Commodity & Infrastructure Insights

Fewer MLPs And American Exceptionalism

The diminishing number of MLPs has started to draw attention from sell-side analysts. Morgan Stanley’s Robert Kad wrote in his Midstream Weekly that consolidation was likely to, “impact active manager mandates that have been dedicated to the sector.” The shrinking pool of MLPs and its impact on MLP-dedicated funds has been a developing problem for years. The changed business model during the height of the shale revolution favored growth over distribution stability. The subsequent downturn saw cuts in payouts that soured the traditional investor base of wealthy individuals (see The Disappearing MLP Buyer from March 2020).

Environmentalists Opposed To Windpower

Climate extremists have a well deserved reputation for a simplistic approach to solving the complex problem of curbing CO2 emissions without impoverishing us all. However, poorly informed objectives doesn’t mean they have a co-ordinated approach. The growth in solar and wind power is setting environmental extremists against one another. 

A Pipeline Win From The Debt Ceiling

On Friday, the US Court of Appeals for the District of Columbia agreed that the Federal Energy Regulatory Commission (FERC) had “inadequately explained its decision not to prepare a supplemental environmental impact statement.”

Alerian Still Clinging On

An unintended side-effect of Oneok’s (OKE) proposed acquisition of Magellan Midstream (MMP) has been to give a bid to smaller MLPs. This has come about because of the shrinking pool of names available to populate the Alerian MLP Infrastructure Index (AMZIX) and the Alerian MLP ETF (AMLP) which tracks it.

Alerian Still Clinging On

An unintended side-effect of Oneok’s (OKE) proposed acquisition of Magellan Midstream (MMP) has been to give a bid to smaller MLPs. This has come about because of the shrinking pool of names available to populate the Alerian MLP Infrastructure Index (AMZIX) and the Alerian MLP ETF (AMLP) which tracks it.

Oneok Does A Deal Nobody Needs

Oneok Inc (OKE) surprised sell-side analysts with their Mother’s Day acquisition announcement of Magellan Midstream, LP (MMP) at a 22% premium. Anticipated synergies of $200MM aren’t that big for the $18.8BN transaction value. Management expects that to reach $400MM+ but nobody can ever tell after the fact whether it happened or not. And given the merged entity’s $60BN enterprise value, it’s insignificant.

Oneok Does A Deal Nobody Needs

Oneok Inc (OKE) surprised sell-side analysts with their Mother’s Day acquisition announcement of Magellan Midstream, LP (MMP) at a 22% premium. Anticipated synergies of $200MM aren’t that big for the $18.8BN transaction value. Management expects that to reach $400MM+ but nobody can ever tell after the fact whether it happened or not. And given the merged entity’s $60BN enterprise value, it’s insignificant.

Why Keep Money At A Bank?

I looked through First Horizon Bank’s (FHN) 10K last week. They were in the news because Toronto Dominion (TD) canceled their merger agreement due to uncertainty about when they might receive regulatory approval. FHN’s stock slumped to below $10. The merger price, agreed in February of last year, was $25.

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