Entries by Simon Lack

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Are MLPs Going Away?

MLP investors have certainly seen their conviction tested of late. Poor stock performance was recently compounded by the Federal Energy Regulatory Commission’s (FERC) ruling on cost of service contracts earlier this month. Although MLPs don’t pay tax, interstate natural gas pipeline tariffs based on cost-of-service have historically included an allowance for taxes paid by their […]

Facebook’s Arrogant Culture

Facebook’s (FB) business model should be well understood as extracting value from the enormous amount of data users provide about themselves. Relationships and “Likes” disclose much about an individual’s affinities. Moreover, when a FB user clicks on an ad or even just hovers her cursor over it, FB knows. This knowledge is exceptionally valuable to […]

FERC Ruling Pushes Pipelines Out of MLPs

The fragile mental state of MLP investors left them ill-prepared for Thursday’s ruling by the Federal Energy Regulatory Commission (FERC). By modifying how MLPs calculate certain tariffs, it sent the sector on another wild afternoon ride. It’s a complex issue – pipelines owned by MLPs that cross state lines and rely on FERC-regulated tariffs are most vulnerable. […]

Initial Thoughts on FERC Ruling Impact on MLPs

FERC’s ruling earlier today disallowing income tax recovery on interstate pipeline contracts is roiling the sector and we continue to analyze the likely impact. We believe it should only affect pipelines owned by MLPs not corporations. In our funds we maintain MLP exposure at below 25%. This ruling may disadvantage MLPs versus corporate owners, and […]

Energy Infrastructure Needs a Catalyst

Last week we spent a couple of days with Catalyst Funds at their annual sales conference in Clearwater, FL. The second winter storm in a week conveniently hit the northeast after everyone had flown south, so travel plans were not disrupted. Catalyst CEO Jerry Szilagyi has been a great partner for our MLP mutual fund, […]

Will MLP Distribution Cuts Pay Off?

It’s surprisingly difficult to find out what MLP distributions have been doing. Alerian claims that their index has been growing its payouts at a 6% average annual rate for 10 years, with growth continuing in 2016 (it’s not yet updated for 2017). However, their methodology is odd. They take the trailing growth rate of the […]

Send in the Canadians!

August 2014 was the peak in the U.S. energy sector, as long time investors know too well. The Alerian MLP Index remains down by more than a third, and larger firms are increasingly abandoning the structure to become regular corporations (“C-corps”). The Shale Revolution has tested the old model of paying out 90% or more […]

Canadians Reward Their Energy Investors

On Thursday Energy Transfer Partners (ETP) released earnings that beat expectations on just about every measure. Midstream infrastructure businesses generally don’t report results too far from consensus – surprises usually come in other ways (more on this below). ETP’s $1.94BN of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was more than 10% ahead of […]

Discussing the Shale Revolution with Enlink Midstream

We thought it would be interesting to learn how the Shale Revolution has changed some of the midstream infrastructure businesses that support it. What have these companies learned, and how are their operations affected? For the first in an occasional series on this topic, we chatted with Adrianne Griffin, Director, Investor Relations with Enlink Midstream […]

Shale Leads Growth in Proved Reserves

On Thursday the U.S. Energy Information Administration (EIA) released updated figures on proved reserves as of 2016. In order to count as proved, companies must be reasonably certain that the reserves are recoverable under existing operating and economic conditions. Improvements in technology have increased the amount of recoverable reserves from some shale formations. The dramatic […]

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