Master limited partnerships (MLPs), as measured by the Alerian MLP Index (AMZ), ended April down 2.0% on a price basis and down 1.4% once distributions are considered. The AMZ results underperformed the S&P 500 Index’s 4.0% total return for the month. The best performing MLP subsector for April was the Compression group, while the Gathering and Processing subsector underperformed, on average.

For the year through April, the AMZ is up 12.1% on a price basis, resulting in a 15.2% total return. This compares to the S&P 500 Index’s 17.5% and 18.2% price and total returns, respectively. The Propane group has produced the best average total return year-to-date, while the Natural Gas Pipeline subsector has lagged.

MLP yield spreads, as measured by the AMZ yield relative to the 10-Year U.S. Treasury Bond, widened by one basis point (bps) over the month, exiting the period at 564 bps. This compares to the trailing five-year average spread of 508 bps and the average spread since 2000 of approximately 373 bps. The AMZ indicated distribution yield at month-end was 8.1%.

Midstream MLPs and affiliates raised $0.9 billion on new marketed equity (common or preferred, excluding at-the-market programs) and $2.1 billion of marketed debt during the month. MLPs and affiliates announced $0.7 billion of asset acquisitions over the month.

Spot West Texas Intermediate (WTI) crude oil exited the month at $63.91 per barrel, up 6.3% over the period and 6.8% lower year-over-year. Spot natural gas prices ended March at $2.59 per million British thermal units (MMbtu), down 5.1% over the month and 5.8% lower than April 2018. Natural gas liquids (NGL) pricing at Mont Belvieu exited the month at $24.95 per barrel, 2.6% higher than the end of March and 25.3% lower than the year-ago period.

News

First-Quarter Earnings Season Kicks Off. First-quarter reporting season began in April. Through month-end, 54 midstream entities had announced distributions for the quarter, including 25 distribution increases, three reductions, and 26 distributions that were unchanged from the previous quarter. Through the end of April, 12 sector participants had reported fourth-quarter financial results. Operating performance has been, on average, in-line with expectations with EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, coming in 0.2% lower than consensus estimates and 3.4% greater than the preceding quarter.

Private Equity Continues to Demonstrate Midstream Interest. Global Infrastructure Partners (GIP) acquired Oryx Midstream, a private Delaware Basin-focused oil gathering and transmission company, from a consortium of private equity firms and two publicly traded oil and gas producers for $3.6 billion. GIP already holds meaningful midstream interests, including stakes in EnLink Midstream (NYSE: ENLC), Hess Midstream (NYSE: HESM) and its sponsor vehicles, Hess Infrastructure Partners, Medallion Gathering and Processing (Private), and Freeport LNG (Private).

PBFX Completes Drop-Down Acquisition and Equity Funding Transaction. PBF Logistics (NYSE: PBFX) announced a drop-down transaction with its sponsor, PBF Energy (NYSE: PBF), in which PBFX will acquire the remaining 50% interest in the Torrance Valley Pipeline for $200 million. To fund the transaction, PBFX completed a privately marketed equity offering of $135 million, the largest common equity transaction in the midstream space since February 2018.