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In-Depth Analysis of the Top 4 MLPs: EPD, ETP, WPZ, and MMP

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In-Depth Analysis of the Top 4 MLPs: EPD, ETP, WPZ, and MMP PART 1 OF 9

Why Williams Partners Outperformed Peers Year-to-Date

The top four MLPs

How are the four biggest energy MLPs performing in the generally down MLP sector? How does their performance compare with others? Which of them is a better investment option? This series attempts to find answers to these and other questions that you might have about your investments in the four biggest MLPs by market capitalization—Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), Magellan Midstream Partners (MMP), and Williams Partners (WPZ).

Why Williams Partners Outperformed Peers Year-to-Date

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The above graph compares YTD (year-to-date) price performance for these four MLPs. Except for Williams Partners—which is nearly flat—the remaining three MLPs are in the red year-to-date. Sustained weakness in crude oil prices has negatively impacted the entire energy sector over the last couple of years. MLPs were no exception.

The EIA (U.S. Energy Information Administration) forecasts WTI (West Texas Intermediate) crude oil prices to average $49 per barrel in 2017 and $50 per barrel in 2018. The prices averaged $43.3 per barrel in 2016 and $49.4 per barrel so far in 2017. So, crude oil prices are expected to remain at current levels or improve marginally over the next year. Midstream companies that can perform in the “new-normal” oil price environment will likely be investors’ preferred choice.

Enterprise Products Partners

Enterprise Products Partners—the largest MLP in the United States by market capitalization—was formed in 1998. It provides midstream services for natural gas, NGL (natural gas liquid), crude oil, and refined products. It’s also involved in marine transportation.

Energy Transfer Partners

Listed in 2004, Energy Transfer Partners mainly provides natural gas midstream services—including transportation and storage. It also provides NGL transportation, storage, and fractionation services. After its merger with Sunoco Logistics, it’s now also involved in crude oil and refined products transportation, terminaling, and marketing.

Williams Partners

Williams Partners mainly provides natural gas gathering, processing, storage, and marketing services. It also provides NGL fractionation and transportation. Williams Companies (WMB) owns a 74% interest in Williams Partners.

Magellan Midstream Partners

Magellan Midstream Partners transports, stores, and distributes petroleum products. The main factor that differentiates MMP from the other three MLPs is that MMP isn’t involved in natural gas operations. MMP owns and operates refined products pipelines and terminals, crude oil pipelines and storage facilities, and marine storage facilities.

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