WEEK 38 SEPTEMBER 21, MLP Protocol FREE VERSION

Transcription

1 MLP PROTOCOL WEEK 38 SEPTEMBER 21, 2012 MLP Protocol FREE VERSION

2 Contact Information Philip Trinder PRESIDENT MLP Protocol 4020 MARLOWE HOUSTON, TEXAS OFFICE: MOBILE: STOCKTWITS / RECENT SEEKING ALPHA ARTICLES 9/19/12 MLP IPO Review: Susser Petroleum Partners, L.P. 9/13/12 Gathering and Processing MLP Protocol Rankings 8/24/12 MLPs and Relative Value Versus U.S. Treasuries 8/15/12 MLP IPO Review: Hi-Crush Partners, L.P. 7/20/12 A Ranking Protocol for the MLP Space 7/16/12 The Two Most Tax Efficient Investments in the MLP Space ADDITIONAL MLP PROTOCOL RESOURCES MLP Protocol Monthly Analytics MLP Protocol Asset Book DISCLAIMER This presentation and the information contained herein, as well as any additional documents and explanations (together the Presentation ), are for information purposes only, and MLP Protocol ( MLPP ) and Marlowe House Capital, LLC ( MHC ) are not soliciting any action based upon it. Opinions expressed herein are MLPP s present opinions only. This Presentation is based upon information that MLPP considers reliable, but MLPP does not represent, guarantee, or warrant, expressly or implicitly, that the Presentation is accurate, complete, or suitable for any particular purpose, and it should not be relied upon as such. MLPP is not obliged to update or periodically review the Presentation. MLPP accepts no liability with respect to, or arising directly or indirectly out of, the Presentation. In addition, there can be no guarantee that any projection, forecast or opinion in this presentation will be realized. Opinions expressed herein are subject to change without notice. You are advised to make an independent review and reach your own conclusions regarding the economic risks and benefits of any investment and the legal, credit, tax, accounting and other aspects of such investment in relation to your particular circumstances. We may from time to time have long or short positions in such securities or in options, futures, or other derivative instruments based thereon. All trade names, trade marks, service marks, and logos herein are the property of their respective owners who retain all proprietary rights over their use. No part of this document may be reproduced in any manner without written permission All rights reserved. W W W. M L P P R O T O C O L. C O M 1

3 MONTHLY ANALYTICS REPORTS 3YR and 5YR FYAT Data Correlations and History Long Term Trends MLP Protocol Monthly Analytics Reports What is the MLP Protocol? The MLP Protocol includes analytical reports covering all of the energy related Master Limited Partnerships. The full Monthly Analytics reports include the following: Forward Yield After Tax ( FYAT ) projections, Valuation Coverage Ratios ( VCR ), FYATs / VCR and segment rankings on all metrics (updated rankings in subscriber version of the Weekly Snapshot reports) Long term historical charts Charts showing the U.S. Treasury Yield curve migration (since 2006) and historical Alerian MLP Index yield trend vs. 10 year and 20 year U.S. Treasury yield trends (since 1995) Distribution history chart showing years that each MLP has maintained or increased their distributions (color coded by segment within the MLP coverage universe) Yield vs. distribution growth correlation analyses Recent IPO scorecard and IPO forward calendar Full peer group analysis for 12 comparable group segments with relative value analysis and valuation and leverage vs. yield charts Distribution Coverage Ratio ( DCR ) studies for each segment comparing DCRs to historical distribution growth, current yields, projected distribution growth and resulting 3 year forward yield after tax, maintenance capex, Total Enterprise Valuation, and Distributable Cash Flow per L.P. unit Forward Yield After Tax ( FYAT ) Allows comparison of the estimated minimum yield investors net across the broad MLP group and is based upon the following assumptions for each MLP: Distribution growth rates Estimated tax deferral of the distributions Highest current individual tax rate (35% for now, the potential increase to 43.4% is less impactful to the projected yields than expected due to the tax deferred nature of MLP distributions) Segment Comp Groups 2

