Although IDRs were once a staple of the MLP space, the majority of AMZ constituents have eliminated their IDRs in recent years. Today’s piece discusses recent developments in the trend of IDR buyouts and what could be in store for those MLPs that still have IDRs.

Natural gas liquids (NGLs) have grown in importance within midstream as US production and exports have risen quickly over the last few years. This week’s Insights post provides a high-level update on what’s driving NGL prices and inventories, production, and exports, as well as the infrastructure being developed to facilitate it all.

Summary // For the first time in over a year, no AMZ or AMZI constituent cut their distribution sequentially. The majority of AMZ and AMZI constituents grew their 3Q19 distributions on a year-over-year basis. Solid company-level fundamentals, including improved distribution coverage, provides added comfort around a historically high yield. 3Q19 was the first cut-free quarter...

Summary// The pass-through structure of MLPs provides significant tax efficiency but comes with some complexities that are important for investors to understand. The majority of MLP distributions are generally tax-deferred, with the remainder taxed as ordinary income in the current year. MLP investment products provide exposure to MLPs without the hassle of K-1 forms but...

Monthly update for November 2019

Summary // With ESG gaining traction broadly among the investment community, discussions around ESG have also become more prevalent in the midstream space. The growing investor interest in ESG is an opportunity for midstream companies to highlight some of the risk management and safety practices that have long been a priority in the space. This...

Environment, social, and governance factors, or ESG, comprise the criteria used by investors in a holistic approach to analyze an investment. Formerly a niche concept, ESG has moved toward the mainstream of finance in recent years as a result of investor demand, regulatory influence, and demographics. With ESG gaining traction broadly among the investment community,...

Summary // After years of significant growth, US oil production is showing signs of a slowdown. The US Energy Information Administration continues to project double-digit growth in 2019 and high single-digit growth in 2020. With production growth slowing, midstream companies can benefit from lower capital spending and a corresponding focus on free cash flow generation....

Summary Midstream investors should have some familiarity with the FERC given its oversight of interstate pipeline rates, LNG export projects, and interstate natural gas pipeline projects. FERC is tasked with making sure rates on interstate pipelines are just and reasonable. FERC has been criticized for delays in approving LNG export facilities but has made progress...

Summary Alerian offers a variety of midstream indexes to meet the benchmarking needs of stakeholders as the energy infrastructure space evolves. The AMZ and AMZI indexes can function as benchmarks for MLP-focused products, while the AMEI is suitable as a benchmark for RIC-compliant products. Alerian’s midstream indexes can also function as the underlying index in...

Summary Recent deregulatory actions have been beneficial in reducing uncertainty for project permitting at the federal level. Pipeline projects blocked at the state level can result in increased reliance on foreign sources of energy and higher emissions. FERC has taken steps this year to expedite its approval process for major energy infrastructure projects such as...

Monthly update for October 2019

Summary Two major Permian pipeline projects began service in August, helping to ease the basin’s takeaway constraints and providing further sources of stable cash flows for midstream companies. Pipeline additions have narrowed the spread between Midland crude prices and crude prices at Cushing and Houston. The movement of Permian crude to the Texas Gulf Coast...