MLP Monthly Report: March 2021
The March MLP Monthly Report can be found here offering insights on MLP industry news, the asset class’s performance, yields, valuations, and fundamental drivers.
1) Oil major Chevron Corp. (CVX) plans to buy out the Noble Midstream Partners LP (NBLX) common units it does not currently own at $12.47 per unit, valuing the company at $1.13 billion. The offer comes after CVX acquired NBLX’s parent company Noble Energy in the fourth quarter of 2020, with the intention of simplifying its corporate entity.
2) Energy Transfer LP (ET) and Enable Midstream Partners LP (ENBL) entered into a definitive arrangement whereby ET will acquire ENBL in an all-equity transaction valued at approximately $7.2 billion. ENBL unit holders will receive 0.8595 ET common units for each common unit held; an at-the-market transaction based on the 10-day volume-weighted average prices of ET and ENBL common units as of February 12, 2021.
3) Crude oil prices reached a nearly 14 month high as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed not to increase oil output in April. Saudi Arabia unexpectedly decided to maintain its voluntary cut of one million barrels per day (bpd) through April.
Sources: Reuters, Energy Transfer LP, CNBC
Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, increased 8.02% last month. The index is down by 7.07% since last February. (Source: Bloomberg)
Yield: The current yield on MLPs stands at 9.88%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (4.93%), Fixed Rate Preferreds (4.40%), Emerging Market Bonds (3.78%), and Investment Grade Bonds (2.10%).1 MLP yield spreads versus 10-year Treasuries currently stand at 8.06%, higher than the long-term average of 5.70%.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 3.92% last month. Since February 2020, the EV-to-EBITDA ratio is up by approximately 1.59%. (Source: Bloomberg)
Crude Production: The Baker Hughes Rig Count increased to 402 rigs, increasing by 18 rigs from last month’s count of 384 rigs. US production of crude oil decreased to 10.000 mb/d in the last week of February compared to January 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 2/28/2021, Noble Midstream Partners LP (NBLX) was a holding in the Global X MLP ETF (MLPA) with a 2.72% weighting. Energy Transfer LP (ET) was a holding in the MLPA ETF with a 9.87% weighting and the Global X MLP and Energy Infrastructure ETF (MLPX), with a 5.07% weighting. Enable Midstream Partners LP (ENBL) was a holding in the MLPX ETF with a 0.26% weighting.
MLPX ETF and MLPA ETF do not have any holding in Chevron Corp (CVX).