MLP Earnings: Wrap-Up for Last Week
Earnings season has begun, and Kinder Morgan (KMI) was the first midstream company to report Q2 earnings on July 19. A few MLPs reported their Q2 earnings last week. For a post-earnings analysis on Kinder Morgan (KMI), read Kinder Morgan Rose Due to Its 2018 Dividend Forecast.
In this article, we’ll do a quick earnings wrap-up for a few of the major MLPs. Let’s start with Western Gas Partners (WES).
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Western Gas Partners
Western Gas Partners and its GP (general partner), Western Gas Equity Partners (WGP), reported their Q2 result on July 25. WES posted 22.6% YoY revenue growth and 8.5% YoY EBITDA growth in the recent quarter. The partnership’s 2Q17 earnings were driven by strong crude oil, NGLs (natural gas liquids), and water throughput volumes. WES missed its 2Q17 EBITDA by a small margin of 0.17%. Moreover, its EBITDA margin shrunk by 1,000 bps YoY.
MPLX LP, which is one of the United States’ largest natural gas processors in the Northeast region, reported its 2Q17 earnings on July 27. It posted YoY revenue and EBITDA growth 62.4% and 107.5% in the recent quarter. The huge YoY earnings growth was mainly driven by an asset dropdown from its sponsor, Marathon Petroleum Corporation (MPC) completed in early March 2017, and strong throughput volumes from the Marcellus and Permian basins. MPLX beat its 2Q17 EBITDA estimate by 1.7%. Moreover, its distribution coverage improved to 1.26x.
MPLX expects to complete the third drop-down in the third quarter. According to the 2Q17 earnings release, “In the third quarter, MPLX anticipates completing the second of several acquisitions from sponsor Marathon Petroleum Corporation (MPC) with the offer of the joint-interest ownership in certain pipelines and storage facilities. These assets are projected to generate approximately $135 million of annual adjusted earnings before interest, taxes, depreciation and amortization.”
EQT Midstream Partners
EQT Midstream Partners (EQM) and its GP, EQT GP Holdings (EQGP), reported their 2Q17 earnings on July 27. EQM posted revenue and EBITDA growth of 11.8% and 13.2%, respectively in 2Q17. The increase in the partnership’s 2Q17 earnings was mainly due to higher “firm transmission capacity and higher contracted firm gathering capacity.” EQM’s firm reservation revenue grew 21.9% in 2Q17. EQM beat its 2Q17 EBITDA estimate by 4.1%. Moreover, the partnership’s 2Q17 EBITDA margin (82%) expanded by 100 basis points versus 2Q16.
NuStar Energy (NS) and its GP, NuStar GP Holdings (NSH), reported their 2Q17 earnings on July 28, 2017. The partnership’s 2Q17 revenue and EBITDA fell 0.5% YoY and 2.4% YoY, respectively. Moreover, it missed its 2Q17 EBITDA estimate by 6.6%. NS covered its distributions in the second quarter. However, it expects the distribution coverage to fall in the coming quarters, driven by the acquisition of Navigator Energy Services.