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MLP analysis: A must-know overview of Access Midstream Partners

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Nov. 20 2020, Updated 2:07 p.m. ET

Access Midstream Partners

Access Midstream Partners LP (ACMP) is a master limited partnership that provides natural gas gathering and processing services under long-term fixed-fee contracts for energy companies like Chesapeake Energy Corporation (CHK) or Mitsui & Co. (MITSF). ACMP is part of the Alerian MLP ETF (AMLP) and CHK is part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Ownership structure and related entities

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ACMP’s general partner is owned by Global Infrastructure Partners (GIP) and The Williams Companies Inc. (WMB). GIP is an independent infrastructure fund that has significant investments in energy assets and businesses worldwide, and Williams is one of the largest energy infrastructure companies in North America. That these entities own ACMP’s GP and confer their expertise on the company is a positive.

Plus, ACMP was born of Chesapeake Midstream, which was previously controlled by Chesapeake Energy. Chesapeake Midstream provided natural gas gathering and processing services mostly to CHK. Currently, CHK remains one of ACMP’s largest customers. To have the implicit support of one of the nation’s largest natural gas producers is also likely a positive.

Asset summary

ACMP is the largest MLP engaged in gathering and processing, as measured by throughput volume, transporting more than 7% of natural gas in the United States.

The company’s assets are located in the Barnett Shale, Haynesville Shale, Marcellus Shale, Mid-Continent region, Eagle Ford Shale, Utica Shale, and Niobrara Shale.

Financial summary

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ACMP has a market cap of ~$11 billion and an enterprise value of ~$15 billion (as of March 21). The company’s adjusted EBITDA for fiscal year 2013 was $859 million, up 80% compared to fiscal year 2012. The key drivers for the EBITDA growth in 2013 over 2012 were capital investments in 2013 in the Utica ($598 million), Eagle Ford ($316 million), and Marcellus ($292 million), which laid down significant revenue-generating assets. Total capex for FY2013 was $1.6 billion. Investments in these liquids-rich regions generated approximately 50% of the company’s EBITDA.

ACMP is currently trading at an EV–to–2014E EBITDA of ~13x. ACMP’s capital expenditures are predicted to drop from $1.6 billion in 2013 to ~$1.1 billion in 2014. While capex decreases, ongoing and new projects continue to drive up 2014E EBITDA, to ~$1 billion.

Distributions

Distributable cash flow (or DCF) for fiscal year 2013 was $635.1 million—up 86.7% over fiscal year 2012, resulting in a full-year coverage ratio of 1.5x.

On January 28, ACMP announced an increase to its quarterly distribution from $0.535 per unit to $0.555 per unit, which was a 23.3% increase versus 4Q12 and 3.7% increase versus 3Q13. The amount distributed for fiscal year 2013 was $2.0425 compared to $1.71 in 2012, a 19% increase. Access Midstream Partners provides a distribution yield of 3.9% currently.

Read on to the following parts of this series to learn about ACMP’s assets in greater detail.

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