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EQM, AM, RMP, and CNNX: A Key Leverage Comparison of MLPs

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Net debt-to-EBITDA

Among the four MLP (master limited partnership) peers we’ve selected for analysis in this series, Antero Midstream Partners (AM) had the highest net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple of 2.5x by the end of the second quarter, and this multiple is below industry standards. MLPs generally target a ratio between 4.0x and 4.5x.

Rice Midstream Partners (RMP), which had zero debt outstanding as of June 30, 2016, has no leverage. Cone Midstream Partners (CNNX) also a leverage ratio of below one. These factors might indicate low expansion opportunities for RMP and CNNX.

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EQT Midstream Partners (EQM), which also has a low leverage ratio of 1.1x, is still using the equity markets for raising funds. When asked if the MLP would reach the target leverage that it had projected, EQM Chief Financial Officer Rob McNally stated: “It really is going to be over the next several years as we guide significant CapEx spend primarily with MVP coming, will give us an opportunity to get to appropriate levels over the next call it two years or little more than two years.”

MVP refers to EQM’s Mountain Valley Pipeline project.

Continue to the next part for a capital expenditure comparison of these four MLPs.

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