MLP Monthly Report: September 2021
The September 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) Enbridge, Inc. (ENB) has entered into an agreement to acquire logistics company Moda Midstream Operating LLC for $3.0 billion in cash from EnCap Flatrock Midstream. The deal is expected to enhance ENB’s U.S. Gulf Coast export strategy and bolster the connectivity to low-cost and long-lived reserves in the Permian and Eagle Ford basins.
2) OPEC+ plans to ramp up its production by 400,000 barrels per day (bpd) to the market in October, sticking to its existing policy of a gradual output increase for a second month in a row. The organization also revised its 2022 growth forecast to 4.2 million bpd, up from the previous projection of 3.28 million bpd, likely building a case for higher throughput in the future.
3) BP Pipelines (North America) Inc. (BP), through its wholly-owned subsidiary BP Midstream Partners Holdings LLC, has offered to acquire all of BP Midstream Partners (BPMP)’s outstanding common units held by the public in exchange for newly-issued American depositary receipts of BP PLC at a value of $13.01 per BPMP common unit.
Sources: Enbridge, Inc., Reuters, BP Midstream Partners, L.P.
Performance: Midstream MLPs, as measured by the Solactive MLP Infrastructure Index, decreased 3.42% last month. The index has increased by 51.91% since last August. (Source: Bloomberg)
Yield: The current yield on MLPs stands at 8.42%. MLP yields remained higher than the broad market benchmarks for High Yield Bonds (4.61%), Fixed Rate Preferreds (4.07%), Emerging Market Bonds (3.86%), and Investment Grade Bonds (2.04%).1 MLP yield spreads versus 10-year Treasuries currently stand at 6.70%, higher than the long-term average of 5.74%.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 2.38% last month. Since August 2020, the EV-to-EBITDA ratio is down by approximately 0.36%. (Source: Bloomberg)
Crude Production: The Baker Hughes Rig Count increased to 508 rigs, increasing by 20 rigs from last month’s count of 488 rigs. US production of crude oil increased to 11.500 mb/d in the last week of August compared to July levels of 11.200 mb/d. (Source: Baker Hughes & EIA)
For performance data current to the most recent month- and quarter-end, please click here
As of 8/31/2021, Enbridge, Inc. (ENB) was a holding in the Global X MLP & Energy Infrastructure ETF (MLPX) with a 9.10 % weighting. BP Midstream Partners, L.P. (BPMP) was a holding in the Global X MLPA ETF (MLPA) with a 4.80% weighting.
MLPA ETF and MLPX ETF do not have any holding in BP PLC. (BP), Moda Midstream, LLC (Moda) and EnCap Flatrock Midstream (EFM).