4 23.3% % 29.8% 29.2% 23.4% 34.7% 28.7% 18.2% 34.6% 24.9% 28.2% 34.7% 34.6% 29.8% 29.2% 28.7% 28.2% 26.5% 24.9% % 23.3% 18.2% Top Ranked by 3 Year Forward Yield After Tax Top Ranked by Segment Highest to Lowest with Relative Risk 4 35% 3 25% 15% 5% ETP NS EXLP NKA LRE SPH CPLP RNO NSH PDH NTI STON Nat Gas & NGL Pipes Crude & Ref Prod Pipes G & P T & S Upstream Propane Marine Coal General Partners ( GP ) Variable Rate D & M Other 4 35% 3 25% 15% 5% CPLP PDH NKA LRE RNO STON EXLP NTI NS SPH ETP NSH Marine Variable Rate T & S Upstream Coal Other G & P D & M Crude & Ref Prod Pipes Relative Risk Scale DCR < 1.0x* Propane Nat Gas & NGL Pipes General Partners ( GP ) *Please see data on next page for additional MLPs in the chart that have Distribution Coverage Ratios (DCRs) less than 1.0x. Risky Very Risky Extremely Risky Top Ranked Summary Table Top Rankings Current Yield 3YR FYAT 5YR FYAT Nat Gas & NGL Pipes ETP 8.4% ETP 23.3% ETP 38.8% Crude & Ref Prod Pipes NS 8.6% NS 24. NS 40. Gath & Process ( G & P ) EXLP 9.2% EXLP 26.5% EXLP 44.9% Terminal & Storage ( T & S ) NKA 10.7% NKA 29.8% NKA 49.6% Upstream LRE 10.5% LRE 29.2% ARP 50.8% Propane FGP 10.2% SPH 23.4% SPH 39. Marine NMM 11.8% CPLP 34.7% CPLP 57.9% Coal OXF 19. RNO 28.7% RNO 47.9% General Partners ( GP ) NSH 6.5% NSH 18.2% NSH 30.3% Variable Rate PDH 12.6% PDH 34.6% PDH 51.5% Downstream & Marketing NTI 10.1% NTI 24.9% CLMT 43.3% Other STON 10.3% STON 28.2% STON 46.9% ALL RANKINGS ARE BASED ON THE SUM OF PROJECTED 3 YEARS OF DISTRIBUTIONS/DIVIDENDS AFTER ADJUSTING FOR ESTIMATED TAXES WITHHELD AT THE HIGHEST APPLICABLE RATE DIVIDED BY THE CURRENT UNIT OR STOCK PRICE. HIGHER YIELDS EQUATE TO HIGHER RISK. PLEASE RE-READ THE DISCLAIMER. 3

