MLPs Caught Fire This Week

Reports that some OPEC members, including Saudi Arabia, as well as non-member Russia, had proposed to freeze

production sent oil higher this week. It also fueled a pretty fierce rally in the energy sector, with MLPs and other

midstream companies in particular seeing huge gains, many jumping more than 20% this week. Leading the way, according to S&P Capital IQ data, were NGL Energy Partners (NYSE:

NGL), CONE Midstream Partners (NYSEMKT: CNNX), Teekay (NYSE: TK), Targa Resources (NYSE:

TRGP), and NuStar Energy (NYSE: NS). 

What:

NuStar Energy (NYSE: NS) jumped 22% this week.

So What: Key driver: Higher oil prices Talk of a proposed output

freeze between several key OPEC producers and Russia drove oil higher this week

That fueled a rebound in energy stocks, with MLPs in particular seeing strong gains

Now What: While NuStar doesn’t have

direct exposure to oil prices, volumes on its Eagle Ford Shale pipelines have fallen due to declining production amid weak oil prices

Key takeaway: Actions to stabilize oil will help MLPs like NuStar because volumes might not fall as much as expected

What:CONE Midstream Partners (NASDAQ: CNNX) leapt 29% this week.

So What: Key driver: Fourth-quarter

results CONE Midstream reported an

excellent quarter with volumes, net income, and distributable cash flow growing strongly

Because of that, the company’s distribution coverage ratio is a very solid at 1.59 times

Now What: Because of its strong results,

solid financials, and current outlook CONE was able to increase its quarterly distribution by 3.6% over last quarter

Key takeaway: CONE Midstream is one of the few MLPs in the position to grow its distribution right now

What:

Teekay (NYSE: TK) jumped 33% this week.

So What: Key driver: Fourth-quarter

results and 2016 guidance Teekay reported strong cash

flow growth for the fourth-quarter

Its MLPs Teekay Offshore and Teekay LNG operated with high fleet utilizations thanks to strong portfolios of fee-based contracts

Now What: The company sees that cash

flow remaining strong in 2016 thanks to continued high fleet utilization and growth projects at its MLPs

Key takeaway: Teekay and its MLPs are weathering the downturn in the energy sector a bit better than investors expected

What:Targa Resources (NYSE: TRGP) surged more than 36% this week.

So What: Key driver: Completing the

acquisition of its MLP Targa Resources completed the

acquisition of all the outstanding units of its MLP, Targa Resources Partners, that it did not already own

In closing the deal, Targa will improve its credit and coverage profile, lower its cost of capital, and simplify its structure

Now What: The company also raised $500

million via a private preferred stock offering to reduce leverage and increase its liquidity

Key takeaway: Investors are glad that the deal has closed and that the company has bolstered its balance sheet

What:NGL Energy Partners (NYSE: NGL) surged almost 45% this week.

So What: Key driver: A rebound

after the prior week’s drubbing

NGL Energy Partners plunged more than 40% after reporting poorly received fiscal third-quarter results in early February

Now What: After taking some time to

digest those results, and the company’s watered down guidance, investors realized they overreacted

It also didn’t hurt that oil prices were higher last week, which helped lift all boats

Key takeaway: Sometimes investors overreact to the news

This could be the next billion-dollar iSecret