EnerCom’s Oil & Gas 360®

MLP Scorecard

December 21, 2015

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 72 MLPs in the industry. All of the MLPs in the list have traded publicly for at least four quarters. The EnerCom MLP group includes 11 E&Ps and 61 Midstream and Other operations. Market capitalization ranges from $1 million to $46.9 billion. Dividend yields range from 5.5% to 93.9% in the E&P list, and 2.5% to 85.5% in the ‘Midstream & Other’ list.

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The following data & analysis is from EnerCom’s Energy Industry Data & Trends, December 2015


*Will Weak Oil Prices Push Fed Back to Zero? – Oil & Gas 360®

Seven years ago, the Federal Open Market Committee made the historically unprecedented move of targeting the zero bound for the federal funds rate. Obviously, that means that today’s first announced rate hike in nine years is also the first time this key benchmark interest rate has ever lifted off zero. Neither the current Chair nor the Committee members nor the market have any historic precedent in this country of whether this lift off will be effective, or if it will fizzle. We observe that the number of central banks globally that have been able to leave the zero bound stands at, well, zero. – Read More

*The No-Lose Bet for Banks in IPOs – The Wall Street Journal

Here is a deal for banks working on IPOs: Price the new stock high, get a bigger fee. Price it low, get free shares of the company. That is the position Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. found themselves in as advisers in Square Inc.’s closely watched initial public offering. The banks each had bought a piece of the payments startup in an earlier private investment round. In that deal, they received provisions negotiated by other investors under which the company would compensate investors with more shares if the IPO came below a certain price. – Read More

*More Pain for MLPs as Oil Falls Below $35 – Barron’s

As the price of crude falls further — now in the $34 a barrel range — midstream master limited partnerships continue to get pounded. The Alerian MLP ETF (AMLP), which tracks the benchmark index, was down 3% early Thursday afternoon to $10.30. It is down 40% this year. Unlike many income-oriented sectors, such as utilities and real estate investment trusts, MLPs failed to rally sharply following the Federal Reserve’s decision Wednesday to raise rates. Falling oil prices, plus more energy company downgrades by credit rating agencies, were obvious culprits. – Read More

*Crude Oil Export Ban Expected to be Lifted as Part of $1.15 Trillion Spending Bill – Oil & Gas 360®

The United States Senate has passed a $1.15 trillion omnibus spending bill to keep the U.S. government up and running today. Included in the bill are several provisions concerning energy, one of which will be an end to the more than 40-year old crude oil export ban. The bill still needs to pass the House of Representatives and be signed by President Obama, both of which are expected to happen. President Obama has previously said that he opposes a lifting of the crude oil export ban as it does not help meet environmental goals. – Read More

*Energy Meltdown Brings MLPs Near-Term Pain, Long-Term Gain – Forbes

The Alerian MLP Index has given up almost 42% of its value since the beginning of the year. In terms of fundamentals, much of this weakness stemmed from further downside in oil and gas prices. As we’ve warned for months, already elevated U.S. crude-oil inventories heading into a period of seasonally weak demand create a scenario where the price of West Texas Intermediate (WTI) could slip to $30 per barrel or less. (For example, see 3 Reasons to be Skeptical of Near-Term Rallies in Oil Prices.) – Read More

*M&A Deal Value Down 23.8% in Oil and Gas, Up 55.1% in Overall U.S. M&A – Oil & Gas 360®

Lower prices for crude oil and natural gas reduced the average deal size and the volume of mergers and acquisitions in the oil and gas industry in 2015. According to a report from Ernst & Young, there were 382 U.S. oil and gas deals in 2015, down 23.8% from 2014, while values fell by $188.7 billion, down 31.7% from last year. Despite the lower levels and values of M&A deals in 2015 compared to 2014 levels, EY anticipates that M&A will increase in 2016 as lower prices force consolidation. – Read More

*Federal Reserve Rate Hike: Who Wins, Who Loses, Who Goes Meh – Bloomberg

Janet Yellen and the Federal Open Market Committee have finally taken the world’s biggest economy off life support. Now, U.S. government deficits will rise, insurance companies will get relief and savers — who’ve weathered years of earning next to nothing — will continue to survive on crumbs. The rate hike comes as no surprise, but it’s new territory nonetheless. – Read More

*Banks Should Not Be Forced To Buy ‘Stock’ In The Federal Reserve – Forbes

On December 4 President Barack Obama signed a $305 billion highway bill that effectively taxes banks and raids the Federal Reserve to pay for new spending. Congress enacted these changes with virtually no debate, but the message is clear: They have no qualms about using the Federal Reserve as a piggy bank for whatever they choose. For those not following the issue, here’s a quick recap. – Read More

*Oil and Gas Spending Cuts Already Apparent for 2016 – Oil & Gas 360®

The year over year drops in 2015 capital expenditures were significant, but apparently not significant enough. Budgets for 2016 are trickling onto the newswires, and some of the largest companies in the business are pulling back on costs yet again. Heavyweights like Chevron (ticker: CVX) and ConocoPhillips (ticker: COP) are reducing capital but abiding to their dividends; other debt-laden E&Ps like Encana (ticker: ECA) are not blessed with such a luxury, cutting dividends while reducing expenditures by more than 40%. – Read More

*Year in Review: No Breakout for Economy, but Jobs, Earnings Grow – The Wall Street Journal

The U.S. economy didn’t notch a breakout year, but it posted strong enough gains to convince the Federal Reserve it was finally fit enough to handle higher interest rates. The unemployment rate fell in 2015 to 5% from 5.6%. The workforce expanded by 2.6 million employees. Average hourly earnings of private-sector workers rose 2.3%—not especially robust growth in historical terms, but the steepest of the past six years. Since 2010, the economy has added an average of just under 200,000 jobs a month. – Read More

*U.S. interest rate hike is tough medicine for indebted Canada – CBC News

Let’s look at the unfortunate facts for a moment. The U.S. Federal Reserve raised interest rates slightly today, because it believes an American recovery is well underway. The U.S. economy is now at what economists would call full employment — about five per cent. Good for them. An American recovery cannot be anything but good for Canada. And yet. The Canadian economy is weak enough that Bank of Canada governor Stephen Poloz is now actually talking about the possibility of going the other way, all the way to negative rates, which means you’d be better off stuffing cash into a mattress. – Read More

*Scotiabank Report: Oil Near Term Could Hit $30 – Oil & Gas 360®

Scotiabank Economics released its annual commodities outlook today, saying near term WTI could be US$30, based on post-Dec. 4 OPEC oil trading below US$35 already, “and could drop to US$30 near-term.” Scotiabank reviewed Saudi Arabia’s Fall 2015 actions as “apparently willing to implement a series of output cuts over the next several years to bring prices back to the US$50 mark, if Iraq rejoined OPEC’s quota system, Iran moderated its projected output increase after sanctions are lifted, and non-OPEC producers also cut output. – 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.

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