Boardwalk Pipeline Partners’ market performance
Boardwalk Pipeline Partners (BWP) stock has been weak for most of July 2017. BWP stock saw a steep decline during the beginning of the month after commodity prices retreated from a strong rally.
Overall, BWP has lost 3.8% so far in July. The Alerian MLP ETF (AMLP), which comprises 25 energy MLPs, was flat on July 24, 2017. The recent weakness in BWP’s stock performance could be attributed to the recent weakness in crude oil and natural gas prices.
Boardwalk Pipeline’s high correlation with crude oil and natural gas, despite its low commodity price exposure, reflects investor concerns over a decline in drilling activity. This decline is due to weakness in commodity prices and BWP’s low or lack of exposure to some of the prolific shale plays such as Permian, Marcellus, Utica, and SCOOP. The partnership has lost 0.17% since the beginning of 2017.
In comparison, BWP’s peers EQT Midstream Partners (EQM) and Spectra Energy Partners (SEP) have lost 0.5% and 1.6%, respectively, in 2017. During the same timeframe, Williams Partners (WPZ) has gained 8.0%, and AMLP has lost 5.1%.
Moreover, the partnership is still trading well below the levels before the announcement of the distribution cut in 4Q13.
Boardwalk Pipeline Partners’ distributions
Boardwalk Pipeline Partners’ distribution has remained flat at $0.20 per unit since its distribution cut. The partnership is not expected to resume distribution growth until its leverage multiple remains below 4.0x. We looked into BWP’s leverage situation in the previous article.
Kinder Morgan (KMI), the midstream giant, cut its quarterly distribution to $0.125 per unit in 4Q15 as a measure to improve its balance sheet. KMI is expected to resume distribution growth from 2018, considering a significant improvement in its leverage situation.
KMI announced its dividend growth forecast for 2018 in its 2Q17 earnings. For more details, please read Kinder Morgan Expects a 60% Rise in 2018 Dividends.