I bet that if Warren doesn’t wimp out the merged company has already cut its distribution as Williams has had to do but is now trading at almost the same unit price as standalone ETE is now, and everyone is saluting Warren’s courage to stand by his word and his shrewdness in snagging the valuable Williams assets just before the energy markets turned. We’ll never know, of course, but this sounds plausible to me.

The most compelling reason to get long MPLX here is that the unit price looks poised to break higher from a basing process that started last April, not unlike the entire sector I guess. On fundamentals I prefer parent MPC, up 12% since we put it back in one of the Energy Strategist portfolios in late October. MPC’s plan to sell MPLX assets worth as much as $12.6 billion this year will allow MPLX to increase its distribution by the promised 12-15% this year and 10%+ in 2018. And we all know MLP investors like double-digit distribution growth. But the fact is that this is financial engineering designed to benefit MPC rather than MPLX, the consolidated complex taking on $5B+ in debt while MPC exchanges its midstream assets for fungible, marketable MPLX units (and debt at MPLX.) The company argues that the transactions will value its midstream assets at $40-50 per MPC share, which if true would mean its refineries are almost a throw-in right now. In any case, MPC’s payday of an estimated $4.5 billion in cash up front from this midstream closeout sale and its $1.2-1.4 billion in annual GP/LP income from MPLX thereafter will underwrite share buybacks and dividend hikes at MPC, not MPLX. So why own MPLX over MPC other than for tax and estate planning reasons? Long-term value from midstream growth will flow to the latter.

I don’t think so; I mean this was an unspecified deal not even on anyone’s radar until last month, so not included in anyone’s expectations of ETE at all. And really the price moves up and down on the deal rumor and then the claim that talks have failed amount to little more than just noise, at least by ETE’s volatility standards.

The apparent consensus on the Street (for the not much it’s worth) is that WMB didn’t get paid enough for its IDR rights. Hence the upbeat action in WPZ, while WMB got whacked by in disappointment but also as a result of the large share offering; offering discounts almost always prove temporary. The bottom line is that the aggregate value of WMB and WPZ didn’t really change much as a result of this restructuring, and the elimination of the IDRs on these terms more than offsets the distribution cut at WPZ That’s money the partnership will be able to invest in a strong slate of growth projects, and now there is less scope for a conflict of interest with its general partner. We’re going to keep out buy ratings on both WMB and WPZ at their prior buy limits, which are $34 for WMB and $42 for WPZ.

I’ve addressed WMB here: http://www.investingdaily.com/mlp-profits/articles/29883/follow-the-leader-3/#comment-83490 ETE here: http://www.investingdaily.com/mlp-profits/articles/29883/follow-the-leader-3/#comment-83488 and DPM here: http://www.investingdaily.com/mlp-profits/stock-talk/#comment-83324 Also covered some of this during yesterday’s chat: http://www.investingdaily.com/mlp-profits/chats/29750/11017-mlp-live-chat/ and will likely have more in the weekly update Friday as well as next week’s monthly issue.