28 Feb

Why greater natural gas production has hurt some MLPs



Many master limited partnerships have assets that gather and transport natural gas. So these companies generally benefit when more natural gas is produced, as that creates revenue opportunities. However, the rapid increase in the amount of natural gas produced in the U.S. has actually hurt some MLPs.

Why greater natural gas production has hurt some MLPs

While most MLPs right now are growing, raising distributions, and seeing their stock prices increase alongside distributions, Boardwalk Pipeline Partners (BWP) recently cut its distribution drastically. The company declared a distribution of $0.10 per quarter ($0.40 annualized), compared to the previous quarterly distribution of $0.5325. As one important part of MLP valuation is distribution yield (annualized distribution divided by stock price), BWP’s stock price plummeted following the announcement. BWP closed at $24.09 per unit prior to the announcement and closed at $13.01 per unit after.

To learn more about investing in MLPs, see the Market Realist series Targa Resources company overview and 4Q13 earnings review.

Latest articles

The troubled 737 MAX's prolonged grounding and uncertainties are hurting Boeing’s (BA) commercial aircraft order and delivery numbers.

On Monday, Southwest Airlines said that it will accelerate inspections of 38 remaining second-hand jets. The company bought the jets from foreign carriers.

Today, Charlotte's Web Holdings (CWEB) (CWBHF) reported its third-quarter earnings. The company missed analysts' revenue and EPS estimates.

Nvidia will release its third-quarter earnings results on November 14. Analysts expect it to report adjusted EPS of $1.57 for the quarter.

Information tech and networking giant Cisco Systems (CSCO) is set to report its fiscal 2020 first-quarter results today at 4:30 PM ET.

Facebook (FB) launched a new payment service that will work across its family of apps. The payment service is called Facebook Pay.