MLP Monthly Report: May 2020

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



1) Certain midstream companies were forced to cut distributions this quarter due to the challenging macro environment and upstream energy sector concerns. Notable distribution cuts included those from NuStar Energy (NS), Holly Energy Partners (HEP), NGL Energy Partners (NGL), Western Midstream Partners (WES), Plains GP Holdings (PAGP), EQM Midstream Partners (EQM), Equitrans Midstream Corp (ETRN) and CNX Midstream (CNXM).

2) A number of midstream companies released Q1 earnings, with those companies providing investors a brighter outlook compared to the broader energy sector. Larger MLPs like Enterprise Product Partners (EPD) and Oneok (OKE), surpassed analyst estimates, and Kinder Morgan Inc (KMI) was in line with estimates. Certain MLPs also trimmed their capital expenditure (capex) budgets, as they factored in current commodity prices and additional rig reductions.

3) With energy companies looking for storage options amid the low oil price environment, midstream storage demand increased, helping propel MLPs to a 47% return in the month of April.

Sources: Company Press Releases, Bloomberg, Yahoo Finance.

Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, increased 47% last month. The index is down by 42.88% since last April. (Source: Bloomberg)

Yield: The current yield on MLPs stands at 15.49%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (8.05%), Emerging Market Bonds (6.64%), Fixed Rate Preferreds (3.52%), and Investment Grade Bonds (2.76%).1 MLP yield spreads versus 10-year Treasuries currently stand at 15.30%, higher than the long-term average of 4.98%.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 9.20% last month. Since April 2019, the EV-to-EBITDA ratio has fallen by approximately 10.78%. (Source: Bloomberg)

Crude Production: The Baker Hughes Rig Count reduced to 465 rigs, decreasing by 263 rigs from last month’s count of 728 rings. US production of crude oil reduced to 12.100 mb/d in the last week of April compared to 13.000 mb/d in March. (Source: Baker Hughes & EIA)

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 4/30/2020, NuStar Energy LP (NS) was a holding in the Global X MLP ETF (MLPA), with a 3.20% weighting and Global X MLP and Energy Infrastructure ETF (MLPX), with a 0.49% weighting, Holly Energy Partners LP (HEP) was a holding in the MLPA ETF, with a 3.02% weighting and MLPX ETF, with a 0.27% weighting, NGL Energy Partners LP (NGL) was a holding in the MLPA ETF, with a 3.32% ,Western Midstream Partners LP (WES) was a holding in the MLPA ETF, with a 4.01% weighting and MLPX ETF, with a 0.75% weighting, Plains GP Holdings LP (PAGP) was a holding in MLPX ETF, with a 3.80% weighting, EQM Midstream Partners LP (EQM) was a holding in the MLPA ETF, with a 6.87% weighting and MLPX ETF, with a 0.69% weighting, Equitrans Midstream Corp (ETRN) was a holding in the MLPX ETF, with a 4.49% weighting, Enterprise Product Partners LP (EPD) was a holding in the MLPA ETF, with a 10.41% weighting and MLPX ETF, with a 4.63% weighting, OneOK Inc (OKE) was a holding in the MLPX ETF, with a 4.80% weighting, Kinder Morgan Inc (KMI) was a holding in the MLPX ETF, with a 9.38% weighting.

MLPX ETF and MLPA ETF do not have any holding in CNX Midstream Partners LP (CNXM).