Great info on upstream MLPs, but one small correction: BBEP is not saddled with IDRs to its GP. See the presentation page 5 at files.shareholder.com
I too am a canroy refugee and own several upstream MLSs (ENP, BBEP, LINE, LGCY) and none of them have significant IDRs. ENP does provide small incentive distribution rights to its senior management, but at a tolerable level (max of about 5% I believe).
With the exception of ENP, which was late to the party, all of these have been under substantial pressure for the past several months, presumably due to the transient reasons you cite. The yields have become very attractive (about 9% to 13%). I have been operating under the assumption that the falling prices are a short-term buying opportunity without fundamental cause. Hope I'm right about that.
I also own several midstream MLPs (EPE, ETP, ETE, MGG), most of which are GP MLPs. The yields of GP MLPs are currently lower than those of the operating MLPs, but their earnings are growing much faster because they are on the receiving end of those generous IDRs (typically 50% of all cash above a threshold level which was exceeded long ago). Where else can you find a security yielding 4-5% with earnings increasing at 25+% per annum? |
