67 WALL STREET, New York - December 6, 2013 - The Wall Street Transcript has just published its Top Ten Equity Analyst Interviews 2013 Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Oil & Gas Pipeline and Midstream Master Limited Partnerships
Companies include: Plains All American Pipeline L (PAA), Magellan Midstream Partners LP (MMP), Western Gas Partners Lp (WES), DCP Midstream Partners LP (DPM), Anadarko Petroleum Corp. (APC), Kinder Morgan Energy Partners (KMP), Copano Energy LLC (CPNO)
In the following excerpt from the Top Ten Equity Analyst Interviews of 2013 Report, Elvira Scotto discusses her Q1 predictions for the sector and 2013 top picks for investors:
TWST: I'd like to start with an overview of your coverage universe.
Ms. Scotto: I believe we have a unique structure here at RBC with respect to how we cover MLPs. We have three Senior Analysts at RBC; two of us split coverage of the midstream MLPs, and we have a third Analyst that covers the upstream MLPs. I currently cover about 20 midstream MLPs, and these are the MLPs that are mostly involved in gathering, processing and transporting oil, gas and natural gas liquids.
TWST: What's your overall sentiment and 2013 outlook for the midstream MLPs?
Ms. Scotto: For MLPs as a whole, if you look at them on a total return basis, they have had a very strong track record of outperforming the broader markets. The MLP index, AMZ, outperformed the S&P 500 on a total return basis in 12 of the last 13 years. The group, AMZ, underperformed last year; however, it is off to a strong start in 2013 with year-to-date total return of about 12% versus 8% for the S&P 500.
The way we look at MLPs is on a total-return basis. MLPs are currently trading at an average yield of about 6%. In general, underlying fundamentals remain strong, and we expect distribution growth on average of about 6% to 7% in 2013, so we expect total return of about 13% to 15% for the year.
TWST: What industry trends or themes are having the greatest impact on these companies?
Ms. Scotto: We believe the shale revolution and new drilling technologies that are driving increased production of oil, natural gas and natural gas liquids are having a significant impact on midstream MLPs. Producers can now economically extract oil, gas and liquids from new areas or previously abandoned areas, which drives a need for additional infrastructure and logistics solutions. In some of these new areas, such as the Bakken shale, limited takeaway capacity exists. The midstream MLPs benefit from this trend as they provide these necessary infrastructure solutions. We believe this is a trend that will continue for several years.
TWST: What are your favorite names among your coverage universe right now and why?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.