24/7 Wall St. » MWE

MarkWest Prices Another Secondary Offering (MWE, APC, CVX, CHK, REXX)

Paul Ausick — Wed, 09 May 2012 14:37:28 +0000

For the second time in two months, MarkWest Energy Partners L.P. (NYSE: MWE) has launched a secondary offering of common units to support the company’s expansion plans. In March, MarkWest sold 6.8 million common units at $59.54 each and raised a total of $388 million to fund expansion of its gathering systems in East Texas. Anadarko Petroleum Corp. (NYSE: APC) and Chevron Corp. (NYSE: CVX) are among the companies for which MarkWest will offer mid-stream services.

Today the company priced a secondary offering of 8 million units at $55.28/common unit, a discount of about 3.5% to last night’s closing price of $57.29/common unit. The offering’s underwriters have an over-allotment option for 1.2 million additional shares. Morgan Stanley, BofA Merrill Lynch, Barclays, Citigroup, UBS Investment Bank and Wells Fargo Securities are acting as joint book-running managers for the offering.

On Monday the company announced that it would acquire Keystone Midstream Services LLC for $512 million. Keystone’s operations in the Marcellus shale play are owned by a consortium including Rex Energy Corp. (NASDAQ: REXX). MarkWest also announced last week it had signed a new gas processing deal with Chesapeake Energy Corp. (NYSE: CHK) that would involve expanding MarkWest’s capacity in the Marcellus shale play by about 60%.

While today’s secondary offering price is battering the company’s common unit price, it’s worth remembering that both the dilution and the lower price have no impact on the limited partnership’s ability to pay its quarterly distributions. The company’s long-term contracts are based on fixed prices that virtually guarantee that distributions will be paid. On Monday, MarkWest paid $0.79/common unit in distributions, and even with the increased demand for capital, the company expects distributable cash flow to range from $440-$500 million for the fiscal year. Distributable cash flow in the first quarter totaled $81.1 million, yielding a jump in distributions of nearly 18%.

MarkWest’s common units are taking a beating today though, down -4.3% at $54.82 in a 52-week range of $39.00-$61.60.

Paul Ausick

Filed under: Oil & Gas, Secondary Offering Tagged: APC, CHK, CVX, MWE, REXX

Top Analyst Upgrades & Downgrades (AXP, ATML, BLK, CVX, CLR, EPR, EQR, FTE, HBC, JNPR, LEN, LECO, MWE, MSFT, OAS, SVU)

Administrator — Thu, 12 Jan 2012 13:29:11 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Thursday morning.

American Express Co. (NYSE: AXP) Reiterated Buy with $60 target at Argus.
Atmel Corporation (NASDAQ: ATML) Maintained Buy but cut target to $11 at Canaccord Genuity.
BlackRock Inc. (NYSE: BLK) Started as Buy at UBS.
Chevron Corporation (NYSE: CVX) Maintained Outperform but cut earnings estimates at Credit Suisse.
Continental Resources (NYSE: CLR) Cut to Hold with $79 target at Canaccord Genuity.
Entertainment Properties Trust (NYSE: EPR) Cut to Neutral at JPMorgan.
Equity Residential (NYSE: EQR) Cut to Neutral at JPMorgan.
France Telecom SA (NYSE: FTE) Cut to Underweight at JPMorgan.
HSBC Holdings PLC (NYSE: HBC) Cut to Underperform at BofA/ML.
Juniper Networks Inc. (NYSE: JNPR) Cut to Hold at Argus.
Lennar Corporation (NYSE: LEN) Cut to Market Perform at KBW.
Lincoln Electric Holdings, Inc. (NASDAQ: LECO) named as Value stock of the day at Zacks.
MarkWest Energy Partners (NYSE: MWE) named as Bull of the Day at Zacks.
Microsoft Corporation (NASDAQ: MSFT) Maintained Outperform but cut target to $34 from $35 at Credit Suisse; Maintained Hold and lowered estimates at Argus.
Oasis Petroleum (NYSE: OAS) Cut to Hold with $32 target at Canaccord Genuity.
SUPERVALU Inc. (NYSE: SVU) Maintained Neutral but cut target to $7 from $10 at Credit Suisse.

