MLP Monthly Report: June 2021
The June 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) Oasis Petroleum Inc. (OAS) has entered into a series of definitive agreements to sell its complete position in Permian Basin. Oasis Midstream Partners LP (OMP) is seeking to benefit from incremental activity on the Permian asset based on the new operator’s plans, as it has retained its Permian midstream assets in Panther DevCo.
2) Cheniere Energy, Inc. (LNG) and Cheniere Energy Partners, L.P. (CQP) announced that as part of their long-term LNG sale and purchase agreement, they have supplied a carbon-neutral cargo of liquefied natural gas to Shell from Cheniere’s Sabine Pass liquefaction facility.
3) Kinder Morgan, Inc. (KMI) has agreed to acquire Stagecoach Gas Services LLC – a joint venture between Consolidated Edison, Inc. (ED) and Crestwood Equity Partners LP (CEQP) – for $1.225 billion on May 31, 2021. The cash proceeds from the divestment will be split pro-rata between ED and CEQP, with CEQP planning to utilize it to repay outstanding borrowings.
Sources: Oasis Midstream Partners LP, Cheniere Energy Inc, Crestwood Equity Partners LP, Kinder Morgan Inc
Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, increased 6.84% last month. The index has increased by 42.76% since last May. (Source: Bloomberg)
Yield: The current yield on MLPs stands at 9.18%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (4.78%), Fixed Rate Preferreds (4.20%), Emerging Market Bonds (3.85%), and Investment Grade Bonds (2.16%).1 MLP yield spreads versus 10-year Treasuries currently stand at 6.25%, higher than the long-term average of 5.73%.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, decreased by 3.71% last month. Since May 2020, the EV-to-EBITDA ratio is down by approximately 0.31%. (Source: Bloomberg)
Crude Production: The Baker Hughes Rig Count increased to 457 rigs, increasing by 17 rigs from last month’s count of 440 rigs. US production of crude oil decreased to 10.800 mb/d in the last week of May compared to April levels of 10.900 mb/d. (Source: Baker Hughes & EIA)
For performance data current to the most recent month- and quarter-end, please click here
As of 5/31/2021, Oasis Midstream Partners LP (OMP) was a holding in the Global X MLPA ETF (MLPA) with a 4.17% weighting. Cheniere Energy, Inc. (LNG) was a holding in the Global X MLP & Energy Infrastructure ETF (MLPX) with a 6.57% weighting. Cheniere Energy Partners, L.P. (CQP) was a holding in the MLPA ETF with a 4.71% weighting and MLPX ETF with a 0.64% weighting. Kinder Morgan, Inc. (KMI) was a holding in the MLPX ETF with a 8.98% weighting. Crestwood Equity Partners LP (CEQP) was a holding in the MLPA ETF with a 4.47% weighting.
MLPA ETF and MLPX ETF do not have any holding in Oasis Petroleum Inc. (OAS) and Consolidated Edison, Inc. (ED).