MLP Protocol 101113

Key Adjustments:

  • On October 7, Crestwood Midstream Partners (CMLP) announced that the merger of Crestwood and Inergy has been completed. As a result Inergy Midstream (NRGM) was adjusted and renamed Crestwood Midstream Partners (CMLP) was removed and Inergy (NRGY) was adjusted and renamed Crestwood Equity Partners (CEQP). CEQP now owns the general partner interest (including the incentive distribution rights) and an approximate 4% limited partner interest of CMLP.  In addition, CEQP’s operations include a natural gas storage business in Texas and an NGL and crude oil supply and logistics business that serves customers in the United States and Canada. CEQP was also moved to the General Partner segment.
  • Adjusted Buckeye Partners (BPL) for a 7.5 million common unit offering (upsized from 6.5 million units) at $62.61 on October 10 (2.7% discount to prior close).
  • Added Western Refining Logistics (WNRL) to the Terminal & Storage MLP segment after its successful IPO at $22 on October 9.
  • Adjusted the Top 15 ranking charts to include the Top 20 ranked MLPs by the various metrics: 3YR FYAT, EV /ADJ EBITDA, Price / DCF per LP Unit, 3YR FYAT  / VCR. (Subscriber Version)

News Items:

On October 7, Blueknight Energy Partners (BKEP) announced the operational startup of the southern Oklahoma Arbuckle pipeline. The Arbuckle pipeline is a 65-mile pipeline from southern Oklahoma to Wynnewood, Oklahoma where it intersects BKEP’s existing Oklahoma mainline system. The pipeline was constructed as part of a long-term transportation agreement with XTO Energy Inc., a subsidiary of Exxon Mobil Corporation. The pipeline transports committed XTO crude oil production from the Woodford Shale area in Southern Oklahoma to BKEP’s crude oil terminal in Cushing, Oklahoma.

On October 9. Buckeye Partners (BPL) announced that it has signed a definitive agreement with Hess Corporation (HES) and its subsidiaries to acquire 20 liquid petroleum products terminals with total storage capacity of approximately 39 million barrels for $850 million. The 19 domestic terminals are located primarily in major metropolitan locations along the U.S. East Coast and have approximately 29 million barrels of refined petroleum products storage capacity, including approximately 15 million barrels of capacity strategically located in New York Harbor. The terminal on St. Lucia in the Caribbean has approximately 10 million barrels of crude oil and refined petroleum products storage capacity and has deep-water access. This acquisition, which is subject to regulatory approvals and customary closing conditions, is expected to close before year-end.

On October 10, Regency Energy Partners (RGP) and PVR Partners (PVR) announced that their respective boards of directors have unanimously approved a definitive merger agreement, pursuant to which Regency will acquire PVR.  This acquisition will be a unit-for-unit transaction plus a one-time cash payment to PVR unitholders that collectively imply a value today for PVR of approximately $5.6 billion, including the assumption of net debt of $1.8 billion. The transaction, which is expected to close in the first quarter of 2014, will create a leading gas gathering and processing platform with a scaled presence across North America’s premier high-growth unconventional oil and gas plays in Appalachia, West Texas, South Texas, the Mid-Continent and North Louisiana.  The combination continues to build on Regency’s fee-based cash flows. The combination is expected to be slightly dilutive to 2014 DCF, but is not expected to affect anticipated cash distribution growth in 2014; moreover, the enhanced scale, balance sheet strength and diversification are expected to provide substantial EBITDA and DCF growth over time. Specifically, the acquisition better positions the combined company to capitalize on the long-term growth momentum of North American gas production through incremental, high-value expansions around its core asset base, as well as other growth and acquisition opportunities.

On October 10, Hi-Crush Partners LP (HCLP) announced that it has reached an amicable settlement with Baker Hughes (BHI), in the previously disclosed litigation between the parties and have filed with the State District Court of Harris County, Texas a Joint Motion to Dismiss with Prejudice with respect to all claims and counterclaims asserted in the lawsuit.  In connection with the settlement, Hi-Crush and Baker Hughes have entered into a six-year supply agreement for the sale of Northern White frac sand by Hi-Crush to Baker Hughes.

On October 10, Crestwood Midstream Partners (CMLP) announced that it has entered into an agreement to acquire Arrow Midstream Holdings, LLC (“Arrow”), a privately-held midstream company, for approximately $750 million, subject to customary purchase price adjustments.  The acquisition marks a continuation of Crestwood’s liquids-focused strategy by significantly expanding Crestwood’s operational footprint in the Bakken Shale and highlights the immediate benefits of the merger of Crestwood and Inergy Midstream, which was completed on Monday, October 7, 2013.  The transaction is expected to be immediately accretive to Crestwood’s estimated distributable cash flow per limited partner unit in 2014, with growing accretion thereafter based upon projected production increases from the Arrow assets. The transaction is expected to close in the fourth quarter of 2013.

IPO Filings:

  • Plains GP Holdings (PAGP) commenced its IPO roadshow last Monday and is looking to raise $3.0 billion at an indicated mid-point yield of 2.5% (S-1 filing, Roadshow) It also looks like they moved up the pricing of the PAGP IPO by one day and now plan to price the offering this Tuesday night (October 15) instead of Wednesday. I would assume that is a positive signal that the roadshow has been going well.

The MLP Protocol Monthly Analytics Report for October is now available, the November 2013 report will be available the weekend of October 25.

MLP Protocol Weekly Snapshot report: (click to open) MLPP 101113 Snapshot vFree

About Philip Trinder

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