks and is therefore baked into the price. Therefore, while we do advise moving on from Amerigas, the MLP is now off the Endangered Dividends List.
Midstream M&A: Many More Positives than Negatives
In most sectors of the stock market, mergers and acquisitions are almost always viewed as investor friendly: An opportunity to realize a windfall gain, or at least to hook onto a stronger company that will generate better long-term returns.
In the master limited partnership world, however, M&A has recently taken on a darker connotation.
The State of US Energy Regulation: What You Need to Know
Two years ago, Keystone XL was the only major pipeline project blocked by federal regulators. Today, even projects supported by both the US government and the affected states face the prospect of delays and even derailment in the courts.
Endangered Dividends List
American Midstream Partners (NYSE: AMID) has received its likely best and final takeover offer from general partner ArcLight Capital Partners LLC. ArcLight last year bid $6.10 per share in cash for AMID units, before cutting it to $4.50 in the wake of disappointing operating results. The newly agreed on offer of $5.25 per unit in cash appears likely to win needed approvals and to close in coming weeks.
Roundtable Part Three: Key Takeaways and Forecasts
Change in the US energy industry has been dramatic over the past decade. Sentiment has shifted from a culture of energy scarcity to one of abundance and the US overtook Russia and Saudi Arabia as the world’s largest oil producer. And, not long ago, you would have been laughed out of a room for predicting that the US would ever export meaningful quantities of oil.
Endangered Dividends
There have been no additional dividend cuts in our three coverage universes since the previous EIA issue. That’s largely a function of timing, as companies are winding up the calendar first quarter and won’t be declaring their next distributions until next month.
However, calendar fourth quarter reporting requires considerably more legal filings. That means it typically takes several weeks longer for many companies to compete filings than it does other times of the year. And the good news is several later reporters did come in with encouraging news and guidance.
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Live Chat with
Elliott and Roger on May. 30, 2019
Portfolios & Ratings
Model Portfolios
Balanced portfolios of energy stocks for aggressive and conservative investors.
Coverage Universe
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
MLP Ratings
Our assessment of every energy-related master limited partnership.
International Coverage Universe
Roger Conrad’s coverage of more than 70 dividend-paying energy names.
Experts
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Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
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Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor