It’s seldom appreciated outside the energy industry, but drilling for oil, natural gas and natural gas liquids (NGLs) involves handling far more water than hydrocarbons. This isn’t just because production often involves pumping water into a well. Water is usually present naturally, and comes up with the oil and gas that is produced. Ideally in […]
“Oceania was at war with Eurasia; therefore Oceania had always been at war with Eurasia.” 1984, George Orwell. The hurriedly organized investor call with Plains All American (PAA) a week ago (rushed because of approaching Hurricane Harvey) must have been inspired by the revisionist history propagated by “the Party” in Orwell’s polemic against totalitarianism. PAA’s […]
Escheatment used to apply when a property owner died without a will or legal heirs. It was the process by which those assets were transferred to the state. Its meaning has since evolved to include theft of property by the state by legal means. So it was that at the Lack home we recently received […]
In the debate over global warming, the environmentalists claim the moral high ground while the “non-believers” deny man-made climate change. The very question of whether you “believe” in global warming suggests religious conviction with little point in debate. This is what makes Alex Epstein’s moral defense of fossil fuels so intriguing. We have clients across […]
Last week’s blog post, The Changing MLP Investor, received more interest than usual. There’s no shortage of research explaining why MLPs are cheap, but it seems few stop to consider the mindset of those who decline to act on this opportunity. Sometimes it’s more helpful to understand the non-buyers. Following the collapse two years ago […]
Why aren’t MLPs performing better given the fundamentals? On valuation, they should be compelling. Using EV/EBITDA (Enterprise Value /Earnings Before Interest, Taxes, Depreciation and Amortization), they are virtually on top of utilities, a point not reached either in 2008 or 2016. Typically, MLPs are valued at a higher multiple. Although like utilities, they depreciate their […]
We regularly get questions from investors about why the dividend yield on MLPs is often higher than for energy infrastructure C-corps that are in the same business. In recent years several MLPs have transferred their assets into their C-corp parent. Examples are Kinder Morgan (KMI), Targa Resources (TRGP) and Oneok (OKE). The merger of an […]
We hear so often how energy infrastructure is all about pipelines and storage assets with fee-based contracts that when another part of the business pops up it can cause quite a stir. So it was that Plains All American (PAGP), one of the biggest crude oil pipeline operators in the U.S., provided an unwelcome example […]
Master Limited Partnerships (MLPs) have been reporting earnings over the past couple of weeks. For the most part they have come in as expected, with few surprises in either direction. Crestwood (CEQP) and Tallgrass (TEGP) both reported system volumes slightly higher than expected; generally though, they were unremarkable, which is the sort of boring stability […]
The Prize: The Epic Quest for Oil, Money and Power was first published 27 years ago, although Daniel Yergin added an Epilogue in 2008. It is nothing less than an economic and political history of crude oil. At 910 pages of text and footnotes it’s an epic read, but you can select sections of interest […]
