How Did MLP Stocks React to Trump Removing the Blockade?



Energy Transfer group companies

Energy Transfer group companies’ stocks including Energy Transfer Partners (ETP), Sunoco Logistics Partners (SXL), and Energy Transfer Equity (ETE) rose 3.5%, 3.8%, and 2.0%, following the executive order on the Dakota Access pipeline.

Together, Energy Transfer Partners and Sunoco Logistics Partners own 75% of the project, while Phillips 66 (PSX) owns the remaining 25%. Energy Transfer Partners and Sunoco Logistics Partners announced a 36.75% stake sale in the Bakken pipeline project to Enbridge Energy Partners (EEP) and Marathon Petroleum (MPC) in August 2016. The deal was pending due to the protest. Following the executive orders, the deal will likely close. The proceeds from the transaction will be used to repay debt.

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Until yesterday, Energy Transfer Partners and Sunoco Logistics Partners had lost ~14% and ~23% of their market value since the beginning of the protest. Native Americans and environmental activists protested against the current route of the Dakota Access pipeline because it passes through North Dakota’s Lake Oahe. Lake Oahe is a burial site and a major source of drinking water for the Standing Rock Sioux reservation settled along the Missouri River.

TransCanada Corporation

Shares of TransCanada, the owner of the Keystone pipeline project, rose 3.5% following President Trump’s executive orders to revive the project. Various environmental groups opposed the Keystone project due to land and water issues following the pipeline construction. It was rejected due to environmental concerns regarding crude oil production from oil sands.

The Alerian MLP ETF (AMLP), which is comprised of 25 midstream energy MLPs, closed 1.5% higher on Tuesday, while the SPDR S&P 500 ETF (SPY) rose 0.6%. The regulatory and environment blockade remained a major concern for pipeline MLPs in pursuing organic projects.

In a separate memorandum, President Trump directed industry agencies and bodies to expedite the approval process for key infrastructure projects. Pipeline MLPs are also expected to benefit from this memorandum.


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