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2 New MLPs That Are
Worth a Closer Look
The Class of 2013
A staggering 20 master limited
partnerships went public last year
The Class of 2013
SCXP CVRR USAC NSLP
KNOP EMES TEP PSXP
FISH QEPM WPT OCIR
OCIP WNRL PAGP SRLP
MEP ARCX DLNG VLP
Big Potential
MLP fund flows continue to
increase in 2014, and actively
managed funds are going after
young MLPs with big ...
Big Potential
Some of the most compelling MLPs
on the market today debuted last
year. Now that they have a few
quarters un...
Phillips 66 Partners
• Market debut: 7/13
• Common units
outstanding: ~38.7
million
• General partner
Phillips 66 controls...
Key events
July 23, 2013
Dist. $0.155
(Pro-rated)
Dist. $0.225
5/1/14
Gold Line
acquisition
$700 million
Units close at
~$...
Key statistics
• Total pipeline capacity: 775,000 barrels/day
• Total storage capacity: 12.2 million barrels
• Total dock ...
Why invest?
• 5 different asset systems, including crude oil
pipelines, terminal storage, refined products
pipelines, and ...
Valero Energy Partners
NYSE: VLP
• Market debut:
12/13
• Common units
outstanding: ~28.8
million
• General partner
Valero ...
Key statistics
• 3 pipeline systems supporting 3 refineries with
675,000 bpd combined capacity
• Generated $13.57 million ...
Why invest?
• Fee-based contracts with Valero drive revenue
• Right of first offer for Valero asset acquisitions,
includin...
Key takeaways
• Both of these MLPs are small and new, but are
driven by fee-based contracts from mature
businesses
• Asset...
Do You Know This
Energy Tax Loophole?
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2 New MLPs Worth a Closer Look

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Phillips 66 Partners and Valero Energy Partners are less than a year old, but don't let that fool you.

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Transcript of "2 New MLPs Worth a Closer Look"

  1. 1. 2 New MLPs That Are Worth a Closer Look
  2. 2. The Class of 2013 A staggering 20 master limited partnerships went public last year
  3. 3. The Class of 2013 SCXP CVRR USAC NSLP KNOP EMES TEP PSXP FISH QEPM WPT OCIR OCIP WNRL PAGP SRLP MEP ARCX DLNG VLP
  4. 4. Big Potential MLP fund flows continue to increase in 2014, and actively managed funds are going after young MLPs with big potential.
  5. 5. Big Potential Some of the most compelling MLPs on the market today debuted last year. Now that they have a few quarters under their belt, here are two you don’t want to miss.
  6. 6. Phillips 66 Partners • Market debut: 7/13 • Common units outstanding: ~38.7 million • General partner Phillips 66 controls > 50% of common units NYSE: PSXP
  7. 7. Key events July 23, 2013 Dist. $0.155 (Pro-rated) Dist. $0.225 5/1/14 Gold Line acquisition $700 million Units close at ~$65, +182% PSXP prices at $23 10/31/13 1/31/14 2/13/14 Dist. $0.274 Mid-June
  8. 8. Key statistics • Total pipeline capacity: 775,000 barrels/day • Total storage capacity: 12.2 million barrels • Total dock throughput: 57,000 barrels/hour • Adjusted EBITDA up 62% since IPO • Quarterly distribution up 29% since IPO
  9. 9. Why invest? • 5 different asset systems, including crude oil pipelines, terminal storage, refined products pipelines, and propylene storage. • Each asset backed by fee-based agreement with Phillips 66, including minimum volume commitments and inflation escalators • Parent-company is midstream-focused • Dropdown opportunities aplenty, given PSX’s asset footprint
  10. 10. Valero Energy Partners NYSE: VLP • Market debut: 12/13 • Common units outstanding: ~28.8 million • General partner Valero controls < 50% of common units Photo credit: flickr/Anthony Qunitano
  11. 11. Key statistics • 3 pipeline systems supporting 3 refineries with 675,000 bpd combined capacity • Generated $13.57 million in distributable cash flow in Q1 2014 • Units are up ~92% from IPO price • Distribution coverage ratio at 1.09 times distributions in the most recent quarter
  12. 12. Why invest? • Fee-based contracts with Valero drive revenue • Right of first offer for Valero asset acquisitions, including six different systems or storage assets • Growth is imminent: Dropdowns are slated to begin in the third quarter of 2014 • Management expects to grow distributions by about 20% each year for the next three years
  13. 13. Key takeaways • Both of these MLPs are small and new, but are driven by fee-based contracts from mature businesses • Asset footprint growth story is relatively transparent • Investors can expect distribution growth and adequate coverage for the foreseeable future
  14. 14. Do You Know This Energy Tax Loophole?
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