A Look at Shell Midstream Partners’s Leverage



SHLX’s net debt-to-EBITDA ratio

Shell Midstream Partners’s (SHLX) net debt-to-EBITDA[1. earnings before interest, tax, depreciation, and amortization] ratio is currently 1.2x. MLPs usually target a debt-to-EBITDA ratio below 4.5x. So, SHLX’s leverage is very conservative.

Debt-to-EBITDA ratios are commonly used by credit rating agencies to determine a company’s credit rating. A lower ratio is considered better than a higher ratio.

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SHLX’s debt-to-equity ratio

The above graph shows Shell Midstream Partners’s (SHLX) debt-to-equity and net debt-to-EBITDA ratios at the end of 3Q16. Shell Midstream Partners’s debt-to-equity ratio is currently 0.19x.

SHLX was listed on NYSE in October 2014. SHLX forms ~1.7% of the Alerian MLP ETF (AMLP).

Equity issuances

In 1Q16, Shell Midstream Partners (SHLX) issued 750,000 common units under its at-the-market program.

In March 2016, SHLX issued 12.6 million common units in a public offering for net proceeds of $395 million. It used the proceeds to repay borrowings outstanding under its revolver credit facilities.

In May 2016, SHLX issued 10.5 million common units for $345.8 million. The company used the proceeds to partially fund an acquisition of additional equity interests in the Zydeco Pipeline, Bengal Pipeline, and Colonial Pipeline from Royal Dutch Shell Plc.

Next, we’ll analyze Shell Midstream Partners’s cash available for distribution, capital expenditures, and distribution growth.


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