Buckeye Partners’ recent market performance
Buckeye Partners (BPL) recovered significantly from its 52-week low, which it saw during the end of November 2017. Since then, Buckeye Partners has gained 21.1%—mainly due to strong crude oil prices and the corresponding increase in drilling activity.
Despite these gains, Buckeye Partners has lost 5.3% since the end of 3Q17. At the same time, the Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, has gained 2.3%.
Buckeye Partners’ underperformance relative to AMLP during 4Q17 and January 2018 could be attributed to its weak 3Q17 earnings, relative high commodity price exposure, and continued weakness in Eagle Ford drilling activity.
According to Baker Hughes, the rig count in the Eagle Ford region averaged 67 during 4Q17—compared to the average of 75 the previous quarter. The rig count in the region was 70 by the end of last year. The rig count has continued to decline in 2018. The total Eagle Ford rig count has come down to 66 as of January 26, 2018. The decline in Eagle Ford drilling activity impacts Buckeye Partners’ throughput volumes.
Buckeye Partners’ one-year performance
Buckeye Partners has lost 23.5% over the past year despite the gains in 2018. Buckeye Partners’ peers, Magellan Midstream Partners (MMP), Kinder Morgan (KMI), and NuStar Energy (NS) have lost 11.5%, 20.3%, and 38.6% in the past year. At the same time, AMLP has lost 13.0%. Buckeye Partners is underperforming AMLP by 1,050 basis points. In the next part, we’ll analyze Buckeye Partners’ current valuation.