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ETE, PAGP, WGP, and ENLC: Analyzing MLPs’ General Partners

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Aug. 18 2020, Updated 6:20 a.m. ET

Series overview

In this series, we’ll perform a comparative analysis of four MLPs’ general partners (or GP). The four we’ve chosen are Energy Transfer Equity (ETE), Plains GP Holdings (PAGP), Western Gas Equity Partners (WGP), and EnLink Midstream LLC (ENLC).

We’ll analyze these four peers based on various parameters throughout the series, and we’ll look at analysts’ recommendations in the final article. Let’s start by analyzing their organizational structures.

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Energy Transfer Equity

Energy Transfer Equity owns ~0.3% LP (limited partner) interest and 100% GP and IDRs (incentive distribution rights) interest in the post-merger Energy Transfer Partners (ETP). ETE recently simplified its organizational structure by merging Energy Transfer Partners with Sunoco Logistics Partners. ETP became a wholly-owned subsidiary of Sunoco Logistics as Energy Transfer LP. Sunoco Logistics Partners was renamed Energy Transfer Partners with the ticker ETP.

ETE also owns 2% LP interest and 90% GP and IDRs interest in Sunoco LP (SUN), which is mainly focused on wholesale marketing and the distribution of refined products following the sale of its retail business to 7-Eleven.

Plains GP Holdings

Plains GP Holdings owns 53% LP interest in Plains AAP, LP (or AAP). AAP owns 37% LP interest in Plains All American Pipeline (PAA) and 100% non-economic GP interest in PAA. 

PAA recently announced its removal of IDRs from its capital structure to lower its cost of capital in the current challenging energy price environment.

Enterprise Product Partners (EPD), Buckeye Partners (BPL), and ONEOK (OKE) are among the midstream companies that have announced similar transactions in the past to lower their capital costs.

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Western Gas Equity Partners

Western Gas Equity Partners owns 29.9% LP interest, 1.5% GP interest, and 100% IDRs interest in Western Gas Partners (WES). Anadarko Petroleum (APC) formed WES to provide midstream services. APC owns 81.6% LP and non-economic GP interest in WGP.

EnLink Midstream LLC

EnLink Midstream LLC owns 22.0% LP interest and 100% GP and IDRs interest in EnLink Midstream Partners (ENLK). Like WES, ENLK is owned by Devon Energy (DVN). ENLC and PAGP are taxed as C corporations.

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