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Enbridge Energy Partners, L.P. Message Board

  • prophet43m prophet43m Sep 18, 2003 2:25 PM Flag

    EEP/EEQ Divergence

    For quite a while the price gap between EEP and EEQ was narrowing. Recently the price gas has widened. Any thoughts?

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    • I look at comparisions between EEP/EEQ and the other cash/unit-paying MLP pair (KMP/KMR) to see what suggests overall market action, and what individual company differences. From mid-june through early august both pairs went through a virtually identical relative decline in the share-paying entity, followed by a 100% recovery. Since August 1 things have been different though. KMP/KMR is the proud owner of the Arizona gasoline pipeline that ruptured in August, and that sitation has created uncertainty for the KM* world that is not matched in EE*, although it isn't clear that it has had even any short term effects.
      Starting ~ August 1 the unit-paying companies started to slide again. What is clear is that things have been different in September. The cash-paying entities have had essentially no change (relative or absolute). The unit-paying companies have been very different though. KMR (unit-paying) relatively increased by ~3% (compared with KMP), and then drifted back down. EEQ however took a ~6% decline, and has only made up a bit of the difference.
      Not sure why, but the market is sure reacting differently to EEQ/EEP this month than to KMR/KMP.

    • I'm a bit baffled by the divergence myself. ultimately it's the same company so it must be the market assigning higher value to cash dist's.

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