Seeking Alpha: From A Lower Starting Point, Magellan Midstream Looks More Interesting

About a year ago I thought that Magellan Midstream Partners, LP (NYSE:MMP) was priced a little too richly for my tastes. The units have since fallen about 10%, which is actually pretty good considering the weak overall performance of MLPs and the steeper declines of comparables like Plains All American Pipeline, LP (NYSE:PAA), Sunoco Logistics Partners, LP (NYSE:SXL), and Enterprise Products Partners, LP (NYSE:EPD).

Although MLPs have sold off as investors have backed away from almost everything related to energy, Magellan has continued to pursue growth projects predicated upon ongoing growth in U.S. crude production, transportation, and storage. I don't quite believe that Magellan is a screaming bargain today, but I believe the company is likely to deliver strong distribution growth over the next couple of years and good mid-single digit distributable cash flow growth over the next decade. Magellan's yield is lower than normal for an MLP, but the company's liquidity position looks pretty solid, the distribution coverage is good, and the cost of capital is low - all of which argues for a quality premium.

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From A Lower Starting Point, Magellan Midstream Looks More Interesting

Seeking Alpha: Enbridge Energy Partners Looking For A Pop From A Drop

I wasn't very keen on Enbridge Energy Partners (NYSE:EEP) a year ago, and while the units have outperformed many of the peer group MLPs, a 1% return before distributions doesn't leave me feeling as though I have missed very much by sitting on the sidelines (I liked Energy Transfer Equity (NYSE:ETE) better and that's up almost 20% over the same period). Clearly the steep drop in oil prices, the prospect of rising rates, and (more debatable) the big increase in MLP supply all have had their impact on the sector, but Enbridge Energy Partners has at least benefited from ongoing volume growth across its liquids pipelines. Now with the prospect of sizable drop-downs from its parent Enbridge (NYSE:ENB), maybe it's not too early to at least consider some due diligence on these units.

Owning Enbridge Energy Partners has a bigger "hassle factor" than a regular equity; as a partnership there are tax issues here that don't come up with regular equities and readers have to decide for themselves if those issues are problematic. I'm also still concerned that Enbridge Energy Partners is overstretched from a balance sheet perspective and will have to engage in complex, likely dilutive, financing to complete what could be up to $10 billion in asset drop-downs. All of that said, the shares look a little undervalued as is and meaningfully undervalued with the drop-downs and I don't think the outlook for liquids volumes is going to get too much worse from here.

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Enbridge Energy Partners Looking For A Pop From A Drop

Seeking Alpha: Enbridge Energy Partners Working A Tricky Balance

A lot is going on these days in the energy MLP sector, as companies try to balance their needs for cash distribution growth to shareholders/unitholders, keep a sustainable balance sheet, and fund the capital spending needed to exploit what could well be a once-in-a-career buildout of new infrastructure to handle North America's growing energy output.

When it comes to Enbridge Energy Partners, L.P. (EEP), the balancing act is a little trickier. Enbridge's (ENB) recent decision to cut its top incentive distribution rights is a positive for EEP, as was a drop-down to Midcoast Energy Partners, L.P. (MEP), but the company is still stretched on its distribution coverage and has a delicate balancing act ahead of it in managing billions of dollars of growth-oriented capex.

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Enbridge Energy Partners Working A Tricky Balance

Investopedia: Macquarie Infrastructure Looks Like A Tricky Play

Savvy investors know to love those toll-booth companies out there--companies that own hard-to-replicate assets that produce quality cash flow streams and require little short-term strategic support. These companies can take many forms, from timberland owners like Weyerhaeuser (NYSE:WY) to petroleum transport and storage companies like Enbridge Energy Partners (NYSE:EEP) to diversified investment holding companies like Brookfield Infrastructure (NYSE:BIP).

Macquarie Infrastructure Company LLC (NYSE:MIC) is a company worth exploring within that same theme. While there are cyclical and long-term structural issues with some of the company's operating assets, results have been getting better and the company's dividend paying ability seems to be getting stronger.

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http://stocks.investopedia.com/stock-analysis/2012/Macquarie-Infrastructure-Looks-Like-A-Tricky-Play-MIC-EEP-BIP-KMP0530.aspx

Seeking Alpha: Plains All American Almost Makes It Look Easy

With crude oil production increasing across North America and differentials going both wide and volatile, these are pretty interesting times to own pipeline, storage, and terminal facilities. As one of the best in the business, Plains All American (PAA) continues to reap the benefits of the network it already has, while also putting even more money into its expansion plans.

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Plains All American Almost Makes It Look Easy

Investopedia: Should Investors Sail With Magellan Midstream?

If low-risk income appeals to you, there aren't too many better businesses than pipeline and storage businesses. The time and capital it takes to get permitting and then build new networks keeps rampant competition at bay and pricing is often quite predictable. All of that said, investors may want to approach Magellan Midstream Partners (NYSE:MMP) with a little bit of caution today.

Solid Assets
There's definitely nothing wrong with the assets that Magellan Midstream operates. The company owns a network of more than 9,000 miles of pipeline that carries refined petroleum products up from the Gulf of Mexico into and through the Midwest. This pipeline network connects to more than 40% of the country's refinery capacity, and the company also owns around 50 petroleum terminals across the Midwest and eastern United States. Magellan also operates a 1,100-mile ammonia pipeline in the Midwest.

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http://stocks.investopedia.com/stock-analysis/2012/Should-Investors-Sail-With-Magellan-Midstream-MMP-BP-EEP-COP0403.aspx

Investopedia: Oasis Petroleum Still Worth A Look

It's pretty much a given that investing in individual exploration and production (E&P) companies is tantamount to buying a ticket for the roller-coaster. While the long-term thesis that oil and gas prices are destined to rise might be directionally correct, the incredible drop in crude oil prices from mid-2008 to the end of the year, and the spike from late 2011 to today, shows that plenty of volatility remains in the meantime.

Oasis Petroleum (NYSE:OAS) is by no means immune to the variability of oil prices, but this growth play in the Bakken could still be worth a look for more aggressive investors.

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http://stocks.investopedia.com/stock-analysis/2012/Oasis-Petroleum-Still-Worth-A-Look-OAS-CLR-WLL-UNP0402.aspx.

Investopedia: Enbridge Energy Partners May Gain From Keystone's Pain

Whatever the objections people had to TransCanada's (NYSE:TRP) Keystone XL pipeline, the fact remains that the U.S. needs ways to get more oil from over there (wherever "there" may be) to over here. With its ownership of the U.S. side of one of the largest North American crude oil pipelines and extensive gas gathering operations in Texas, Enbridge Energy Partners (NYSE:EEP) may yet be able to benefit from the situation.

A Valuable Asset Becoming More Valuable
Key to the stories of Enbridge Energy Partners and parent/general partner Enbridge (NYSE:ENB) is the Enbridge Pipeline System. It includes about 1,200 miles of Canadian pipeline and the Lakehead System - 1,900 miles of U.S. pipeline than can move well over 1 million barrels of oil from oil fields in Western Canada down through Chicago and (through connecting pipelines) on to storage facilities in Oklahoma (Cushing) or along the Great Lakes, up to Montreal.

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http://stocks.investopedia.com/stock-analysis/2012/Enbridge-Energy-Partners-May-Gain-From-Keystones-Pain-EEP-ENB-TRP-UNP0330.aspx