Only time will tell whether last week’s bounce was a dead cat, but after months of negative performance the MLP sector finally turned in a strong week. The Alerian MLP Index saw a total return of 5.1% for the week, while the UBS ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure Index ETN (NYSE: MLPL) gained 11.3%.  

There were quite a few double-digit gainers last week, with two turning in performances of over 40% in a single week.


Source: MLPData.

The fertilizer MLPs have done very well this year thanks to low natural gas prices and strong fertilizer demand, but Rentech Nitrogen Partners’ (NYSE: RNF) huge weekly gain was a result of a merger agreement with CVR Partners (NYSE: UAN) to create North America’s fifth-largest nitrogen fertilizer producer. The offer for RNF was at a 33% premium to the previous week’s closing price for RNF, and RNF units surged nearly 50% for the week on the news.

American Midstream Partners (NYSE: AMID) was 2013’s best performing midstream MLP with a gain of 98.5% for the year. Last week investors bid shares up by 46.7% after AMID announced an attractively priced dropdown acquisition and projected 5% annual distribution growth following the dropdown. Still, that surge wasn’t enough to pull AMID out of negative territory for the year.

The same can be said of the other double-digit gainers for the week; it wasn’t enough to put them in positive territory for 2015. The one exception was Navios Maritime Midstream Partners (NYSE: NAP), a partnership that owns, operates and acquires crude oil tankers. Units of NAP are up 30% on the year.

The bottom 10 performers for the week were the usual suspects — the partnerships producing oil and coal. Units for these partnerships was down across the board by 8-10% for the week, and they comprise the vast majority of the 15 MLPs that are down at least 50% year-to-date.  

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

Portfolio Update

Energy Transfer Makes LNG Headway     

Energy Transfer Equity (NYSE: ETE) reported incremental progress on its proposed Lake Charles, Louisiana, export terminal Monday with the issuance of the final environmental impact statement on the project by the FERC, which opened a 90-day window during which the agency is expected to grant final approval.

On an earlier earnings conference call, ETE management suggested the project remains on track for final go-ahead sometime in mid-2016, following the completion of the merger between Shell (NYSE: RDS.A) and Energy Transfer’s longtime Lake Charles partner BG Group (London: BG).

The ongoing slump in crude prices has raised doubts about the project’s commercial feasibility, but Energy Transfer has continued to project confidence that Lake Charles will be finalized and proceed to construction, citing the site’s cost advantages.

Meanwhile, Energy Transfer appears to be in the home stretch of its bidding process for rival Williams (NYSE: WMB), following a recent Reuters report that final offers are due in late August and could include a bid by Spectra Energy (NYSE: SE).

Spectra, which is much smaller than either Williams or Energy Transfer, seems like an extreme longshot to pull off any such deal. But Energy Transfer still might. ETE remains our #2 Best Buy below $37.50, and we’re suggesting you hold on to any Williams shares not sold when we recommended halving your stake right after ETE’s bid became public.    

                                                                                                                                   — Igor Greenwald