5 Top Ranked by 3 Year Forward Yield After Tax Segment Ticker Company Current Price Max GP Tax Est. Tax Current Current Historical Dist Growth 3 YR FWD 3 YR Position? 9/21/12 IDR Tier Form Deferral Yield Yield AT QoQ YoY 3YR 5YR Dist Growth FYAT ($ in millions, except per unit or share amounts) Nat Gas & NGL Pipes ETP Energy Transfer Partners L.P. None $ K % 7.77% % % Crude & Ref Prod Pipes NS NuStar Energy L.P. None $ % K % % 2.9% Gath & Process ( G & P ) EXLP Exterran Partners, L.P. Long $ K % 8.59% % 2.8% 7.5% % Terminal & Storage ( T & S ) NKA Niska Gas Storage Partners LLC Long $ K % 9.92% NA NA % Upstream LRE LRR Energy, L.P. Long $ % K % 9.35% 0. NA NA NA % Propane SPH Suburban Propane Partners L.P. None $ K % 7.81% % 3.7% % Marine CPLP Capital Product Partners L.P. (C-Corp.) Long $ DIV 95% 11.67% 11.46% (17.2%) (9.1%) % Coal RNO Rhino Resource Partners, L.P. None $ K % 9.58% (7.3%) (2.2%) NA NA % General Partners ( GP ) NSH NuStar GP Holdings, LLC None $ NA K % 6.05% % 8.4% % Variable Rate PDH PetroLogistics, L.P. Long $ K-1 75% 12.64% 11.53% NA NA NA NA % Downstream & Marketing ( D&M ) NTI Northern Tier Energy, L.P. Long $ K % 8.31% NA NA NA NA % Other STON StoneMor Partners. LP None $ K-1 75% 10.29% 9.39% % 2.6% % Short positions will typically be via long Put Spread positions or long Put Positions, unless indicated otherwise. Segment Ticker Company EV EV / ADJ Net Debt / EBITDA M Cap / TTM MRQ Price / % GP EBITDA EBITDA Margin EBITDA DCR DCR DCF LP Dist Nat Gas & NGL Pipes ETP Energy Transfer Partners L.P. $ 18, x 4.4x % 0.96x 0.89x 14.3x 35.9% Crude & Ref Prod Pipes NS NuStar Energy L.P. 6, x 5.3x 5.7% 9.3% 0.73x 0.19x 19.4x 12.9% Gath & Process ( G & P ) EXLP Exterran Partners, L.P. 1, x 4.4x 41.1% 23.7% 1.30x 1.21x 9.2x 6.1% Terminal & Storage ( T & S ) NKA Niska Gas Storage Partners LLC 1, x 4.2x 51.7% 1.2% 1.31x 3.03x 11.3x 2. Upstream LRE LRR Energy, L.P x 3.0x % 1.15x 1.06x 8.3x 0.1% Propane SPH Suburban Propane Partners L.P. 1, x 0.0x 10.2% 10.2% 0.55x NA 25.5x 0. Marine CPLP Capital Product Partners L.P. (C-Corp.) 1, x 5.0x 55.9% 7.3% 1.01x 1.03x 9.3x 2. Coal RNO Rhino Resource Partners, L.P x 1.9x 25.4% 27.2% 1.13x 1.19x 7.4x 2. General Partners ( GP ) NSH NuStar GP Holdings, LLC 1, x 0.8x NA NA 1.01x 1.02x 15.4x NA Variable Rate PDH PetroLogistics, L.P. 2, x 0.9x 35.8% x NA 6.3x NA Downstream & Marketing ( D&M ) NTI Northern Tier Energy, L.P. 2, x 0.7x % 1.00x NA 7.4x 0. Other STON StoneMor Partners. LP x 4.2x 21.4% 9.1% 1.07x 1.09x 9.1x 3.8% ALL RANKINGS ARE BASED ON THE SUM OF PROJECTED 3 YEARS OF DISTRIBUTIONS/DIVIDENDS AFTER ADJUSTING FOR ESTIMATED TAXES WITHHELD AT THE HIGHEST APPLICABLE RATE DIVIDED BY THE CURRENT UNIT OR STOCK PRICE. HIGHER YIELDS EQUATE TO HIGHER RISK. PLEASE RE-READ THE DISCLAIMER. 4

6 Heat Index / Group Moving Averages / Declared Distributions Moving Average Heat Index Downstream & Marketing 50 General Partners 438% Terminaling & Storage 427% Natural Gas & NGL Pipelines 411% Upstream 392% Variable Rate 375% Gathering & Processing 373% Propane 35 Other 35 Coal 325% Marine 3 Crude & Refined Products Pipelines 30 Total 4,562% NOT SCALE ADJUSTED - 2/17/12 3/17/12 4/17/12 5/17/12 6/17/12 7/17/12 8/17/12 9/17/12 Total Moving Average Heat Index AMZ AMZ SCALE ADJUSTED 300 2/17/12 3/17/12 4/17/12 5/17/12 6/17/12 7/17/12 8/17/12 9/17/12 Total Moving Average Heat Index AMZ NOTE: The addition of the Downstream & Marketing segment skews the Heat Index data by increasing the maximum score, so best to give the charts at least until year end to develop or show any possible pattern Current Price vs. 20 Day Moving Average 1 Current Price vs. 50 Day Moving Average 1 Current Price vs. 200 Day Moving Average 1 22% 78% 22% 78% 21% 79% 20 Day Moving Average / 200 Day Moving Average 1 29% 71% 20 Day Moving Average / 50 Day Moving Average 1 28% 72% 34% 50 Day Moving Average / 200 Day Moving Average 2 66% Key: % Abov e % Below n = 88 (1) Included in the Moving Average Heat Index calculation, by segment. (2) NOT included in the Moving Average Heat Index calculations. 5

