Midstream/MLP Credit Ratings Largely Stable in Tough Tape
09/22/20 | Insights
Debt is an important component of midstream capital structures, and monitoring debt markets is instructive for understanding the health of midstream companies. While there have been some downgrades and negative revisions to ratings outlooks in recent months, ratings for most of midstream have held steady, and debt markets remain open. Today’s credit update discusses recent rating developments and recaps debt issuances from the last few months.
Midstream/MLP Capex and Projects: Where’s the Growth?
09/17/20 | Insights
A key characteristic of the energy infrastructure space in recent years has been significant capital investment to facilitate increasing US oil and gas production and exports. However, a shift in production expectations for the US has resulted in projected declines in capital budgets across the board for 2020 and beyond. Will midstream companies be able to grow going forward? Today’s piece examines the landscape for midstream projects and spending outlook, while also discussing the possibilities for future growth.
Free Cash Flow: A Tailwind for Midstream/MLPs in 2021?
09/15/20 | Insights
The midstream space has seen plenty of headwinds in 2020, from the demand impacts of COVID-19 to hurricanes to political risk. Looking to 2021, one important tailwind could be increased free cash flow generation among midstream companies, which is examined in today’s note. This inflection, combined with a potential macro recovery, could align in 2021 to the benefit of midstream investors.
Examining the Active vs. Passive Debate for Midstream
09/10/20 | Insights
Midstream investing has come a long way since the first MLP closed-end fund was introduced in 2004, and there are now a variety of ways to access the midstream space. One age-old question in investing that is also relevant to midstream products is whether an active or passive strategy is better. Today’s note examines the numerous factors relevant to this debate for midstream, including the characteristics of the products, applicable risk-return metrics, and the potential similarity between products and their benchmark indexes.
Natural Gas and NGLs: A Bright Spot in Energy
09/08/20 | Insights
While oil prices and production trends tend to dominate headlines, natural gas and natural gas liquids have seen notable relative strength in the face of macro headwinds. Fundamentals for the two commodities have improved in recent months, representing a bright spot in energy amid a challenged environment. Today’s note provides an update on the markets for natural gas and natural gas liquids and discusses the potential implications for energy infrastructure.
US LNG Exports: Outlook Improves as Macro Headwinds Ease
09/03/20 | Insights
Summary Global LNG prices have been boosted recently by recovering demand with coronavirus lockdowns slowly easing, US LNG cargo cancellations helping to tighten the supply-demand balance, and warm summer weather in the US and Europe. After dozens of US LNG cargoes were canceled from June through August, there have been significantly fewer cancellations for September...
High MLP/Midstream Yields But Ample Coverage, Payout Ratios
09/01/20 | Insights
Despite the lingering uncertainty in energy markets and elevated yields, 2Q20 midstream dividend payouts were stable. Continued execution and steady payouts will be needed to restore confidence in midstream income and drive a moderation in yields, which remain abnormally high. In the meantime, distribution coverage and payout ratios are one way to gauge how well midstream companies are able to afford their payouts. Today’s note examines these metrics and the rising importance of using free cash flow after dividends to better reflect strides in financial flexibility.
What Could the Election Mean for MLPs/Midstream and Energy?
08/27/20 | Insights
With election season in full swing, today’s note discusses the policies of the Trump administration and the proposals from the Biden campaign, as well as the potential implications of a change in the White House for midstream and energy more broadly.
SS&C ALPS and Alerian celebrate 10 years of AMLP
08/26/20 | Insights
We were thrilled to join with SS&C ALPS Advisors to celebrate the 10th anniversary of the Alerian MLP ETF (AMLP) by (virtually) ringing the closing bell at the New York Stock Exchange. CEO Dave LaValle Celebrates 10th Anniversary of Alerian MLP ETF (AMLP).
2020 Midstream Summer Update Video
Thus far in 2020, the equity price performance and elevated yields for midstream and MLPs paint a different picture than what may be drawn from fundamentals. Yields remain high, yet 2Q payouts were steady. Equity prices are well below levels from early January, but forward earnings estimates have only seen modest revisions. Midstream has the...
2020 Midstream Summer Update Video
08/25/20 | Insights
Thus far in 2020, the equity price performance and elevated yields for midstream and MLPs paint a different picture than what may be drawn from fundamentals. Yields remain high, yet 2Q payouts were steady. Equity prices are well below levels from early January, but forward earnings estimates have only seen modest revisions. Midstream has...
Assessing Midstream’s ESG Journey So Far
08/20/20 | Insights
As environmental, social, and governance (ESG) factors continue to gain popularity with the broader investment community, sustainability reporting is becoming more commonplace among midstream companies. Although the industry certainly still has a way to go, there have been notable improvements in ESG reporting in the last year alone. Today’s piece serves to update our October 2019 ESG white paper by examining developments in sustainability reporting and performance in the space, as well as a discussion of next steps for the industry.
Steady Midstream EBITDA Outlooks Contrast with Performance
08/18/20 | Insights
With 2Q20 midstream earnings season wrapping up last week, the focus has been primarily on the outlooks for MLPs and midstream companies with investors keyed in on the ongoing recovery in energy demand. Today’s piece compares forward EBITDA estimates for midstream against other sectors of energy and discusses company guidance revisions announced with 2Q releases. After an admittedly turbulent few months, these updates highlight the resilience of midstream and help to clarify expectations for the space for the remainder of this year.
2Q Earnings Review: Politics, (E&P) Religion, and More
08/13/20 | Insights
Earnings season was particularly eventful this quarter for midstream and broader energy. Operational outlooks were in focus as the macro recovery continues, but renewables and the election were other key points. Today’s note discusses these topics and other highlights from 2Q earnings, as well as the potential impacts to midstream as oil and gas producers emphasize returns over growth.
Midstream/MLP 2Q20 Dividends/Distributions Hold Steady
08/11/20 | Insights
After a slew of cuts with 1Q20 payouts, the stability of midstream dividends and distributions for 2Q20 may have been a pleasant surprise to some, particularly in light of stubbornly high yields in the space. Today’s piece recaps 2Q20 payouts for midstream and discusses the outlook for distributions from here, particularly whether distribution cuts are firmly behind us.