March 2013 showed continued production growth in the Bakken. Most expect the Bakken to continue to grow rapidly which is a positive for midstream names (mostly MLPs) with assets in the area.
Treasury yields increased last week, and a continued movement upward could hurt the valuation of rate-sensitive instruments such as MLPs. However, from a long-term context rates remain very low.
The spread between the Alerian MLP Index and corporate credit was relatively unchanged last week.
Plains All American Pipeline beat its 1Q13 EBITDA guidance by 20%, a strong performance which benefits names such as GEL and SXL.
Last week, frac spread declined roughly 4% to give up some of their gains in the week prior and negatively affecting gas processors’ margins.
Treasury rates continued to compress last week, which is a positive for the rate-sensitive MLP sector.
Frac spreads increased by over 9% last week, as natural gas prices declined and natural gas liquids prices generally were unchanged or up on the week.
The spread between the BofAML BBB Corporate Credit Index and the Alerian MLP Index widened by 9 bps last week.
The cost of equity remains low for master limited partnerships which is a positive for funding growth capex.
The cost of debt for MLPs, both investment grade and non-investment grade, continues to trend lower.
The spread between corporate credit and MLP yields remained relatively unchanged last week. However, from a historical perspective the spread is currently wider than average.
Treasury rates remain near all-time lows which has been a positive for MLP stocks.
Fractionation spreads last week declined by nearly seven percent, which cuts into margins of commodity sensitive gas processors.
Continued growth in Marcellus activity should be positive for midstream names with assets strategically located in the area.
The IPO of two MLP closed-end funds should result in increased demand for MLP names and provide price support to the sector.
Fractionation spreads moved slightly higher last week, in a positive move for MLPs with commodity sensitive gas processing contracts.
Propane exports could increase propane demand and lead to higher prices. Higher prices on natural gas liquids such as propane can have a positive effect on margins of commodity price sensitive midstream gas processing companies.
North Dakota oil production continued to grow rapidly in February 2013, boding well for midstream names with assets located in the area.
Midstream companies in the rapidly growing Eagle Ford play in South Texas stand to benefit from continued growth in the area.
Rising propane exports over the next several years could lift propane prices, which would be a negative driver for retail propane distributors.