MLP Monthly Report: August 2019

The August MLP Monthly Report can be found here offering insights on MLP industry news, the asset class’s performance, yields, valuations, and fundamental drivers.



1) Blackstone Group Inc. (BX) is considering selling its 58% stake in Cheniere Energy Partners (CQP), valued at close to $9 billion as of July 22nd, 2019. Blackstone is in talks with an advisor after it received unsolicited interest from potential buyers. The private equity firm plans to sell its stake to a small number of infrastructure, pension, and sovereign wealth funds.

2) Phillips 66 Partners (PSXP) and Philips 66 (PSX) announced the elimination of their incentive distribution rights (IDRs) in exchange for the issuance of PSXP common units valued at $5.4 billion to the general partner (GP). Philips 66 now owns 75% of the limited partner interests and retains a noneconomic GP interest in Phillips 66 Partners.

3) Enterprise Products Partners L.P. (EPD) and Chevron Corporation (CVX) announced long-term agreements to support the development of EPD’s Sea Port Oil Terminal (SPOT) in the Gulf of Mexico. Under the agreements, Chevron agreed to use EPD’s pipeline network to move crude oil from the Permian Basin of West Texas to EPD’s ECHO terminal in Houston, Texas in order to export crude to foreign markets.

Sources: Bloomberg, Reuters, Business Wire, Yahoo Finance.

Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, rose by 0.9% last month. The index is down by -2.98% since last July. (Source: Bloomberg)

Yield: The current yield on MLPs stands at 7.73%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (5.88%), Emerging Market Bonds (5.38%), Fixed Rate Preferreds (5.33%), and Investment Grade Bonds (3.30%).1 MLP yield spreads versus 10-year Treasuries currently stand at 5.78%, higher than the long-term average of 4.49%.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, decreased by -2.6% last month. Since July 2018, the EV-to-EBITDA ratio has fallen by approximately -25%. (Source: Bloomberg).

Crude Production: The Baker Hughes Rig Count fell last month to 946 rigs, falling by 21 rigs from last month’s count of 967 rigs. The rig count has more than doubled since its recent low point in May 2016 of 404 rigs. US production of crude oil remained flat at 12.200 mb/d in the last week of July compared to the last week in June. (Source: Baker Hughes & EIA)

mlp performance

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 07/31/2019, Cheniere Energy Partners (CQP) was a holding in the Global X MLP ETF (MLPA), with a 3.58% weighting and the Global X MLP and Energy Infrastructure ETF (MLPX), with a 4.53% weighting. Phillips 66 Partners (PSXP) was a holding in the Global X MLP ETF (MLPA), with a 5.12% weighting and the Global X MLP and Energy Infrastructure ETF (MLPX), with a 0.62% weighting. Enterprise Products Partners L.P. (EPD) was a holding in the Global X MLP ETF (MLPA), with a 10.81% weighting and the Global X MLP and Energy Infrastructure ETF (MLPX), with a 4.91% weighting.

MLPX ETF and MLPA ETF do not have any holding in Blackstone Group Inc. (BX) and Chevron Corporation (CVX).