Organic Growth for Midstream and Acquisitions for Upstream MLPs: A Wall Street Transcript Interview with Christopher P. Sighinolfi, Director at UBS Investment Bank

Wall Street Transcript

67 WALL STREET, New York - March 21, 2013 - The Wall Street Transcript has just published its Oil & Gas: Master Limited Partnerships Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increasing Demand for Midstream Assets - U.S. Energy Infrastructure Build Out - Emerging Shale Plays - Oil and Gas Transportation Infrastructure Demand - Master Limited Partnerships Distribution Growth - Outlook for Natural Gas Liquids - Low Treasury Yields and MLP Dividends

Companies include: El Paso Pipeline Partners, L.P (EPB), Copano Energy LLC (CPNO), Williams Companies, Inc. (WMB), Linn Energy, LLC (LINE), Berry Petroleum Co. (BRY), Vanguard Natural Resources, LL (VNR), Legacy Reserves Lp (LGCY), ONEOK Inc. (OKE), Williams Partners L.P. (WPZ), ONEOK Partners, L.P. (OKS), AmeriGas Partners LP (APU), Spectra Energy Partners, LP (SEP) and many more.

In the following excerpt from the Oil & Gas: Master Limited Partnerships Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Do these companies have ample access to capital to fund their growth?

Mr. Sighinolfi: Yes, they do. It's interesting as you look at the phases of maturity for these MLPs the things which they do to enhance capital access. If we start with the upstream group, they're initially capable of doing small overnight equity raises - traditionally placed largely with the retail networks at various banks - and supplementing these equity raises with access to very inexpensive debt on their revolving credit facilities. This combination has fueled the initial growth within the space. And then what we see is that, to enhance the amount of capital they can raise at any one time, these companies enter the public debt markets.

We saw this with Vanguard Natural Resources (VNR) and Legacy Reserves (LGCY) last year. That's a painful but necessary process to go through. It's painful in that these companies are replacing very inexpensive credit revolver borrowings with long-term debt that is 500 to 600 basis points more expensive. But in doing so they are introduced to the public debt markets and, over time, borrowing costs tick down as credit investors become more familiar with the issuer, business model, etc., and this allows enhanced access to capital.

And then what we have seen most recently is LINN's development of LinnCo (LNCO), which was really centered on that question of getting enhanced access to capital. LINN had successfully done three overnight transactions at about $0.75 billion, but their appetite for growth was larger than their ability to finance allowed.

Creating LinnCo allows them now to have a currency that is palatable to institutional investors, that opens up their access beyond the retail networks to institutions to foreign owners and also to those within the retail network that want to own LINE...

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.

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