In this last issue of MLP Investing Insider for 2013, I take a look back at the year’s best and worst-performing MLPs. Performance numbers are from Yahoo Finance and Google Finance, year-to-date through Dec. 27, and exclude distributions.

2013’s Top Performing MLPs

1. Icahn Enterprises

Icahn Enterprises (NASDAQ: IEP) led all MLPs in 2013 with a capital gain of 136 percent. IEP is an unconventional MLP involved in nine primary business segments: Investment, Automotive, Energy, Gaming, Railcar, Food Packaging, Metals, Real Estate and Home Fashion. IEP invests in energy-related companies such as CVR Refining (NYSE: CVRR) and American Railcar Industries (Nasdaq: ARII), but nearly 60 percent of its assets are invested in the automotive sector and in investment funds. Since 2000, IEP has achieved an average annual return of 23.8 percent, and units currently yield 4.4 percent. MLP Profits subscribers had a chance at a 58 percent capital gain between the Sept. 9 Buy recommendation for IEP and its Dec. 16 liquidation from the Aggressive Portfolio.

2. Hi-Crush Partners

Hi-Crush Partners (NYSE: HCLP) was the year’s best-performing energy MLP with a rally of 130 percent. HCLP is a pure-play supplier of monocrystalline sand that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells that have been hydraulically fractured. Its reserves consist of Northern white sand, predominantly found in Wisconsin and portions of the upper Midwest region of the US. At the most recent closing price, the annualized yield based on the the last quarterly distribution is 4.9 percent.

3. The Blackstone Group

The Blackstone Group (NYSE: BX) gained 101 percent in 2013, and is the second investment MLP in the top five. Blackstone is the largest of the financial services limited partnerships, and the world’s largest independent alternative asset manager, with business segments consisting of Private Equity, Real Estate, Hedge Funds, Credit, and Mutual Funds, with a total of $248 billion in assets under management. Blackstone’s Financial Advisory segment is comprised of financial and advisory services, restructuring and reorganization advisory services and Park Hill Group, which provides fund placement services for alternative investment funds. Based on the past year’s distributions of $1.18 per unit, the annualized yield is 3.8 percent.

4. American Midstream Partners

American Midstream Partners (NYSE:AMID) gained 96 percent in 2013 before accounting for distributions. American Midstream is engaged in the business of gathering, treating, processing, fractionating and transporting natural gas and natural gas liquids. Operations are organized into two segments, Gathering and Processing and Transmission. Assets are primarily located in Alabama, Louisiana, Mississippi, Tennessee and Texas. The partnership operates 2,100 miles of pipelines that gather and transport over 850 MMcf/d of natural gas. Units currently yield 6.8 percent.

5. Pioneer Southwest Energy Partners

Pioneer Southwest Energy Partners (NYSE: PSE) closes out the top five MLP performers for the year with a gain of 87 percent. However, units of this Texas-based upstream MLP that owned more than 1,100 wells in the Permian Basin area are no longer available, as the partnership merged with sponsor Pioneer Natural Resources (NYSE: PXD) on Dec. 17.

2013’s Worst Performing MLPs

1. Oxford Resource Partners

The coal industry in the US has been badly battered over the past few years. Oxford Resource Partners (NYSE: OXF) was a casualty, as the unit price fell 73 percent in 2013. The biggest problem for this producer of coal in the northern Appalachia and the Illinois Basin was that it had to suspend cash distributions in January in response to continued weakness in the coal markets.

2. Rentech Nitrogen Partners

Rentech Nitrogen Partners (NYSE: RNF) is a variable distribution MLP that saw fertilizer margins decline in response to much higher natural gas prices than in 2012. As a result, by the third quarter the distribution was reduced to $0.27/unit, down from $0.50 in Q1 and $0.85 in Q2. The unit price for the year declined by 54 percent in 2013.

3. EV Energy Partners

EV Energy Partners (Nasdaq: EVEP) was the worst-performing oil and gas MLP. The partnership was plagued by cash flow problems, and as a result units declined by 40 percent for the year. At the most recent closing price, units yield 9.1 percent, but EVEP will likely need more cash flow in 2014 to support that yield.

4. CVR Partners

CVR Partners (NYSE: UAN) is a fertilizer MLP that suffered from the same declining margins and weak fertilizer prices that hurt Rentech Nitrogen Partners. The partnership’s price declined 36 percent in 2013. The annualized yield based on the past four quarters of distributions is 11.7 percent, but that is expected to decline when the next distribution is announced.

5. Terra Nitrogen Company

The nitrogen fertilizer MLPs were easily the worst performing MLP category, with Terra Nitrogen Company (NYSE: TNH) rounding out the five worst performers of 2013 — down 33 percent for the year. Based on the past year’s distributions, the annualized yield is 11.5 percent but, as with CVR Partners, this yield is expected to decline because of continuing weakness in the nitrogen fertilizer market.  

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

Portfolio Update

Regency’s Shopping Spree

Are you a master limited partnership that’s recently invested lots of growth capital only to find early returns on those investments disappointing, as reflected in a drooping unit price? If so, there’s a good chance Regency Energy Partners (NYSE: RGP) might be willing to put you out of your misery, at a decent acquisition premium.

Less than three months after unveiling a $5.6 billion buyout of Appalachia-focused gatherer PVR Partners (NYSE: PVR), Regency announced two more deals last week. The Growth Portfolio holding will spend $1.3 billion on the midstream assets of Eagle Rock Energy Partners (Nasdaq: EROC), one of the MLP sector’s biggest 2013 busts. It will also buy Hoover Energy Partners’ midstream assets for $290 million.

The purchases expand Regency’s footprint in the Texas panhandle, east and west Texas and are adjacent to Regency’s own gathering systems, promising increased efficiencies of scale and other cost savings.

The purchases will be financed with debt and the issuance of Regency units worth nearly $700 million,  roughly 13 percent of the current market capitalization, with general partner Energy Transfer Equity (NYSE: ETE) buying $400 million.

Regency expects the acquisitions to be immediately accretive to distributable cash flow and in fact now expects to raise its distribution by 6 to 8 percent next year. Even the lower bound of that forecast would exceed aggregate per-unit distribution growth over the last five years.

Investors cheered the news, rallying Regency’s unit price nearly 8 percent the day of the announcement. The yield remains a relatively juicy 7.2 percent. So why are we not raising the Hold rating assigned to Regency in the wake of its PVR buyout? Because, aside from the usual integration risks, debt leverage remains high and the new unit issuance to finance the latest deal with disproportionately benefit Energy Transfer Equity via the latter’s incentive distribution rights. If Regency’s price rallies further, we will be tempted to switch out of the name entirely and into more Energy Transfer Equity. For now, continue to hold RGP.

— Igor Greenwald