MASTER LIMITED PARTNERSHIPS

Wednesday, October 08, 2008

BLOOD IN THE MLP STREETS!

Down 15% in about 2 hours of trading. The index has now down more than 60% off its highs and its down nearly 33% just since September 1st. Down 25 points to 152. Cheniere Energy Partners(CQP)is up 42 cents for some unknown reason but that is it.

Now for horror. Enbridge Energy Partners(EEP) is down 7. Kinder Morgan (KMP) is down 6 and change.Amerigas (APU) Oneok (OKS) Buckeye (BPL) and Sunoco Logisitics (SXL) are down 5. Nustar(NS) Plains All American (PAA) Energy Transfer (ETP) Magellan (MMP) Suburban Propane (SPH) and Hiland Partners (HLND) are down 4. And on and on and on.

Some note worthy prices. Crosstex Energy (XTEX) is under 10 dollars. Hiland Holdings (HPGP) has fallen from 21 to 9 in 5 trading days. Buckeye Holdings (BGH) is under 10 dollars. The GPS have been massacred. Some mlps have seen already depressed prices cut in half in the last few days. Note also that there are some volume spikes in Kinder Morgan,Enterprise and a few others today which indicates perhaps more hedge fund unwinding and they are doing so with no buyers in the market place at all. At face value the move to me is discounting distribution cuts. Are we going to get the hikes or will we begin to see companies hold back on distribution hikes in order to save cash.

Since i started this post we've gone from minus 25 to minus 22 on the mlp index. The overall market is desperately trying to rally and there is still time to mount a violent comeback this afternoon.

12 comments:

Anonymous said...: Distro hikes have to off the table.

Distro cuts are possible if the average interest rate paid is higher reducing the income available for distribution.

If there is any money for distro hikes, it should be used to pay down revolver debt.

I'd hope that some MLPs would preannounce earnings, hopefully stating that they are in compliance with all their lending covenents, and making crystal clear their cost of money going forward.

With demand destruction for oil perhaps being 6% or so, some pipelines that serve imported oil might see lower volumes.
I'd suspect that Nat gas pipelines
will not see much in demand destruction at all.

We also have to face the Obama Presidency with perhaps the ugly spectre of Al Gore helping to set energy policy.

HS; 10/08/2008 11:52 AM
Anonymous said...: No they aren't. Read this:

Just released...

Kinder Morgan Energy Partners Expects to Increase Quarterly Distribution Next Week to $1.02 Per Unit
HOUSTON--(BUSINESS WIRE)--

Kinder Morgan Energy Partners, L.P. (NYSE:KMP) today announced it expects to increase its quarterly cash distribution per common unit next week to $1.02 ($4.08 annualized) from $0.99 ($3.96 annualized). This will represent an increase of 16 percent over the third quarter 2007 quarterly distribution of $0.88 ($3.52 annualized).

"While no company is 100 percent immune to external conditions, KMP continues to demonstrate that our diversified portfolio of stable assets is capable of generating consistently strong cash flow even in extremely difficult market conditions," said Chairman and CEO Richard D. Kinder.

Kinder Morgan Management, LLC also expects to increase its quarterly distribution per unit to $1.02 ($4.08 annualized). The distribution will be paid in the form of additional KMR shares. Both KMP and KMR distributions will be payable on Nov. 14, 2008, to unitholders and shareholders of record as of Oct. 31, 2008. The company will announce its third quarter earnings at close of market on Wednesday, Oct. 15.

Kinder Morgan Energy Partners, L.P. (NYSE:KMP) is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates more than 25,000 miles of pipelines and 165 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle bulk materials like coal and petroleum coke. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. The general partner of KMP is owned by Knight Inc. (formerly Kinder Morgan, Inc.), a private company.

Source: Kinder Morgan Energy Partners, L.P.; 10/08/2008 12:05 PM
Anonymous said...: KMP announces "likely" to raise distribution to $1.02 from current 0.99.
Regardless of price action, that is NOT bad news.
BOL

Vonhayekschumpeter; 10/08/2008 12:08 PM
Anonymous said...: I'd think that it's better to address credit fears, by reducing their need for financing, and improving your credit rating than increasing distros.

HS; 10/08/2008 12:10 PM
Anonymous said...: I just established a major position in KYN in my IRA. Yield: 12.5%; 10/08/2008 12:12 PM
Anonymous said...: HS,

Maybe KMP has no "fear" of being unable to raise funds via capital markets.

Mr Majestyk; 10/08/2008 12:14 PM
Anonymous said...: I can hardly wait to read the Barclays weekly mlp trader report Monday.; 10/08/2008 12:14 PM
Anonymous said...: Hello
I have been looking at MLPs now for several months and found your site during that time. I have found it helpful and nformative... thanks.
Watching MLPs decline makes me very interested in purchasing them but not understanding the tax ramifications has held me back (so far that seems to have been a good thing). Questions that I cannot seem to find a definitive answer too concern how do you find out which states require you to file a tax form when selling a MLP that goes through their state. Does this idea of filing several state tax forms influence your choices in what to purchase?...and how difficult does it make it to buy and sell units?

I have Wachovia's Primer and have visited the official MLP site and still have not found my answer, am I missing something. Any help would be appreciated. As you can see I am new at this but am willing to learn.
Thanks,
TLB; 10/08/2008 12:39 PM
Anonymous said...: What is Barclays weekly MLP trade report? How would one obtain it?; 10/08/2008 12:43 PM
joewxman said...: The amount of taxable income generated in individual states is so small that i have never had to file an indivual state return. For the most part the amounts are below most state minimums for filing. I would say most mlp holders don't bother with it except of course for filing in the state they reside in.; 10/08/2008 12:58 PM
Anonymous said...: "What is Barclays weekly MLP trade report? How would one obtain it?"

It is an ANAL-yst report, posted and available on mlp research group 4 on Yahoo!

Dave; 10/08/2008 1:17 PM
Anonymous said...: So, state tax liability is a non-issue. Thanks! Now on to buying some units.

I know that you do not give advice about buying and selling but do you list what you currently own?

Again, thanks for the quick reply.
TLB; 10/08/2008 1:20 PM