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US M&A - the rise of the MLPs
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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...
What's included
This report contains
Table of contents
- Executive summary
- What is an MLP?
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MLPs in the energy industry
- Which MLPs are active in upstream M&A?
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The Upstream MLP business model
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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?
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What does this mean for C-Corps?
- Supporting liquidity and valuations
- Restructuring opportunity?
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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
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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
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Favourable market conditions have enabled growth
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Appendix 2: MLP basics
- Laws and Tax codes governing MLPs
- Appendix 3: List of Upstream MLPs
Tables and charts
This report includes 11 images and tables including:
Tables
- US M&A - the rise of the MLPs: Table 1
Images
- 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: 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
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