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January 25, 2016

MLP Scorecard is our weekly distribution of information emerging from the world of master limited partnerships.

This week’s Scorecard report delivers 33 comparative metrics on 71 MLPs in the industry. All of the MLPs in the list have traded publicly for at least four quarters. The EnerCom MLP group includes 10 E&Ps and 61 Midstream and Other operations. Market capitalization ranges from under $1 million to more than $43 billion. Dividend yields range from 5.7% to 84.4% in the E&P list, and 2.6% to 242.4% in the ‘Midstream & Other’ list.

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The following data & analysis is from EnerCom’s Energy Industry Data & Trends, January 2016

*Spring Borrowing Base Redeterminations: a Preview – Oil & Gas 360®

Haynes and Boone polled banks, producers, private equity firms, professional services and oilservice companies in January to take an early pulse of the spring redetermination expectations from the industry and the financial institutions supplying the credit. Key findings by Haynes and Boone: – Read More

*Meet the Energy Funds That Made Money While Oil Fell – Bloomberg

The plunge in oil prices has dragged down much of the energy sector with it. Yet, some energy-focused hedge funds managed to avoid the carnage entirely. Lansdowne Partners — one of Europe’s largest hedge funds with $22 billion — gained 14.8 percent last year in its long-short energy-focused equity fund, according to a person familiar with the matter. Some commodity trading advisers, or CTAs, posted gains of more than 25 percent in 2015. – Read More

*Energy MLPs: From Bad to Worse – Barron’s

Investors in energy-focused master limited partnerships could be forgiven for crying uncle. The sector rebounded late last week, but the midstream benchmark Alerian MLP index is still down a brutal 16% in January, and 46% for the past year. The problem here, as with global markets, is falling crude-oil prices. In good times, MLPs don’t correlate with oil prices, since they mostly earn revenue from long-term contracts based on volumes of gas and oil they transport; but in bad times, they do. – Read More

*Bank of Canada Holds Interest Rate Ahead of Federal Budget – Oil & Gas 360®

The Bank of Canada announced that it would continue to hold its overnight interest rate at 0.5%. Economists were split down the middle regarding whether or not the Bank of Canada would hold or cut the rate that retail banks charge each other for short-term loans. In maintaining its overnight rate at half a percent, the bank rate is correspondingly 0.75% and the deposit rate is 0.25%, the Bank of Canada said in its press release. – Read More

*UBS to Redeem Two Leveraged Exchange-Traded Notes – The Wall Street Journal

For some investors, a risky bet on energy backfired Wednesday. UBS Group AG said it would redeem shares of two of its niche investment products that are tied to energy companies, as a fall in energy-linked shares was steep enough to require UBS to announce a mandatory redemption. The move highlights the risk in leveraged exchange-traded notes, which expose investors to bigger gains—or losses—than the indexes they track. – Read More

*What’s in the Cards for Clayton Williams Energy? – Oil & Gas 360®

Clayton Williams (ticker: CWEI) and Concho Resources (ticker: CXO) each made significant announcements regarding their respective Delaware Basin positions yesterday, including an acreage swap that is “highly beneficial to both companies,” said Mel Riggs, President of CWEI, in the company’s press release. The two exploration and production companies also announced separate, unrelated transactions in their releases, but the direct exchange between the two companies included working interest swaps involving their assorted Permian positions. – Read More

*High Yield Bonds: What Lies Ahead? – Forbes

Conditions in the U.S. high yield market have been challenging in recent months, and investors need to balance risk and reward carefully. But, with big coupons and short maturities, the case for high yield fixed income remains persuasive, says the latest quarterly report from the MacKay High Yield Corporate Bond team. The Credit Suisse High Yield Index fell 2.58% in the fourth quarter, increasing its 2015 loss to 4.93%. This represents the U.S. high yield market’s first losing year since 2008 and only the third in the last 20 years. – Read More

*Morgan Stanley sees big plunge in Treasury yields – CNBC

If early returns hold, 2016 is shaping up as another year where the bond market’s demise has been greatly exaggerated. Numerous forecasts around Wall Street warned investors away from fixed income, particularly longer duration U.S. government issues. The thinking was that the Fed’s rate-hiking trajectory would push up Treasury yields, eroding prices and sending investors to bond-like equities. That theory has pretty much blown up in January. – Read More

*Schlumberger: “Significant Recovery” will not occur Until 2017 – Oil & Gas 360®

Fourth quarter earnings season is officially underway, and, expectedly, Schlumberger (ticker: SLB) opened up the forum with a not-so-pleasant outlook on the oil and gas market. Paal Kibsgaard, Chairman and Chief Executive Officer of the world’s largest oilservice company, essentially echoed all of the problems that have plagued the market throughout the commodity downturn. – Read More

*’Putin is corrupt’ says US Treasury – BBC News

The US Treasury has told a BBC investigation that it considers Russian President Vladimir Putin to be corrupt. The US government has already imposed sanctions on Mr Putin’s aides, but it is thought to be the first time it has directly accused him of corruption. His spokesman told the BBC that “none of these questions or issues needs to be answered, as they are pure fiction”. – Read More

*Saudi Arabia Said to Ban Betting Against Its Currency – Bloomberg

The sharp fall in share prices last week was a reminder of the vulnerabilities created by years of unconventional monetary policy. While chaos in the Chinese stock market may have been the triggering event, it was inevitable that the artificially high prices of U.S. stocks would eventually decline. Even after last week’s market fall, the S&P 500 stock index remains 30% above its historical average. There is no reason to think the correction is finished. – Read More

*Husky Energy Cuts 2016 CapEx Guidance by 27% – Oil & Gas 360®

Husky Energy (ticker: HSE), one of Canada’s largest integrated energy companies, amended its 2016 guidance just six weeks after its initial release. The first line of the statement says, “Husky Energy is taking additional steps to improve its resilience through the extended low commodity price environment.” The additional step consists of a revised 2016 capital budget of $2.1 to $2.3 billion, down approximately 27% from its first plan of $2.9 to $3.1 billion. – Read More

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable.  This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note.  This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results.  EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services.  In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies.  As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note.  The company or companies covered in this note did not review the note prior to publication.