7 EQM 4.7% RRMS 4.7% NRGM 6.7% RNF 7.1% SUSP 7.6% MCEP 8.3% HCLP 8.6% NTI 10.1% MEMP 10.1% LRE 10.5% PDH 12.6% MEMP () LRE (4%) PDH (26%) RNF 96% RRMS 63% EQM 42% NTI 42% NRGM 34% HCLP 3 MCEP 28% SUSP 13% 7/1/11 7/29/11 8/26/11 9/23/11 10/21/11 11/18/11 12/16/11 1/13/12 2/10/12 3/9/12 4/6/12 5/4/12 6/1/12 6/29/12 7/27/12 8/24/12 9/21/ % 18.1% 20.4% 18.6% 22.4% 21.3% 25.5% 24.7% 11.2% 23.2% 23.5% 19.8% 5.5% 5. Forward Yield Summaries / MLP IPO Scorecard 3 Year Forward Yield After Tax ( FYAT ) 3 25% 15% 5% Segment Averages 25% 15% 5% 9/21/2012 NGas Pipe Crude Pipe G & P T & S Upstream Propane Marine Coal GP Variable Rate D & M Other SPY 20Y UST Average 3YR FYAT STSPY SPY 3YR FYAT ST20YR UST 20Y UST 3YR FYAT Recent IPO Current Yields Price Performance Since IPO 14% 12% 8% 6% 4% 2% 8.3% () (4) 28.8% Source: Company filings, press releases, presentations and internal estimates, Recent IPOs are defined as being public for less than 365 calendar days or the 10 most recent IPOs. 6

8 AHGP () MWE (1%) PVR (2%) XTEX (2%) TCP (2%) BKEP (2%) KMP (3%) KMR (3%) STON (3%) QRE (3%) EVEP (6%) NSH (6%) RGP (6%) DPM (6%) CPNO (7%) ETP (7%) APU (7%) LRE (7%) EEQ (9%) NS () APL () WPZ (11%) EEP (11%) SGU (13%) SPH (15%) ARLP (16%) EROC (17%) RNO (17%) NRP (18%) NRGY (22%) CMLP (23%) BPL (24%) PDH (26%) CEP (37%) OXF (39%) FUN 61% RRMS 58% CLMT 52% NKA 48% ATLS 43% EQM 42% NTI 42% OILT 35% CQP 35% TLLP 34% HCLP 3 CPLP 3 TNH 29% ARP 27% HEP 26% BIP 25% MCEP 25% TRGP 25% PAA 23% WES 23% MMP 22% NGL 22% SXL 22% GEL NRGM GLP 18% EPD 16% SPY 16% TGP 16% TLP 13% GSJK 13% SUSP 13% ETE 11% NGLS 11% KMI 11% XTXI UAN ACMP 9% LINE 9% EXLP 8% EPB 6% GMLP 5% MEMP 5% TOO 4% VNR 4% FGP 4% AMZ 4% AMID 3% LGCY 3% BBEP 3% PNG 2% MMLP 2% NMM 1% OKS 1% SEP 1% BWP PSE RNF 14 EXH 117% KMR () TGP () AMZ () BKEP () NRGM () AMID () NMM () OKS () KMP () PVR (1%) EPD (1%) CEP (1%) GEL (1%) SPY (1%) APU (1%) MCEP (1%) BIP (1%) NKA (1%) KMI (1%) APL (2%) RGP (2%) ARP (2%) EVEP (2%) STON (2%) TNH (2%) SGU (2%) NTI (2%) PDH (3%) ATLS (3%) TLLP (3%) NRP (3%) CPNO (4%) SXL (4%) MMP (5%) BPL (5%) HEP (6%) OILT (7%) CQP (7%) NRGY (14%) SUSP 13% UAN 7% SPH 6% RNF 6% MEMP 6% XTEX 6% PSE 5% CLMT 5% AHGP 5% TLP 5% RNO 4% CPLP 4% XTXI 3% TRGP 3% EQM 3% VNR 3% CMLP 3% GSJK 2% EPB 2% EEP 2% EXLP 2% NS 2% HCLP 2% WPZ 2% WES 2% EEQ 2% FUN 2% ARLP 1% MWE 1% LRE 1% ACMP 1% GLP 1% NGLS 1% BWP 1% LINE 1% OXF 1% PAA 1% NSH 1% NGL 1% DPM 1% MMLP 1% TCP 1% EROC 1% LGCY 1% QRE 1% SEP RRMS ETP TOO EXH PNG BBEP FGP ETE GMLP 1 Week and YTD Price Performance 1 Week Price Performance 15% 5% (5%) () (15%) Year to Date Price Performance () (4) (6) 7

