VTTI IPO Preview July 2014

VTTI Energy Partners, LP (ticker VTTI) is currently out on its IPO roadshow and looking to raise $350 million by selling 17.5 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 5.25%. They expect to price the deal Thursday July 31. VTTI is a fee-based, growth-oriented limited partnership formed in April 2014 by VTTI, one of the world’s largest independent energy terminaling businesses, to own, operate, develop and acquire refined petroleum product and crude oil terminaling and related energy infrastructure assets on a global scale. VTTI’s initial assets consist of a 36% interest in VTTI Operating, which owns a portfolio of 6 terminals with 396 tanks and 35.5 million barrels of refined petroleum product and crude oil storage capacity located in Europe, the Middle East, Asia, and North America. Its network of terminal facilities represents one of the largest independent portfolios of refined petroleum product and crude oil terminaling assets in the world when measured by total storage capacity. Since inception in 2006, the parent VTTI has increased its operating storage capacity by 47.6 million barrels through a balance of organic development projects, greenfield construction and third party acquisitions. Capitalizing on its relationship with VTTI and its owners, Vitol and MISC, the partnership intends to continue its growth through acquisitions from VTTI or third parties, organic development opportunities, greenfield construction and optimization of existing assets, and has a management team dedicated to executing this growth strategy.

IMPORTANT: VTTI will provide investors with a 1099-DIV (instead of a K-1), which means, yes, you can buy it in any tax advantaged account and not have to worry about possible UBTI issues.

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MLP Protocol 072514

MLP Protocol Weekly Snapshot report: (click to open) MLPP 072514 Snapshot vFree

The MLP Protocol Sprint Portfolio Position Report for July 2014 is now available (based on July 1, 2014 closing prices), the August 2014 report will be available after August 1.

Due to a large influx of new follower capital during 2014, the Sprint Portfolio is currently CLOSED to new investors at Covestor.

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Short Interest Trends for the Atlas Energy Group 072514

Below please find an update on the total number of units sold short across the three Atlas Energy entities. The following chart shows the total number of units sold short for each name since April of 2013. The data is somewhat delayed, typically 10-12 days.

Atlas Energy Short Interest Trends 072514

(Click to view)

Two week change in the amount of units sold short:

  • ATLS: Down 2.7%
  • APL: Up 1.2%
  • ARP: Up 21.9% <anticipate an equity offering

If you are a retail investor and shorting these names, please pay attention to the Ex-Distribution dates so you don’t also have to pay the distributions. In addition, you should also take into account your additional cost to borrow each security from your broker. Many MLPs are typically “Hard to Borrow” so assuming your broker finds you units to borrow to short, they may charge a high rate.

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Short Interest Trends for the Kinder Morgan Group 072514

Below please find an update on the total number of shares and units sold short across the four Kinder Morgan entities. The following chart shows the total number of units or shares sold short for each name since September of 2012. The data is somewhat delayed, typically 10-12 days.

KM Short Interest Trend 072514

(Click to view)

The vertical black dashed lines under the “X’s” mark the Ex-Dividend or Ex-Distribution dates for the entities. You may notice that some of the short positions tend to get covered prior to the Ex dates so they do not have to pay the dividends/distributions. Technically the data is as of the close on the date shown and not continuous data for every day, so the entire short position could be covered prior to the Ex date and then put back on the following day.

Two week change in the amount of units/shares sold short:

  • KMI: Down 1.8%
  • KMP: Up 2.1%
  • KMR: Down 7.1%
  • EPB: Down 3.7%

If you are a retail investor and shorting these names, please pay attention to the Ex-Dividend / Ex-Distribution dates so you don’t also have to pay the dividend/distributions. In addition, you should also take into account your additional cost to borrow each security from your broker. Many MLPs are typically “Hard to Borrow” so assuming your broker finds you units to borrow to short they may charge a high rate.

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RIGP IPO Preview July 2014

Transocean Partners, LP (ticker RIGP) is currently out on its IPO roadshow and looking to raise $350 million by selling 17.5 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 7.25%. They expect to price the deal Wednesday July 30.

RIGP is a growth-oriented limited liability company recently formed by Transocean (ticker RIG), one of the world’s largest offshore drilling contractors, to own, operate and acquire modern, technologically advanced offshore drilling rigs. RIGP’s initial assets consist of 51 percent interests in the RigCos that own and operate three ultra-deepwater drilling rigs that are currently operating in the U.S. Gulf of Mexico. Transocean owns the remaining 49 percent noncontrolling interest in each of the RigCos. RIGP generates revenue through contract drilling services, which involves contracting its mobile offshore drilling fleet, related equipment and work crews on a dayrate basis to large international energy companies to drill oil and gas wells. RIGP’s drilling rigs currently operate under long-term contracts with Chevron and BP, two leading international energy companies, with an average remaining contract term of approximately 4.2 years as of June 16, 2014. RIGP believes that their drilling contracts will generate stable and reliable cash flows over their term. Transocean Partners intends to use the relationships and expertise of Transocean to re-contract its fleet when the existing contracts expire and identify opportunities to expand its fleet through acquisitions.

IMPORTANT: RIGP will provide investors with a 1099-DIV (instead of a K-1), which means, yes, you can buy it in any tax advantaged account and not have to worry about possible UBTI issues.

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WLKP IPO Preview July 2014

Westlake Chemical Partners, LP (ticker WLKP) is currently out on its IPO roadshow and looking to raise $225 million by selling 11.25 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 5.5%. They expect to price the deal Tuesday July 29.

WLKP is a Delaware limited partnership recently formed by Westlake Chemical Corp. (WLK) to operate, acquire and develop ethylene production facilities and related assets. Westlake is a vertically-integrated, international manufacturer and marketer of basic chemicals, polymers, and fabricated building products. WLKP’s business and operations are conducted through OpCo, a recently-formed partnership between Westlake and WLKP. At the consummation of this offering, WLKP’s assets will consist of a 10% limited partner interest in OpCo as well as the general partner interest in OpCo. Because WLKP owns OpCo’s general partner, it has control over all of OpCo’s assets and operations. OpCo’s assets will be comprised of three ethylene production facilities, which convert primarily ethane into ethylene, with an aggregate annual capacity of approximately 3.4 billion pounds and a 200-mile ethylene pipeline. OpCo will derive substantially all of its revenue from its ethylene production facilities. Ethylene is the world’s most widely used petrochemical in terms of volume and is a key building block used to produce a number of key derivatives, such as polyethylene (“PE”) and polyvinyl chloride (“PVC”), which are used in a wide variety of end markets including packaging, construction and transportation.

IMPORTANT: WLKP will provide investors with a K-1 (instead of a 1099-DIV), which makes WLKP appropriate for taxable accounts. Here is the key language from page 41 of the Prospectus telling you that it does not really belong in an IRA (or any tax advantaged account):

Tax-exempt entities and non-U.S. persons face unique tax issues from owning our common units that may result in adverse tax consequences to them.

Investment in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs), and non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes at the highest applicable effective tax rate, and non-U.S. persons will be required to file U.S. federal tax returns and pay tax on their share of our taxable income. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor before investing in our common units.

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MLP Protocol 071814

MLP Protocol Weekly Snapshot report: (click to open) MLPP 071814 Snapshot vFree

The MLP Protocol Sprint Portfolio Position Report for July 2014 is now available (based on July 1, 2014 closing prices), the August 2014 report will be available after August 1.

Due to a large influx of new follower capital during 2014, the Sprint Portfolio is currently CLOSED to new investors at Covestor.

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