In this series, we’ll perform a comparative analysis of four GPs (general partners) of MLPs (master limited partnerships). The GPs of MLPs generally don’t have any business assets and are dependent upon their limited partnerships for distribution income. The four peers we’ve chosen to discuss include Energy Transfer Equity (ETE), Western Gas Equity Partners (WGP), Plains GP Holdings (PAGP), and Williams Companies (WMB).
ETE and WGP are structured as MLPs, while PAGP is structured as an LLC (limited liability company), and WMB operates as a C corporation. Both MLPs and LLCs are pass-through entities with no taxes at the entity level (only at the investor level), while WMB is taxed at the entity level, resulting in double taxation on dividend income for investors.
One of the major differences between an MLP and an LLC is the tax filling procedure. While MLPs have a complex K-1 form to be filed by investors, LLCs have a simpler 1099 form.
Energy Transfer Equity
Energy Transfer Equity owns 2.5% of LP (limited partner) interest and 100% of GP and IDR (incentive distribution rights) interest in Energy Transfer Partners (ETP). ETP is a diversified MLP involved in almost all midstream activities related to natural gas, crude oil, NGLs (natural gas liquids), and refined products.
ETE also owns 2.3% LP interest and 90% of GP and IDR interest in Sunoco LP (SUN), which is mainly focused on the distribution and wholesale marketing of refined products.
Plains GP Holdings
Plains GP Holdings owns 53% LP interest in Plains AAP, which owns 37% LP interest in Plains All American Pipeline (PAA) and 100% of non-economic GP interest in PAA. Plains All American Pipeline is one of US largest crude oil transporters with a focus in the Permian and Eagle Ford Shale regions.
Western Gas Equity Partners
Western Gas Equity Partners owns 30% LP interest, 1.5% GP interest, and 100% IDR interest in Western Gas Partners (WES). WES is a DJ and Delaware Basin natural gas gathering and processing MLP.
Williams Companies owns 74.0% LP interest and 100% of non-economic GP interest in Williams Partners (WPZ). WPZ is mainly involved in natural gas gathering and transportation. It also provides NGLs (natural gas liquids) transportation and storage services.
WMB’s economic GP interest was converted to non-economic GP interest after the financial repositioning. IDRs were also removed from WPZ’s capital structure.