Buckeye Partners’ 4Q15 Distributions Continue to Grow



Stock price reaction

Buckeye Partners’ (BPL) shares rose 8.7% on February 12, 2016, following its 4Q15 earnings announcement. The Alerian MLP ETF (AMLP), which is comprised of 22 midstream MLPs, rose by 7.03%. Buckeye Partners’ outperformance could be attributed to its strong 4Q15 earnings. The partnership continues to grow its distributions in the midst of turmoil in the energy sector.

Buckeye Partners declared a distribution of $1.19 per unit for 4Q15. This represents an ~4.4% YoY (year-over-year) increase over 4Q14 and a 1.1% sequential increase over 3Q15. Buckeye Partners’ peers, NGL Energy Partners (NGL) and VTTI Energy Partners (VTTI) grew their 4Q15 distribution by 3.3% YoY and 14.9% YoY, respectively. NuStar Energy (NS) kept its distributions flat over the past several quarters. Buckeye Partners forms ~5.9% of the Global X MLP ETF (MLPA).

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2016 distribution guidance

Midstream energy giant Kinder Morgan (KMI) decided to slash its dividend by 75%. Buckeye Partners might continue to grow its distribution in 2016. The partnership expects to grow its distribution at a fixed rate of $0.0125 per unit for each quarter in 2016.

On the fixed rate of distribution growth, Clark C. Smith, Buckeye Partners’ CEO said, “given the uncertainty of the capital markets and the importance these markets are placing on improving balance sheets rather than accelerating distributions, we concluded that greater long-term unitholder value will be created by refraining from any acceleration in our distribution growth rate at this time. We will maintain our focus on strengthening our balance sheet, growing cash flow and improving our coverage and leverage metrics.”

2016 capex guidance

Buckeye Partners expects to spend between $325 million and $375 million on capital projects in 2016. However, 40% of the planned capex is uncommitted and could be deferred. According to Keith E. St. Clair, Buckeye Partners’ CFO, the projects are “focused primarily on optimizing our assets and, if we obtained a necessary customer support, we will move forward with the capital spend as we believe it will generate long-term value for our unitholders.”


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