9 CQP FUN CLMT TLLP TRGP GLP TNH OILT SXL RRMS PAA CPLP NKA WES BIP GEL UAN ETE GSJK MMP LRE NTI HEP KMI OXF EPD GMLP NGLS FGP NRGM EVEP VNR TGP LINE ACMP OKS AHGP MCEP NMM NGL MWE BBEP MMLP BKEP TLP KMR KMP CPNO TOO APL PNG PSE EQM DPM QRE LGCY NRGY XTXI RNO ARLP HCLP SEP ARP PDH PVR EEP BWP RGP MEMP EROC EEQ TCP AMID EXLP EPB ETP SPH XTEX NSH CMLP NRP STON APU SGU WPZ NS BPL CEP RNF ATLS EXH CEP OXF VNR CLMT WES PAA HCLP EPB FUN EXH AHGP PNG LGCY EPD GEL BBEP MMLP RRMS TCP ETE SEP ACMP GLP OKS EQM GSJK BWP PVR CPLP APU NKA SXL MMP MCEP TOO NTI BIP NMM NGL KMP TLLP NGLS DPM FGP TGP UAN OILT HEP KMR EEP MWE EXLP NRGM XTEX KMI CQP ATLS SPH XTXI RGP NSH EEQ PSE EROC ETP CPNO LRE QRE APL BKEP WPZ SGU GMLP NS AMID EVEP STON ARP ARLP CMLP NRP BPL RNO PDH TNH NRGY RNF TRGP LINE MEMP TLP % Below 52 Week Highs and % Above 52 Week Lows % Below 52 Week Highs () () (3) (4) (5) (6) (7) Positive number indicates close at a new high % Above 52 Week Lows Negative number indicates close at a new low. 8

10 Glossary and Assumptions Max GP IDR Tier Maximum General Partner ( GP ) Incentive Distribution Right Tier, typically publicly traded Master Limited Partnerships ( MLPs ) will have a General Partner that will receive an increasing share of distributable cash flow upon achieving certain levels of distributions to the Limited Partners up to a maximum of 5. Tax Form Typically MLPs send annual K-1s which add complexity to individual tax returns and also can cause issues if MLPs are held in an IRA account due to UBTI ( Unrelated Business Taxable Income ). If UBTI from MLPs exceeds $1,000 in an IRA then taxes should be paid out of the distributions. Est. Tax Deferral Estimated Tax Deferral represents the amount of the expected distributions that will be treated as a return of capital and used to adjust down the investment tax basis so not taxable until the unit holder sells the security. Next Dist Next Distribution, either the most recently announced quarterly distribution or the last distribution until the next one is announced. For recent IPOs the Next Dist is shown as the Minimum Quarterly Distribution ( MQD ) as per the prospectus; however, the first distribution will be pro-rated over the period of the quarter that the MLP was public so it will be less than the amount shown in the charts. Current Yield AT Estimated Current Yield After Tax, basically after taking into account the amount of distributions that are tax deferred and the effective tax rate on the taxable portion of the distribution. Assumes non-tax deferred MLP distributions are taxed at the highest income tax rate of 35%. Deferred portion of MLP distributions received will lower investor s cost basis over time and result in deferred tax recapture upon sale of the MLP units. Historical Dist Growth Historical Distribution Growth rates, QoQ is Quarter over Quarter, YoY is Year over Year, 3YR and 5YR are the 3 year and 5 year compound annual growth rate ( CAGR ) in the distributions respectively, information will be rolled forward each quarter. U.S. 10 or 20 Year Treasury 10 or 20 Year Treasury forward yields after tax assume a 35% tax rate over the projected periods, so the 3 Year Forward Yield After Tax Undiscounted would be calculated as follows if the Current Treasury Yield was 3.0: (3.0 x (1-.35 tax rate)) x 3 years = 5.85%. 3 YR / 5 YR FWD Dist Growth 3 Year or 5 Year Forward Distribution Growth rate assumptions. 3 YR / 5 YR FYAT 3 Year or 5 Year Forward Yield After Tax, the undiscounted sum of the projected quarterly distributions taking into account the projected growth rate and also the estimated tax deferral divided by the current unit price. 3 YR / 5 YR FYAT / Beta 3 Year or 5 Year Forward Yield After Tax divided by Beta, an attempt to utilize Beta to rank the MLPs by taking into account risk as measured by Beta. 20 / 50 / 200 DMA The 20 Day Moving Average, 50 Day Moving Average and 200 Day Moving Average. TEV Total Enterprise Value, sum of market cap plus total debt less cash. EBITDA Earnings Before Interest Taxes Depreciation and Amortization and other non-cash charges, generally interim period annualized except for Propane segment which is trailing twelve months. ADJ EBITDA Adjusted EBITDA, EBITDA less the cash distributions paid to the GP, effectively represents EBITDA available for the LP unit holders since the TEV is calculated using only the outstanding LP units and any related subordinated units and i-shares/units. TTM Trailing Twelve Months, YTD Year to Date, MRQ Most Recent Quarter. 9

