Highest capital spending targets for 2018
MLPs’ capital spending plans picked up in 2017 after a slump in 2016. The decline in MLPs’ capital spending in 2016 was due to multiyear low crude oil prices.
The publicly traded partnerships are expected to remain cautious in 2018 and maintain capital discipline, which could maintain a healthy balance sheet and coverage position. The heavy spending before the rout in energy prices resulted in huge debt levels and high leverage following the turmoil in energy prices.
Most MLPs expect a reduction in capital expenditures during 2018 compared to 2017. The MLPs with the highest capital spending plans for 2018 are as follows:
- Energy Transfer Partners (ETP): $5.0 billion
- Enterprise Products Partners (EPD): $3.3 billion
- Kinder Morgan (KMI): $2.9 billion
- Williams Partners (WPZ): $2.7 billion
- MPLX LP (MPLX): $2.4 billion
For further detail on the capital spending plans of these top five MLPs, please read Capital Spending and Growth Plans of the Top Midstream Players.
Capital financial plans
Most MLPs are expected to finance their 2018 growth capex from internally generated cash flows and debt. MLPs don’t expect to raise money from the equity capital markets to prevent dilution and the high cost of equity capital.
According to the GSAM’s (Goldman Sachs Asset Management) recent MLP update presentation, MLPs raised $14.7 billion from the debt markets in the first two months of 2018 and ~$1.7 billion from the equity markets.