JON C. OGG

Filed under: Analyst Calls Tagged: ATML, AXP, BLK, CLR, CVX, EPR, EQR, FTE, HBC, JNPR, LECO, LEN, MSFT, MWE, OAS, SVU

MLP 2012 Sector Breakout? Outlook, Charts, Income (EPD, KMP, MWE, PAA, WPZ, MMP, BPL, EPB, KYN, AMJ, AMLP)

Administrator — Tue, 20 Dec 2011 15:41:14 +0000

This is an interesting point in time for the sector of Master Limited Partnerships (MLPs). The oil and gas business could greatly unlock much of the domestic unemployment woes (and the trade balance) if the United States will develop even the hint of an energy policy. The allure of MLP distributions is continuing to attract investors who would otherwise be investing in Treasuries, bonds, CDs, and other dividend or income strategies. Our take is that MLPs have not even reached half of their potential over the next decade, and as such we have given MLPs a place in the 24/7 Wall St. 2012 Model Dividend Portfolio.

We overlaid some of the recent Fitch Ratings analysis after the individual MLPs. The aim is to show how the MLPs are valued at today as well as how they compare to their Thomson Reuters consensus price target objective and 52-week trading ranges. The individual MLPs we are including on our own are as follows: Enterprise Products Partners L.P. (NYSE: EPD); Kinder Morgan Energy Partners LP (NYSE: KMP); MarkWest Energy Partners, L.P. (NYSE: MWE); Plains All American Pipeline, L.P. (NYSE: PAA); Williams Partners L.P. (NYSE: WPZ); Magellan Midstream Partners, L.P. (NYSE: MMP); Buckeye Partners, L.P. (NYSE: BPL); and El Paso Pipeline Partners, L.P. (NYSE: EPB).

As the end of 2012 approaches rapidly, we wanted to take a year-end look into the sector to see where there is opportunity versus risk. We have shown the basic fundamentals of some of our top go-to names in the MLP sector and have shown a chart of the key ETF in this sector. A report from Fitch Ratings earlier this month called MLPs fairly well positioned against economic regulatory risks and has noted that the sector should generate stable operating performance and financial credit measures for 2012. The belief was that these should remain consistent with recent past performance and the outlook includes natural gas pipelines as well as crude oil and refined products pipelines.

Income and dividend investors have become more aggressively interested in MLPs after a couple of years of Treasury rates and CD rates not paying anything of substance any more for income. Retirees need cash flow from their investments in order to live. Even though these distributions paid to investors act as dividends, there is usually a mixed combination of income and a return of capital. In short, not all of the distributions paid out are treated the same by the tax-man.

Our individual valuation analysis on some of the key individual MLPs is as follows:

Enterprise Products Partners L.P. (NYSE: EPD) is valued at $39.2 billion now and trades at $45.00, under its consensus target of $49.11 and it has a 52-week range of $36.00 to $46.70. The implied distribution per year based on the last payout was about 5.5%.

Kinder Morgan Energy Partners LP (NYSE: KMP) is valued at $26.9 billion and trades at $81.00, above its consensus target of $76.11 and against a prior 52-week range of $63.42 to $80.52. The implied distribution per year based on the last payout was 5.8%.

MarkWest Energy Partners, L.P. (NYSE: MWE) is valued at $4.6 billion. This unit trades at $54.20, and is under the consensus target of $61.88 and it has a 52-week range of $39.00 to $56.82. The implied distribution per year based on the last payout was 5.4%.

