December 28, 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 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 $1 million to $52.0 billion. Dividend yields range from 5.5% to 75.8% in the E&P list, and 2.4% to 40.7% in the ‘Midstream & Other’ list.

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

*Freeport-McMoRan Looks to Sell Oil and Gas Arm for $3 Billion, Changes Chairman – Oil & Gas 360®

U.S. mining company Freeport-McMoRan (ticker: FCX) is exploring potentially selling its oil and gas assets as the company faces lower profits from both oil and gas, as well as copper, which was responsible for 60% of the company’s profits in 2014. People familiar with the matter said Freeport-McMoRan has retained investment bank Lazard to advise on a possible sale of the company’s entire oil and gas interests, which could be worth more than $3 billion, reports Reuters. Freeport purchased its oil and gas assets in 2013 with the acquisitions of Plains Exploration and McMoRan Exploration for $19 billion, including debt. – Read More

*Oil Bettors Seek Safety in Proxies – The Wall Street Journal

Some traders anticipating a rebound in oil are making an indirect bet: wagering on energy companies and the currencies of oil-producing nations instead of the commodity itself. Their approach is spurred in part by contango, an occasional event in which the current price of oil is lower than prices for future delivery. The phenomenon, which prevailed this year, makes it more expensive to bet on oil futures, as it forces investors pay up when they trade out of old contracts and into newer ones. To avoid pricey futures, traders have turned to other wagers as a proxy for oil. – Read More

*The Year Nothing Worked: Stocks, Bonds, Cash Go Nowhere – Bloomberg

The idea behind asset allocation is simple: when one market struggles, it’s OK because an investor can jump into another that is thriving. Not so in 2015. In fact, if you judge the past year by which U.S. investment class generated the largest return, a case can be made it was the worst for asset-allocating bulls in almost 80 years, according to data compiled by Bianco Research LLC and Bloomberg. With three days left in 2015, the Standard & Poor’s 500 Index gained 2.2 percent with dividends, cash is up less, while bonds and commodities show losses. – Read More

*Oil and Gas Bankruptcy Climbs to More than $16 Billion in 2015 – Oil & Gas 360®

Saying that 2015 has been a difficult year for the oil and gas sector would be an understatement. U.S. crude oil benchmark WTI averaged $91.23 per barrel in 2014, while in 2015 it has, to date, averaged $49.12. That’s a 46% decline, and it shows no signs of recovering soon. WTI today stands at $36.08, 34% lower than the year-ago price of $55.26.  Future crude oil prices for December 2024 currently sit at just $54.96. This sharp decline in prices has put the oil and gas industry in a difficult position. Many companies have adapted to the new reality of low oil prices, but that’s easier to accomplish for companies with right-sized balance sheets.  Not all have been so fortunate. – Read More

*Oneok’s Flat Dividend Sparks MLP Rally – Barron’s

company announcing it is keeping its dividend flat isn’t usually the stuff rallies are made of. But for the beleaguered midstream master limited partnership sector, maintaining a dividend is good news — especially for companies like Oneok (OKE) and its MLP Oneok Partners (OKS) which were considered candidates to cut their distributions. Pipeline giant Kinder Morgan‘s (KMI) massive dividend cut announced earlier this month was a big red flag for MLPs and sparked speculation about which company might be next to cut their dividend. Now the Oneok franchise can be crossed off the list — at least for this quarter. – Read More

*Putin Gives His Outlook on Oil and Gas, Russia’s Economy – Oil & Gas 360®

During his time in office, both as the Russian president and prime minister, President Vladimir Putin has held a conference every year. The conference is held with members of the press, both Russian and international, and typically involves reporters asking questions of Putin who then responds off the cuff, though it is thought that Putin likely agrees to some questions ahead of time. Last week, many topics were addressed in this year’s press conference, Putin’s 11th. Topics ranged from ISIS and Syria’s President Assad, to Putin’s feelings on the quality of work being done by his government and the economic crisis facing Russia. – Read More

*Saudi Arabia hikes petrol prices by 40% at the pump – Al Jazeera

Saudi Arabia has raised domestic energy prices by as much as 40 percent after the world’s leading oil producer announced a record $98bn budget deficit on Monday citing rock-bottom global petroleum prices. The budget deficit is the highest in the history of Saudi Arabia, but was not as big as some expected. The International Monetary Fund had projected a deficit of $130bn. The kingdom has seen a sharp drop in revenues as oil prices have fallen more than 60 percent since mid-2014 to below $40 a barrel. – Read More

*A Surprising Source of Dividend Safety – The Wall Street Journal

It has been a long time since anyone thought of bank stocks as reliable dividend payers. It may be time to give them a second look. Back in 2007, 29% of the S&P 500’s dividend income came from banks and other financial stocks. The financial crisis brought that number down sharply. By 2012, financials were contributing just 13% of the S&P’s dividends, behind consumer staples and technology. Financials have regained their lead position, however. As of June 30, 2015, they produced 15.5% of the S&P’s dividends, higher than any other sector. – Read More

*U.S. Oil Prices: Export Ban Lifts, See What Happens – Oil & Gas 360®

Last Friday, Dec. 18, the United States Senate adopted the Omnibus Appropriations Act by a vote of 65-33 as did the House of Representatives by a 316-113 vote. Later that day, President Obama then signed into law the $1.1 trillion funding bill.  Those actions brought an end to the 40 year old law that had banned exporting of U.S. crude oil, a ban that was in effect since the Arab Oil Embargo in 1974. “The Arab Oil Embargo of 1973-74 caused long gas station lines, soaring fuel prices and rationing for American drivers.” – Read More

*JPMorgan’s McClellan Says Low Oil Will Cut Demand for Bonds – Bloomberg

Oil prices will remain under pressure in the near term as Iran seeks to boost crude shipments, said Meg McClellan, global head of consultant and client strategies at JPMorgan Asset Management. While countries such as Saudi Arabia have the financial strength to finance revenue shortfalls from lower oil by issuing bonds, other countries may need to cut spending and investment, reducing foreign demand for U.S. assets, McClellan said Monday in an interview with Erik Schatzker and David Westin on Bloomberg Television. “We are projecting a 30 percent decline in foreign interest in the U.S. bond markets, a significant decline,” McClellan said. – Read More

*The Federal Reserve Vs The Federal Government – Why Our Economy Suffers – Forbes

When you consider the U.S. economy, one might logically conclude that the Federal Reserve, guardian of monetary policy, and the federal government, ruler of fiscal policy, would work in harmony to attain a desired economic result. However, any coordination between the two is merely fictional, as each entity acts independently from the other. In this article, we will explore this dysfunctionality and its negative effect on the American economic system. We will begin with a basic explanation of monetary and fiscal policy and the tools available for each. Then, we will discuss how the Fed and the federal government should work together to achieve a desired economic result. – Read More

*Iraq + China MOU Establishes Long Term Oil & Gas Partnership – Oil & Gas 360®

During a visit to China, Iraqi Prime Minister Haider al-Abadi signed a memorandum of understanding (MOU) with Chinese Premier Li Keqiang to establish a long-term, stable energy partnership. As part of the MOU, China has agreed to cooperate with Iraq on oilfield projects and refinery construction in the Middle Eastern country, reports The BRICS Post. “More investment will be channeled to the energy sector and governments and enterprises will be encouraged to cooperate in the areas of crude oil trade, oil-gas exploration and development, oilfield engineering service technology, construction of storage and transportation facilities, chemical refining engineering and energy equipment,” the MOU read. –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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