MLP Monthly Report: February 2022
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.
The latest quarterly MLP Insights piece providing analysis into the midstream space can be found here as well.
1) Brent crude oil prices touched a seven-year high of $90 as tight supplies and escalating tensions between Russia and Ukraine heightened concerns about an already tight supply outlook. This increases the risk that supplies could be affected globally as Russia is one of the world’s largest oil and gas exporters.
2) Crestwood Equity Partners LP (CEQP) completed its acquisition of Oasis Midstream Partners LP (OMP), allowing Crestwood to enhance its scale and expand operations in the Williston and Delaware Basins. The combined entity is expected to generate approximately $45 million in operational and commercial synergies, increasing financial strength and flexibility.
3) In March, OPEC+ agreed to maintain its existing plan of raising oil output by 400,000 barrels per day (bpd). OPEC+ continued with its policy of unwinding record supply cuts of roughly 10 million bpd despite rising oil prices, showing OPEC+ continues to take a conservative approach to raising production.
Sources: Reuters, Crestwood Equity Partners LP (CEQP), CNBC.
Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, increased 10.74% last month. The index increased by 47.23% since last January. (Source: Bloomberg)
Yield: The current yield on MLPs stands at 7.84%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (5.53%), Emerging Market Bonds (4.77%), Fixed Rate Preferreds (4.54%) and Investment Grade Bonds (2.81%).1 MLP yield spreads versus 10-year Treasuries currently stand at 5.64%, lower than the long-term average of 5.76%.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 0.01% last month. Since January 2021, the EV-to-EBITDA ratio is down by approximately 0.79%. (Source: Bloomberg)
Crude Production: The Baker Hughes Rig Count increased to 610 rigs, increasing by 24 rigs from last month’s count of 586 rigs. US production of crude oil decreased to 11.500 mb/d in the last week of January compared to December levels of 11.800 mb/d. (Source: Baker Hughes & EIA)
For performance data current to the most recent month- and quarter-end, please click here
As of 01/31/2022, Crestwood Equity Partners LP (CEQP) was a holding in the Global X MLPA ETF (MLPA) with a 4.38% weighting. Oasis Midstream Partners LP (OMP) was a holding in the Global X MLPA ETF (MLPA) with a 0.95% weighting.