Filed under: Bonds, Commodities, Compensation, Corporate Governance, Dividend, Economy, Editor's Picks, ETF, Financial Stocks, Infrastructure, Oil & Gas Tagged: AMJ, AMLP, BPL, EPB, EPD, KMP, KYN, MMP, MWE, PAA, WPZ

In Defense of MLPs For 2012 (EPD, KMP, MWE, PAA, WPZ, MMP, BPL, EPB, KYN, AML, AMLP)

Administrator — Wed, 07 Dec 2011 19:20:39 +0000

With many Master Limited Partnerships (MLPs) trading at or even above some of their expected target prices, we wanted to take a year-end look into the sector to see where there is opportunity versus risk. Fitch Ratings has issued a report calling MLPs as being fairly well positioned against economic regulatory risks and has noted that the sector should generate stable operating performance and financial credit measures for 2012. It noted that these should remain consistent with recent past performance and the outlook includes natural gas pipelines as well as crude oil and refined products pipelines. With so many retail and income-oriented investors treating this sector’s payouts as dividends (actually distributions of income and capital), we wanted to look at our universe again.

We have overlaid some of the Fitch Ratings analysis after the individual MLPs because we wanted to show you what the MLPs are valued at today as well as how they compare to their Thomson Reuters consensus price target objective and 52-week trading ranges. The individual MLPs we are including on our own are as follows: Enterprise Products Partners L.P. (NYSE: EPD); Kinder Morgan Energy Partners LP (NYSE: KMP); MarkWest Energy Partners, L.P. (NYSE: MWE); Plains All American Pipeline, L.P. (NYSE: PAA); Williams Partners L.P. (NYSE: WPZ); Magellan Midstream Partners, L.P. (NYSE: MMP); Buckeye Partners, L.P. (NYSE: BPL); and El Paso Pipeline Partners, L.P. (NYSE: EPB).

Our individual valuation analysis on some of the key individual MLPs is as follows:

Enterprise Products Partners L.P. (NYSE: EPD) is valued at $40 billion now and trades at $46.10, under its consensus target of $49.11 and it has a 52-week range of $36.00 to $46.70. The implied distribution per year based on the last payout was about 5.3%.

Kinder Morgan Energy Partners LP (NYSE: KMP) is valued at $26.1 billion and trades at $78.50, above its consensus target of $76.11 and against a 52-week range of $63.42 to $79.34. The implied distribution per year based on the last payout was 5.9%.

MarkWest Energy Partners, L.P. (NYSE: MWE) is valued at $4.7 billion. This unit trades at $55.80, and is under the consensus target of $58.38 and it has a 52-week range of $39.00 to $56.40. The implied distribution per year based on the last payout was 5.3%.

Plains All American Pipeline, L.P. (NYSE: PAA) is valued at $10 billion, and its $67.30 price compares against a price target of $71.96 and its 52-week trading range is $54.90 to $67.74. The implied distribution per year based on the last payout was 5.9%.

Williams Partners L.P. (NYSE: WPZ) is worth some $17.3 billion and its $59.65 price compares to a target of $60.81 and a 52-week range of $44.81 to $61.22. The implied distribution per year based on the last payout was about 5%.

Magellan Midstream Partners, L.P. (NYSE: MMP) is worth $7.35 billion and its $6.30 price is just under the $66.64 consensus price target. Its 52-week range is $51.00 to $65.92. The implied distribution per year based on the last payout was only about 4.9%.

Buckeye Partners, L.P. (NYSE: BPL) is valued at $5.95 billion and its $63.98 price is pretty far under the consensus price target of $70.25. It has a 52-week range of $54.51 to $68.92. The implied distribution per year based on the last payout was 6.5%.

El Paso Pipeline Partners, L.P. (NYSE: EPB) is valued at $6.7 billion with a $32.60 share price. That is one of the largest discounts to the consensus price targets of peers as its target is $39.00. Its 52-week range is $31.34 to $38.36. The implied distribution per year based on the last payout was 6.1% based on today’s price.

Because many of the largest MLPs are so close to or above the consensus price targets, we recently gave the 24/7 Wall St. Model Dividend Portfolio some changes to focus more on the funds and ETFs (with payout rates based upon the average of the last two payouts): Kayne Anderson MLP Investment Company (NYSE: KYN) with a distribution of about 6.9%; JPMorgan Alerian MLP Index ETN (NYSE: AMJ) with a distribution of about 5.2%; and ALPS Alerian MLP ETF (NYSE: AMLP) with a distribution of about 6.3%.

Filed under: Analyst Calls, Banking, Bonds, Commodities, Corporate Governance, Dividend, Economy, Infrastructure, Oil & Gas Tagged: AML, AMLP, BPL, EPB, EPD, KMP, KYN, MMP, MWE, PAA, WPZ

Energy Companies Raising More Cash (BRY, BWEN, KYN, MWE, REXX)

247wallst — Thu, 14 Jan 2010 18:02:37 +0000

We have already seen a flood of secondary offerings from many companies in many sectors either sold or filed this week. The strong market is giving many companies a window to raise cash, and we are seeing a specific push from the energy sector in efforts to raise capital. We have seen formal pricing, pending pricing and/or filings this week from companies like Berry Petroleum Co. (NYSE: BRY), Broadwind Energy Inc. (NASDAQ: BWEN), Kayne Anderson MLP Investment Company (NYSE: KYN), MarkWest Energy Partners LP (NYSE: MWE), and Rex Energy Corp. (NASDAQ: REXX).

Other secondaries filed this week

Berry Petroleum Co. (NYSE: BRY) is selling some 7 million common shares in an offering expected to price today. The deal is being brought by Credit Suisse and J.P. Morgan and would be close to $200 million based on current prices. That compares to a market cap of $1.3 billion and funds are being used for an acquisition.

Broadwind Energy Inc. (NASDAQ: BWEN) is first and foremost NOT an oil and gas company. It manufactures and sells high precision gears for wind turbines and for other sectors, but we hope one day that alternative energy companies and their suppliers are thought of as energy companies. The company has been in the process of selling 15 million shares of common stock in an offering through Macquarie and J.P. Morgan. That would be close to $100 million in proceeds today, versus an implied market cap of $633 million.

Kayne Anderson MLP Investment Company (NYSE: KYN) is technically not an oil company, but it is a closed-end fund that invests at least 85% of its total assets in energy-related master limited partnerships and their affiliates. It sold 5.5 million shares at $23.61 per share. This raised approximately $124 million to be used to make additional portfolio investments. The sale came through UBS Securities, Merrill Lynch, Citi, and Morgan Stanley as joint book-running managers. This one is even down 6% today on the event.

MarkWest Energy Partners LP (NYSE: MWE) has filed with the SEC its automatic shelf registration for units to sell Common Units (LP interests) and debt securities. As with many automatic shelf registration statements, no financial terms nor underwriters were named. Its market cap is $1.9 billion.

Rex Energy Corp. (NASDAQ: REXX) is selling some 5.5 million shares in a deal expected to price today after the close through KeyBanc Capital Markets and RBC Capital Markets. Net proceeds of the offering are intended to fund a portion of Rex Energy’s capital expenditure program for 2010 and for other general corporate purposes. This would be close to $70 million today versus an implied market cap of $472 million.

You are invited to join our free daily email distribution list to hear about IPOs and secondary offerings, ongoing day trader and options trader alerts, analyst upgrades and downgrades, stock and market rumors, Buffett and guru investor news, M&A and more.

JON C. OGG

Posted in Mutual Funds, Oil & Gas, Secondary Offering Tagged: BRY, BWEN, KYN, MWE, REXX

MarkWest Secondary Discounting Takes A Toll (MWE)

247wallst — Fri, 05 Jun 2009 13:29:13 +0000

MarkWest Energy Partners, L.P. (NYSE: MWE) has priced its public offering of 2.9 million common units at an offering price of $18.15 per common unit. While all funds are being used for the right purposes, this discounting may create an issue in this partnership’s uptrend we have seen.

The use of net proceeds from the offering, approximately $50.3 million excluding offering expenses, will be used to partially fund its growth capital budget and the partnership plans to apply a portion of the net proceeds to pay down borrowings under its revolving credit facility.

Morgan Stanley was the sole book-running manager for the secondary offering, and the partnership has granted an overallotment option for an additional 435,000 common units to the underwriter.

This $18.15 is a fairly deep discount of about 9% from the close of $19.95 yesterday and shares had not really been able to break above the $20.00 mark all week. The 52-week trading range is $6.55 to $38.50. So far we have seen some 250,000 units trade and the last price is down at $18.15. Its market cap before this offering and before the implied price drop was listed as $1.14 billion.

MLP’s can trade with a mind of their own and the price of oil is usually the bias-setter each day. But generally speaking, a price drop of twice the dilution to the stock is deemed excessive. The problem with using that general rule is that this one has also doubled in the last 3 months.

Jon C. Ogg
June 5, 2009

Posted in Oil & Gas, Secondary Offering Tagged: MWE

MarkWest Energy Files To Raise Cash (MWE)

247wallst — Thu, 12 Mar 2009 20:39:03 +0000

MarkWest Energy Partners LP (NYSE: MWE) has just filed with the SEC to raise capital via the sale of securities. The company’s filing is for sales of any combination for it (and its many units) to sell common units, debt securities, and guarantees of debt securities for an amount of up to $1 billion.

The sale of these securities are earmarked for the traditional general corporate purposes, which is meant to include paying or refinancing outstanding debt, funding working capital, capital expenditures, and acquisitions.

No underwriters were named and no terms were given in the filing.

MarkWest units closed at $11.55 today, and its 52-week trading range is $6.55 to $38.50. As of today’s close, the market cap was $657 million.

The company (partnership) is in the gathering, compression, treatment, processing, and transportation of natural gas in the United States.

JON C. OGG

Posted in Oil & Gas, Secondary Offering Tagged: MWE

Top Pre-Market Analyst Upgrades (BBY, CB, DVA, DFT, FCX, FMS, MWE, MCHP, WFT)

247wallst — Thu, 29 Jan 2009 12:48:35 +0000

These are some of the top per-market analyst upgrades and positive calls we are seeing from Wall Street this Thursday morning:

Best Buy (BBY) Raised to Overweight at Barclays.
Chubb (CB) Raised to Buy at Bank of America-Merrill Lynch.
DaVita (DVA) Started as Outperform at RBC.
Dupont Fabros Tech (DFT) Raised to Buy at UBS.
Freeport McMorRan (FCX) Raised to Hold at Canccord.
Fresenius Medical (FMS) Started as Outperform at RBC.
MarkWest Energy (MWE) Raised to Outperform at Morgan Keegan.
Microchip Tech (MCHP) Raised to Overweight at Barclays.
Weatherford (WFT) Raised to Overweight at JPMorgan.

Jon C. Ogg
January 29, 2009

Posted in Analyst Calls Tagged: BBY, CB, DFT, DVA, FCX, FMS, MCHP, MWE, WFT

The 52-Week Low Club (MNI)(MWE)(ARTC)(TXCC)

247wallst — Mon, 22 Dec 2008 15:48:27 +0000

McClatchy (MNI) Another big newspaper company headed toward liquidation. Drops to $.83 from 52-week high of $13.31.

Markwest Energy (MWE) Downgraded by Morgan Keegan. Drops to $7.36 from 52-week high of $38.50.

ArthroCare (ARTC) May have to restate several years of financials. Sells off to $4.35 from 52-week high of $53.76.

TranSwitch (TXCC) No news, but big sell-off toward the close. Dips to $.22 from 52-week high of $1.15.

Douglas A. McIntyre

Posted in HI/LOW Tagged: ARTC, MNI, MWE, TXCC