11 Glossary and Assumptions Distributable Cash Flow ( DCF ) generally EBITDA less cash interest expense less maintenance capital expenditures less any cash taxes, represents the amount of cash available to pay distributions. Dist Cov Ratio ( DCR ) Distribution Coverage Ratio, Distributable Cash Flow divided by L.P. plus G.P. distributions, the higher the ratio the better, a ratio below 1.00x means that the MLP is effectively paying some of the distribution using debt (although some MLPs like the Propane MLPs have substantial seasonality of cash flows so in those cases the ratio is better suited to be viewed over a rolling four quarter period). All Distribution Coverage Ratios are shown on a trailing twelve month basis. Valuation Coverage Ratio ( VCR ) (TEV / ADJ EBITDA) / Distribution Coverage Ratio. The DCR is generally TTM DCR unless the MRQ DCR is less than 1.00x, if so then the VCR calculation uses the lower MRQ DCR. M Cap Maintenance capital expenditures or sustaining capital expenditures as reported by the companies, generally the amount of capital required to replace partially or fully depreciated/obsolete assets, maintain the existing operating capacity or operating income of an MLP s assets (replace reserves/production for Upstream MLPs), and extend the useful life of assets (routine equipment and pipeline maintenance). Price / DCF LP Current price divided by the Distributable Cash Flow per LP Unit, so total Distributable Cash Flow less the distributions that the General Partner receives. % GP Dist % of total distributions that the General Partner receives, as the distributions increase over time the Incentive Distribution Rights ( IDRs ) provide for more of the distributions to go to the General Partner. STSPY Spread to S&P 500 dividend yield, however, calculated based on the 3 or 5 year estimated forward yield after tax for the S&P 500 using data from SPY ETF as a proxy (assuming a 15% dividend tax rate and a 5% annual growth rate for SPY dividends), then in the chart it is compared to the 3 or 5 year estimated forward yield after tax for the MLP group average to come up with the spread. Avg / SPY Ratio 3 or 5 YR FWD Yield AT for the full MLP group divided by the 3 or 5 year forward dividend yield after tax for the SPY ETF. SEC PV10 The present value of estimated future revenues to be generated from the production of proved reserves calculated in accordance with Securities and Exchange Commission ( SEC ) guidelines, net of estimated lease operating expense, production taxes and future development costs, using price and costs as of the date of estimation without future escalation, without giving effect to non-property related expenses such as general and administrative expenses, debt service, depreciation, depletion and amortization, or Federal income taxes and discounted using an annual discount rate of. PIPE Private Investment in Public Equity. MMBOE / BOE / BCFE / MCFE Million Barrels of Oil Equivalent, Barrels of Oil Equivalent, Billion cubic feet equivalent, Thousand cubic feet equivalent, converted using a 6,000 cubic feet of natural gas to 1 barrel of oil ratio. Moving Average Heat Index calculated by the sum of the percentages of five moving average metrics that are Above, i.e. if the current price is Above the simple 20 day moving average, so maximum Heat Index is 50 and minimum Heat Index is. AMZ Alerian MLP index. Unit and share prices as of market close on the date shown on the cover. 10