MLP Protocol 040513

Key adjustments from last week:

  • Adjusted SEP for a 4.5 million unit equity offering at $37.25 on April 2 (4% discount to prior close).
  • Adjusted NKA for its equity restructuring announced on April 3:
    1. Equity restructuring combines and restructures subordinated units and prior incentive distribution rights into a new class of incentive distribution rights (New IDRs)
    2. All 33.8 million subordinated units and prior incentive distribution rights eliminated (Carlyle/Riverstone Funds retain their voting percentage at 74.9% even though remaining direct equity ownership dropped to 50.3%)
    3. Outstanding units reduced from 68.3 million (including subordinated units) to 34.5 million. Managing member retains 1.98% interest
    4. New IDRs receive 48% of any cash distributions above the existing minimum quarterly distribution (“MQD”) of $0.35 per unit, after payment of any arrearages in the MQD from prior quarters
    5. I applaud Carlyle/Riverstone for this supportive equity restructuring (the market seemed to as well with NKA up 20.4% for the week, during a pretty choppy week)
  • Adjusted ETP for a 12 million unit equity offering at $48.05 on April 4 (4.6% discount to prior close).
  • Adjusted ALDW, CVRR and NTI forward estimates to provide for modeled quarterly estimates beyond the next four quarters (instead of using a lowered estimated average distribution after 1 year).
    1. Modeled forward estimates provide for an ongoing decline rate in the estimated crack spreads (sort of a reversion to the mean concept)
    2. Also includes currently scheduled turnarounds for the various refineries
    3. Let me reiterate that ALL projections are ALWAYS wrong, these variable rate refinery MLPs will have very volatile distributions, they are and always will be impossible moving targets and I am constantly adjusting these as the crack spread moves around
    4. Here’s a chart of TNH’s full distribution history to get an idea of what “variable” can mean over an extended period:

TNH Cash Dist 2012

  • AMID remains my best short idea, if you are long please look closely at the recent SEC filings and consider selling.
  • PAID SUBSCRIBER VERSION: Conformed some changes to match the April Monthly report and adjusted some charts / tables to enhance readability.

The MLP Protocol Monthly Analytics Report for April is now available, the May 2013 report will be available after April 26th.

MLP Protocol Weekly Snapshot report: MLPP 040513 Snapshot vFree

About Philip Trinder

President of MLP Protocol, investor, trader, and proponent of Master Limited Partnerships.
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