MLP Monthly Report: February 2021

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



1) MPLX LP (MPLX) stated on its earnings call that it may use some of its excess cash flow to buy back MPLX’s common units since they view the units as being undervalued.

2) There were no distribution cuts across midstream MLPs this distribution season, as measured by the Solactive MLP & Energy Infrastructure Index. A recovery in the energy markets gave midstream companies confidence to maintain distribution levels.

3) The crude markets opened 2021 with a price rally as WTI crude oil rose 8% in the month of January from $48 to $52. The price rally was supported by higher demand expectations and the recent Saudi Arabia’s voluntarily supply cut of 1 million bpd.

Sources: Seeking Alpha, Solactive MLP & Energy Infrastructure Index, IEA, Bloomberg

Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, increased 5.49% last month. The index is down by 27.54% since last January. (Source: Bloomberg)

Yield: The current yield on MLPs stands at 11.08%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (4.97%), Fixed Rate Preferreds (4.12%), Emerging Market Bonds (3.64%), and Investment Grade Bonds (1.91%).1 MLP yield spreads versus 10-year Treasuries currently stand at 9.62%, higher than the long-term average of 5.67%.2 (Sources: Bloomberg and Fed Reserve)

Valuations: The Enterprise Value to EBITDA ratio (EV-to-EBITDA), which seeks to provide more color on the valuations of MLPs, increased by 4.17% last month. Since January 2020, the EV-to-EBITDA ratio is down by approximately 8.65%. (Source: Bloomberg)

Crude Production: The Baker Hughes Rig Count increased to 384 rigs, increasing by 36 rigs from last month’s count of 348 rigs. US production of crude oil decreased to 10.900 mb/d in the last week of January compared to December levels of 11.000 mb/d. (Source: Baker Hughes & EIA)

For performance data current to the most recent month- and quarter-end, please click here

As of 1/31/2021, MPLX, LP (MPLX) was a holding in the Global X MLP ETF (MLPA) with an 8.33% weighting and the Global X MLP and Energy Infrastructure ETF (MLPX), with a 3.51% weighting.