MLP Monthly Report: April 2020
The April MLP Monthly Report can be found here offering insights on MLP industry news, the asset class’s performance, yields, valuations, and fundamental drivers.
1) In response to the recent downturn, five midstream MLPs and two C-Corp taxed entities cut their distributions. The five MLPs are DCP Midstream LP (DCP), Enable Midstream Partners (ENBL), Genesis Energy (GEL), Noble Midstream Partners (NBLX), and Plains All American (PAA). The two C-Corp taxed entities are Targa Resources (TRGP) and EnLink Midstream LLC (ENLC). The distribution cuts ranged from 50% to 90%.
2) OPEC+ and other non-OPEC members reached an oil production cut agreement at their April meeting. Approximately 9.7 million barrels a day (bp/d) will be cut globally. Saudi Arabia and Russia will be covering approximately 2.5 million bp/d each. Other OPEC members will cut daily production by 23%. Other nations such as Mexico, Canada, Brazil, & the US will be cutting approximately 5 million bp/d total.
3) In its strategic review of MPLX LP (MPLX), Marathon Petroleum Corp. (MPC) concluded MPLX would maintain its current structure as a master limited partnership (MLP) with MPC as the general partner.
Sources: Global X MLP Insights, Bloomberg, MPC Press Releases.
Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, fell by 47.94% last month. The index is down by 61.75% since last March. (Source: Bloomberg)
Yield: The current yield on MLPs stands at 23.43%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (9.44%), Emerging Market Bonds (6.85%), Fixed Rate Preferreds (5.82%), and Investment Grade Bonds (3.70%).1 MLP yield spreads versus 10-year Treasuries currently stand at 19.63%, higher than the long-term average of 4.87%.2 (Sources: Bloomberg, AltaVista Research, and Fed Reserve)
Valuations: The Enterprise Value to EBITDA ratio (EV-to-EBITDA), which seeks to provide more color on the valuations of MLPs, fell by 17.31% last month. Since March 2019, the EV-to-EBITDA ratio has fallen by approximately 24.92%. (Source: Bloomberg)
Crude Production: The Baker Hughes Rig Count reduced to 728 rigs, decreasing by 62 rigs from last month’s count of 790 rings. US production of crude oil reduced to 13.000 mb/d in the last week of March compared to 13.100 mb/d in February. (Source: Baker Hughes & EIA)
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month- and quarter-end, please click here
As of 3/31/2020, DCP Midstream LP (DCP) was a holding in the Global X MLP ETF (MLPA), with a 2.18% weighting and Global X MLP and Energy Infrastructure ETF (MLPX), with a 0.19% weighting, Plains All American Pipeline (PAA) was a holding in the MLPA ETF, with a 4.47% weighting and MLPX ETF, with a 1.28% weighting, Enable Midstream Partners LP (ENBL) was a holding in the MLPA ETF, with a 1.56% weighting and MLPX ETF, with a 0.11% weighting, Genesis Energy LP (GEL) was a holding in the MLPA ETF, with a 2.26% weighting and MLPX ETF, with a 0.22% weighting, MPLX LP (MPLX) was a holding in the MLPA ETF, with a 7.81% weighting and MLPX ETF, with a 2.31% weighting, Targa Resources Partners LP (TRGP) was a holding in the MLPX ETF, with a 1.60% weighting, Enlink Midstream LLC (ENLC) was a holding in the MLPX ETF, with a 0.92% weighting, Noble Midstream Partners LP (NBLX) was a holding in the MLPA ETF, with a 0.81% weighting.
MLPX ETF and MLPA ETF do not have any holding in Marathon Petroleum Corp (MPC).