Last Week’s Biggest MLP Losers: SMLP and More


Feb. 26 2018, Published 3:35 p.m. ET

Summit Midstream Partners

Summit Midstream Partners (SMLP), a midstream MLP mainly involved in crude oil gathering and processing and crude oil gathering, was the biggest MLP loser last week. SMLP fell 8.9% in a single trading session on Friday, resulting in a weekly loss of 12.7%.

SMLP crashed following its weak 4Q17 earnings announcement and weak growth outlook. The partnership reported a flat adjusted EBITDA[1. Earnings before interest, tax, depreciation, and amortization] and a 6.9% YoY decline in distributable cash flow in 4Q17 versus 4Q16. For 2017, the partnership posted a marginal decline in adjusted EBITDA. The partnership’s 4Q17 was negatively impacted by weak performance at its Williston Basin and Barnett Shale segments.

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SMLP expects its adjusted EBITDA to lie between $285 million and $300 million in 2018. At the midpoint, this range represents a marginal 0.7% increase compared to 2017. There seems no chance of distribution growth resuming in 2018, considering the partnership’s low distribution coverage and weak earnings growth.

Martin Midstream Partners

Martin Midstream Partners (MMLP) was the second-biggest MLP loser last week, with a WoW (week-over-week) decline of 9.2%. MMLP shares tanked after Moody’s downgraded the partnership to B2 from B1.

According to Moody’s, “The downgrade reflects Moody’s expectation for a continued increase in leverage over the next 12 months. Distribution coverage will also be pressured including as a result of incremental maintenance capital expenditure needs during 2018.” The partnership recently announced its 2018 guidance. It expects to end 2018 with a coverage ratio of 1.0x. Moreover, MMLP’s higher capital spending plans for 2018 are expected to put additional pressure on its weak balance sheet. MMLP expects its 2018 capital expenditure to be $79.6 million, of which $50.3 is assigned for organic expansion.

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EnLink Midstream LLC

EnLink Midstream LLC (ENLC) was the third-biggest MLP loser last week. Its limited partnership, EnLink Midstream Partners (ENLK), was also among the ten biggest MLP losers. ENLC and ENLK fell 8.1% and 5.3% last week, respectively. The EnLink duo fell following their 4Q17 earnings announcement.

The steep decline in ENLC’s share could be due to lower-than-expected distribution growth guidance for 2018 versus 2017. The GP expects to grow its distribution by 5% for 2018 over 2017. The limited partnership isn’t expected to resume distribution growth in 2018, considering its capital spending plans and low distribution coverage.                       

Other MLP losers

CVR Refining (CVRR), Sanchez Midstream Partners (SNMP), EQT Midstream Partners (EQM), Genesis Energy (GEL), Calumet Specialty Products Partners (CLMT), and Plains All American Pipeline (PAA) were among the big ten MLP losers last week. EQM fell after its sponsor, EQT Corporation (EQT), announced the spin-off of its midstream business. For details, see EQT to Spin Off Its Midstream Operations.


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