Cramer eyes three consolidation candidates in transformed MLP landscape
Aug 11 2014, 19:15 ET
As Rich Kinder abandons the MLP structure he helped popularize, CNBC's Jim Cramer feels confident that rivals are taking notice, thus investors should expect many more deals in the energy MLP space.
Cramer tabs three MLPs he thinks could end up in play: Enterprise Products Partners (NYSE:EPD), the entity that received gained permission to export condensate in "a huge game-changer"; Energy Transfer Equity (NYSE:ETE), whose cash flows should "explode higher" and its payout increase dramatically once temporarily relinquished incentive distribution rights are reinstated, which should happen next year; and Atlas Energy (NYSE:ATLS), a relatively cheap stock which should be able to raise its distribution dramatically for the next few years.
BofA/Merrill Lynch also thinks the deal may be a harbinger of what’s to come for other MLPs that grow too big: "While we do not see other GP-buying-LP transactions occurring yet, we also think it provides a template for a somewhat graceful exit from a structure that can prove long-term unwieldy as an MLP grows... [We] expect significant interest in potential MLP consolidation candidates."
Business Wire | About: AMID
Partnership Provides Update to 2014 Guidance
DENVER--(BUSINESS WIRE)-- American Midstream Partners, LP (AMID) ("Partnership") today reported financial results for the three and six months ended June 30, 2014.
Gross margin (a non-GAAP measure) for the second quarter of 2014 was $22.2 million, an increase of $3.9 million, or 21.3 percent, compared to $18.3 million in the prior year period. For the six months ended June 30, 2014, gross margin was $45.2 million compared to $31.0 million in the prior year period, an increase of $14.2 million, or 45.8 percent. The increase in gross margin for the three and six months ended June 30, 2014 was primarily due to higher gross margin in the Partnership's Gathering and Processing segment attributable to the January 2014 acquisition of the Lavaca System from Penn Virginia Corporation ("Penn Virginia") in the Eagle Ford Shale in Texas, higher gross margin in the Partnership's Transmission segment as a result of increased throughput from the April 2013 acquisition of the High Point System, and incremental gross margin from the Terminals segment associated with the December 2013 acquisition of Blackwater Midstream.
The Partnership reported Adjusted EBITDA (a non-GAAP measure) for the three and six months ended June 30, 2014 of $6.8 million and $17.4 million, respectively, compared to $7.5 million and $12.7 million for the same periods in 2013.
Why would you actually expect anything different. Guess he thought he would get away with it not thinking that someone from the Boston area would be on an EMC board. I would bet that he never told you what it said just as you enter the door at that Oyster place.
Nice catch on the 61 vette, 62 vette sequence at least I think it was you, maybe someone else;and the overlook the red sox Fenway park deal. Some people just do not get it. My MLPs really took off today an immediate return of $70k+ on the KMP stock alone and the rest seemed to follow suit.
Here's what some had to say
Raymond James: Kinder Morgan's bold move is the right move for investors
Aug 11 2014, 15:43 ET | About: Kinder Morgan, Inc. (KMI)
Kinder Morgan's (KMI +8.6%) consolidation is "the right long-term move for shareholders," Raymond James analysts say; the "streamlined structure, lower cost of capital, and benefit of tax depreciation meaningfully enhance long-term value."
A lower equity cost of capital will greatly improve Kinder’s ability to maximize return on investment capital on both organic and acquisition-driven capital expenditures, the firm says; the substantial tax depreciation from existing basis and future capex - the five-year forecast organic backlog alone currently reflects ~$17B, with no acquisition capex forecast - also creates meaningful value.
BofA/Merrill upgrades KMI to Buy from Neutral, and Goldman Sachs maintains its Conviction Buy rating and raises its price target to $50..
Markwest Energy Partners Trading Up 5.7% Following Analyst Upgrade (MWE)
Posted by Ethan Ryder on Aug 11th, 2014
Markwest Energy Partners logoMarkwest Energy Partners (NYSE:MWE)’s share price rose 5.7% during trading on Monday after Credit Suisse raised their price target on the stock from $82.00 to $83.00, Analyst Ratings News reports. Credit Suisse currently has an outperform rating on the stock. Markwest Energy Partners traded as high as $75.94 and last traded at $74.00, with a volume of 1,685,120 shares trading hands. The stock had previously closed at $70.00.
Looks like my stupid investment is not so stupid after all.
Just as a side note it is reported that Richard Kinder of recent MLP fame will make 1.25 BILLION dollars on the
combining of KMP KMI, KMR and EBP into 1 c-corp. While I am not making .25 BILLION I am doing just fine.
Having an awesome day!
Their goal if they have such a thing is to disrupt as much as they can. They are proud of the word associated with such a method and as opposed to having all of us succeed they choose to only have them succeed. We call them an ANARCHIST, some may call them Democrats.
Kinder Morgan scrapping MLP structure in $44B deal
Consolidating its oil-and-gas pipeline empire into a single company, Kinder Morgan (NYSE:KMI) will purchase Kinder Morgan Energy Partners (NYSE:KMP), Kinder Morgan Management (NYSE:KMR), and El Paso Pipeline Partners (NYSE:EPB).
The MLP structure is limiting, says Richard Kinder. Combining the four companies into one unit "will allow us to further expand the reach of the kind of projects we can do."
KMP unitholders will receive 2.1931 KMI shares and $10.77 in cash for each KMP unit, or $89.98, a 12% premium to Friday's close (based on KMI's Friday close).
KMR shareholders will receive 2.4849 KMI share for each share of KMR, or $89.75, a 16.5% premium to Friday's close (based on KMI's Friday close).
EPB unitholders will receive .9451 KMI shares and $4.65 in cash for each EPB unit, or $38.79, a 15.4% premium to Friday's close (based on KMI's Friday close).
In conjunction with the deal, KMI expects a $2 annual dividend in 2015, a 16% boost to 2014's anticipated payout. The dividend is expected to grow about 10% per year through 2020.
That means I will have when this deal is completed 10965.5 shares and 53,850 cash money.
In most case like this the deal should be tax free, but am unsure because it is an MLP
Those who are not involved will miss out. It has nit been announced yet when this will happen but I would imagine by the end of the year.
While the dividend will move from a $1.39 to .50 cents based upon that statement which would make it $1572 less than if they did nothing but I will be getting 53,850 in cash to compensate and the distributions are anticipated to grow 10% per year thru 2020. I will make out just FINE
Have an AWESOME DAY!
Just got home and I have not seen this. Thanks for sharing what it means is that for the future this should be running away and the money will be coming in.
We have decided to take a trip to Florida after Labor Day and look for a Condo to buy. I have that meeting in Seattle also in Sept as well and of course the Alabama football games so my schedule is pretty full. If I do not make the sept timeframe, maybe November looking at the Gulf side. I want to thank you for the cabin use as it was most enjoyable, well if it was not for the rain but I and you cannot control the weather. We have friends in Panama City, but I think we want to be the Tampa area. We will see.
Talk to you soon and thanks for the info.
Dividend paying stocks are more popular than they’ve been in a very long time, if ever. And as investors scour the market for higher yields, a number of them are shifting their attention to MLPs.
It’s doesn’t take much to see why MLPs are gaining in popularity today...The average dividend from the S&P 500 yields just about 2%, 10-year Treasuries pay less than 2%. And money market accounts return next to nothing.
Meanwhile, MLPs like Enterprise Product Partners EPD, Energy Transfer Partners ETP, and Regency Energy Partners RGP yield 5%, 7%, and 9% respectively. Returns from other MLPs can be even higher. From a growth standpoint one needs only look at the charts.
Because MLPs redistribute at least 90% of their income back to investors. They typically have higher yields than regular dividend paying stocks
But there’s a second reason more investors are looking into them as well... TAXES.
You see, distributions from MLPs offer a unique tax advantage because a portion of their payouts is considered a “return of capital,” not a dividend.
Therefore, unit holders are not taxed on their return of capital until they go to sell their holdings.
Now if this sounds enticing and complicated all at the same time, you’re absolutely right.
And this is exactly what makes MLPs good for some and bad for others. I’d say, unless you know what you’re doing, you should consult a tax adviser before investing a dime in any MLP.
If you are satisfied with your returns on your investments, by all means stay with those investments. If you want more, you owe it to yourself to at least look at those alternatives as those choices to invest are entirely yours. Not all of my investments are in the energy sector and I would advise that they should not be. The energy sector will continue to grow for the foreseeable future, you should at least investigate.
I am not a tax adviser; I am however telling you what has and is working for me. The choice remains yours.
Have a nice Sunday!
"Sold Out" was the message from the High Crush (HCLP) and Emerge (EMES) conference calls, sending units higher. The GP of Lehigh Gas Partners (LGP) was purchased by CST Brands, which offers the buyer an attractive IDR split if future distributions can be increased. Delek Logistics Partners (DKL) reported an exceptional quarter and raised it's long term cash distribution guidance to 15%.
Of course if you believe this is not for you, NO PROBLEM.
While many of my investments may not reflect the wishes of others, I am not in the business to please others, just me. Many years ago I listened to a speech from Warren Buffet, and while I do not necessarily agree with everything he has to say, one cannot dispute his success. By that same token I do not believe that everyone should agree with how I invest. For those who disagree because it is ME, I have no use for and do not feel an obligation to engage in a discussion.
I make no secret I consider myself a dividend growth investor, and as such, it might be easy to assume my focus is primarily on the dividend and the more common metrics associated with it such as yield, growth rate, payout ratio. I use them more as indicators to help me get a better understanding of the business. Yes, I treat every stock like it was my own business. People who invest in a business are in it for the long haul or at least until the return makes it unfeasible to continue. I use the stock market as a means to do that, thus I am an investor not a trader. While I am not averse to investing in non-dividend stocks that is not my focus. Success may not happen overnight, which reflects my thoughts about investing as an investor and not a trader. Like any good business person I set personal goals for each investment but never to the extent that they cannot be achieved. When goals are not met I look again at the investments and make a judgment as to hold or bail. When a stock goes down to my first bottom line goal I tend to sell a portion of the stock usually 1/3 or in some cases 1/2. This is a self judgment evaluation, based upon what I know about the stock and invariably is it still above water from original investment. In my case all stocks are sold before I lose money on them. The only ones that happen to lose money are those newly acquired and after selling I have no intention to repurchase. The good news is I currently have no stocks showing a loss so far this year.
Just fine...My Cowboy boots fit and look good
Off to Franklin Barbecue tonight hope they have not run out as when they run out thy close.
Our investment is running and they are hiring. More applicants than positions
Home on Sunday!
Have a great weekend
American Midstream Partners has agreed to acquire Gonzales County full-well-stream gathering system from ArcLight Capital Partners for a total consideration of $110 million. Also, American Midstream Partners has executed an agreement to buy a 50 percent stake in Republic Midstream from ArcLight for about $200 million.
DENVER–(BUSINESS WIRE)–American Midstream Partners, LP (NYSE: AMID) (“Partnership”) announced today the approval of the Partnership’s exercise of its right-of-first-offer to acquire the Gonzales County full-well-stream gathering system from an affiliate of ArcLight Capital Partners, LLC (“ArcLight”). The Partnership also executed an option agreement to acquire a 50 percent interest in Republic Midstream, LLC (“Republic Midstream”) from an affiliate of ArcLight. The acquisitions of these assets would complement the Partnership’s existing natural gas gathering and re-delivery system in Lavaca County and create a competitive position in a prolific shale play supported by long-term, fee-based agreements with dedicated acreage.
Gonzales County Full-Well-Stream Gathering System
On August 4, 2014, the Board of Directors of the General Partner of the Partnership approved the Partnership’s exercise of its right-of-first-offer to acquire the Gonzales County system for total consideration not to exceed $110 million. Construction on the system commenced in the second quarter of 2014 at an estimated total capital expenditure of approximately $100 million incurred by an affiliate of ArcLight. The initial phase of the project is expected to commence operations in the fourth quarter of 2014, and full-system operations are expected in the first quarter of 2015. The Partnership anticipates the acquisition of the system from an affiliate of ArcLight will be completed in late 2014 or early 2015