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Investing Topics: MLPs

M&A Activity in MLP Space Remains Robust

Over the past decade, the current universe of publicly traded partnerships has closed 682 transactions–a total value of $226.72 billion. Deal flow has been particularly robust over the past three years, reaching a record $47.6 billion in 2010. With the group having completed or announced $25 billion worth of acquisitions thus far in 2013, we expect transaction volume and value in the MLP space to be on par with recent years. 

Staying Focused

In the previous issue of Energy & Income Advisor, we reviewed the performance of our Focus List in the second quarter and the first half of 2013 and made a few changes, swapping out shares of marine-seismic provider Petroleum Geo-Services (Oslo: PGS, OTC: PGSVY) and small-cap contract driller Pacific Drilling (NYSE: PACD). Our high-grading of the Focus List continues.

Growing Pains: MLPs Go Mainstream

The rhetoric underpinning many of the more than 60 presentations that we attended at the National Association of Publicly Traded Partnership’s annual investor conference was remarkably similar.

Midstream master limited partnerships repeatedly emphasized the progress they’d made increasing fee-based revenue and insulating cash flow against swings in commodity prices.

Meanwhile, management teams also highlighted their firms’ positions in the best shale plays, the number of blue-chip energy producers with which they have contracts, their low-risk expansion plans and forecasts for distribution growth.

To filter the barrage of information we gleaned during these presentations and subsequent breakout sessions with management teams, we opted to focus on two criteria: an MLP’s prospects for growth and its relative valuation. Over the course of two jam-packed days of presentations and meetings, we identified eight MLPs that trade at reasonable valuations across the risk spectrum. 

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    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

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      Managing Editor: Capitalist Times and Energy & Income Advisor