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Why Gathering and Processing MLPs Outperformed in 1Q17

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Gathering and processing MLPs

Gathering and processing MLPs, including Williams Partners (WPZ), Oneok Partners (OKS), and MPLX (MPLX), were the best performing MLPs in the first quarter of 2017. The subgroup rose 14.7% in the quarter.

Gathering and processing MLPs benefited from a slight recovery in drilling activity. Throughput volumes of these MLPs are directly linked to producer activity. We’ll look more at this in a later part of this series.

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Marine transportation MLPs

Marine transportation MLPs, which are mainly involved in marine transportation of crude oil, refined products, and LNG (liquefied natural gas), was the second best performing subgroup among MLPs. They rose 7.0% in 1Q17. For a recent update on LNG carriers, including Teekay LNG Partners (TGP) and GasLog Partners (GLOP), read LNG Carriers: Latest Updates and Analyst Recommendations.

Upstream MLPs

EV Energy Partners (EVEP) and Legacy Reserves (LGCY), both upstream MLPs, were the worst performing subgroup in 1Q17. Their weak performances could be attributed to doubts related to the survival of upstream MLPs under the prolonged low price environment.

Two well known upstream MLPs, Memorial Production Partners (MEMP) and Vanguard Natural Resources (VNR), recently announced bankruptcy. For more details, read Memorial Production Partners to File Bankruptcy: Key Highlights and Vanguard Natural Resources Can’t Make It, Files for Bankruptcy.

Downstream MLPs

Downstream MLPs were the second worst performing MLP subgroup in 1Q17. Their weak performances could be attributed to the current gasoline glut, which is expected to drive gasoline prices lower, resulting in lower profits for these MLPs.

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