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A Look at MLP Subgroups in 2018 Year-to-Date

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Upstream MLPs

In this article, we’ll analyze MLPs’ performance by subgroups. Upstream MLPs comprise the top-performing MLP subgroup in 2018 year-to-date. This is mainly driven by strong performance from Legacy Reserves (LGCY), which has gained more than 140.0% since the start of this year.

This trend is being offset by weak performance from the other upstream MLPs, including EV Energy Partners (EVEP) and Mid-Con Energy Partners (MCEP). Overall, the outlook for upstream MLPs remains bleak.

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Natural gas transportation

Natural gas transportation MLPs, which are mainly engaged in natural gas and NGLs (natural gas liquids) transportation, comprise the weakest MLP subgroup in terms of performance.

On an average, natural gas transportation MLPs have lost 15.6% since the start of this year. This trend could be mainly attributed to the sharp decline in interstate pipeline operators following the FERC ruling.

Liquids transportation and storage MLPs

Liquids transportation MLPs have the second-weakest performance among the MLPs. Liquids transportation MLPs are involved in crude oil, NGLs, and refined products transportation, terminaling, logistics, and marketing. This MLP subgroup fell 11.5% in 2018 YTD.

This trend could be attributed to weakness in drilling activity in some regions and weaker-than-expected earnings announcements from most liquids transportation MLPs during 4Q17.

Enbridge Energy Partners (EEP) and Tallgrass Energy GP (TEGP) also have the weakest performance metrics in the MLP subgroup. On the other hand, Plains All American Pipeline (PAA) is the top performer in the subgroup.

Others

Others, which includes catalytic conversion, frac sand producer, upstream services, and midstream services MLPs, have risen 2.8% on average. This trend was led by strong performance from midstream services and frac sand producers.

Midstream services mainly include contract natural gas compression MLPs such as CSI Compressco (CCLP), Archrock Partners (APLP), and USA Compression Partners (USAC). Frac sand producers include Hi-Crush Partners (HCLP).

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