Interstate pipeline MLPs
Interstate pipeline MLPs continued to be among the worst performers in the week ending March 23 due to downward price revisions from various Wall Street analysts. Dominion Midstream Energy Partners (DM) and Spectra Energy Partners (SEP) were among the top three MLPs losses last week. They fell 24.8% and 10.8% last week.
Dominion Midstream Energy Partners’ steep decline was due to the downward target price revision and the rise in trade war tensions with China. Dominion Midstream Energy Partners is developing an LNG (liquefied natural gas) export terminal at Cove Point. Cheniere Energy (LNG), which is the only US LNG exporter, fell ~4.0% after the US announced a tariff on Chinese exports worth $60 billion. Read Could Trade War Fears Impact Cheniere Energy’s Performance? to learn more.
Shell Midstream Partners
Shell Midstream Partners (SHLX), the MLP subsidiary of Royal Dutch Shell (RDS-A), fell 13.7% last week. Shell Midstream Partners’ weakness could be due to general weakness in the midstream energy sector following the FERC ruling. However, the partnership doesn’t see any material impact from the ruling on its finances. According to a related press release, “Shell Midstream Partners revenue is predominantly driven by contract, index, and market-based rates, and non-jurisdictional assets. This policy change is not expected to have a material impact to earnings.”
Overall, Shell Midstream Partners has lost 29.4% since the beginning of 2018. Shell Midstream Partners is underperforming the Alerian MLP ETF (AMLP) by 1,570 basis points.
Buckeye Partners (BPL), the midstream subsidiary involved in crude oil, refined products, and natural gas liquids transportation and terminaling, had the fourth-highest MLP loss last week. Buckeye Partners ended the week 10.8% lower. Last week, the partnership’s decline might have been due to its lower rating and target price.