US M&A - the rise of the MLPs

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29 August 2013

US M&A - the rise of the MLPs

Report summary

Master Limited Partnerships, or MLPs, have become major players in the US upstream M&A market. In 2013 ytd, MLPs account for 36% of acquisition spend onshore US Lower 48. The pending US$4.3 billion takeover of Berry Petroleum by LINN Energy is the largest upstream deal of the year, globally. MLPs are publicly-listed entities which do not pay corporation tax, but pay a high proportion of cash earnings out in the form of regular, dividend-like ‘distributions'. Maximising distributions is...

Table of contents

  • Executive summary
  • What is an MLP?
    • Which MLPs are active in upstream M&A?
    • Favourable market conditions have enabled growth
      • Higher yields underpin investor interest in MLPs
      • Low cost of capital helps to fund acquisitions
      • What types of assets are MLPs targeting?
      • What does this mean for C-Corps?
        • Supporting liquidity and valuations
        • Restructuring opportunity?
      • What might halt the rise of the MLPs?
        • Tightening monetary policy could raise the cost of capital
        • Falling commodity prices would (eventually) hit distributions
        • Incentive Distribution Rights could cap growth
        • Limited Institutional Investment
        • Change in tax code
        • SEC investigation into LINN Energy
      • Appendix 1: Recent asset trends in Upstream MLP deals
        • Permian region
        • Mid-Continent region
        • Gulf Coast region
        • Rocky Mountains region
        • West Coast region
    • Unconventional strategy case study - Atlas Resource Partners
    • Laws and Tax codes governing MLPs
  • Appendix 3: List of Upstream MLPs

Tables and charts

This report includes 11 images and tables including:

  • Upstream MLP spending in the onshore US Lower 48
  • US M&A - the rise of the MLPs: Image 3
  • US M&A - the rise of the MLPs: Table 1
  • US M&A - the rise of the MLPs: Image 2
  • Enterprise value and capital structure of US Upstream MLPs
  • Upstream MLP acquisition spend by primary resource
  • MLP acquisition spend by asset status (2010-2013)
  • Acquisition costs ($/boe, proved) - MLPs vs. market
  • MLP acquisition spend by seller Peer Group
  • US M&A - the rise of the MLPs: Image 9
  • C-Corp USL48 onshore portfolio analysis: near-term unit capex vs. reserves life, by company, by play

What's included

This report contains:

  • Document

    US M&A - the rise of the MLPs

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