DCP Midstream Rose on Sponsors’ Asset Drop-Down Announcement

Top gainers

DCP Midstream Partners (DPM) was the top gainer among midstream MLPs at the end of trading on Tuesday, September 8. It rose 3.65% yesterday.

DCP Midstream Rose on Sponsors’ Asset Drop-Down Announcement

DCP Midstream Partners

DCP Midstream Partners rose after an announcement of asset contribution from its 50-50 joint venture owners—Phillips 66 (PSX) and Spectra Energy (SE). According to the company press release, “Spectra Energy has agreed to contribute its ownership interest in both the Sand Hills and Southern Hills NGL pipelines” while “Phillips 66 has agreed to contribute $1.5 billion in cash.” DCP Midstream Partners’ ownership in Sand Hills and Southern Hill is expected to enhance its “balance of fee-based assets.” The $1.5 billion in cash from Spectra Energy would be used to pay down a “portion of the DCP Midstream revolving credit facility.”

According to Greg Garland, chairman and CEO of Phillips 66, “DCP Midstream is a valuable portion of our NGL value chain and part of our plans to grow. This infusion of cash and operating assets by the joint venture owners will enhance the credit profile of DCP Midstream, provide stability to the existing business and allow pursuit of growth opportunities.”

Crestwood Midstream Partners

Crestwood Midstream Partners (CMLP) is next on our list of the top midstream MLP gainers. It rose 3.38% yesterday. Crestwood Midstream’s general partner, Crestwood Equity Partners (CEQP), rose 3.60%.

Crestwood Midstream Partners has lost 49.67% of its market value since the beginning of this year. Its poor market can be attributed to lower NGL (natural gas liquid) and crude oil prices affecting its crude oil and NGL services segment. For an in-depth analysis of Crestwood Midstream Partners’ recent operating and market performance, read Crestwood Midstream’s 2Q15 Results: Highlights for Investors.

Other gainers

The next three MLPs on the list of the top five midstream MLP gainers on September 8 are Transmontaigne Partners (TLP), Boardwalk Pipeline Partners (BWP), and ONEOK Partners (OKS). They rose 3.24%, 2.20%, and 1.47%, respectively. These three MLPs have returned -1.81%, -24.25%, and -17.87% YTD.

The Alerian MLP ETF (AMLP) and the UBS ETRACS Alerian MLP ETN (AMU) rose 0.14% and 0.09%, respectively. Together, DCP Midstream Partners, Crestwood Midstream Partners, and ONEOK Partners account for ~8.07% of AMLP. For context, the upstream energy company heavy SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 1.88% on the same day.