More Solid Pipeline Results

Cheniere continues to expand their export facilities, both at Sabine Pass, LA where they’re adding a sixth train and also at Corpus Christie, TX. They don’t expect coronavirus to harm either the cost or completion schedule of these projects. They reaffirmed previous full year guidance on distributable cash flow and EBITDA.

Magellan Midstream (MMP) provided some interesting recent volume statistics, in that refined product demand was down 24% in April but “only” 20% in the last week of April. CEO Mike Mears thinks that this category could return to last year’s levels by 3Q20, which most would agree is more positive than consensus.

One analyst asked about interest from private equity firms in acquiring publicly traded MLPs. Mears responded, “We haven’t spent a lot of time talking to private equity firms about acquiring Magellan. That wouldn’t be at the top of our list.”

TC Energy (TRP) noted that their outlook was largely unchanged with their CEO Russ Girling commenting on their Friday afternoon earnings call that “with approximately 95% of our comparable EBITDA coming from regulated or long-term contracted assets, we are largely insulated from the volatility associated with volume throughput and the commodity prices that are being experienced by many others. Aside from the impact of normal maintenance activities and seasonal factors to date, we have not seen any meaningful change in the utilization of our assets, which further reinforces their critical nature to North America.”

Large midstream companies are generally maintaining dividends and where 2020 results are guided lower, cuts in growth spending more than offset (see Pipeline Payouts Holding Up). In the 2014-16 downturn, MLP distribution cuts were widespread. The payouts on the Alerian MLP ETF (AMLP) is the lowest in its history, and 36% below its level of 2016. In a familiar story, 21 MLPs have recently cut distributions. EPD and MMP are an exception to this pattern, which puts them in the company of large pipeline corporations. The components of the broad-based American Energy Independence Index (which is 80% corporations) currently yield 10.5%.

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