Insight
US M&A - the rise of the MLPs
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
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?
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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 the following images and tables:
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Upstream MLP spending in the onshore US Lower 48US M&A - the rise of the MLPs: Image 3US M&A - the rise of the MLPs: Table 1
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US M&A - the rise of the MLPs: Image 2Enterprise value and capital structure of US Upstream MLPsUpstream MLP acquisition spend by primary resourceMLP acquisition spend by asset status (2010-2013)Acquisition costs ($/boe, proved) - MLPs vs. marketMLP acquisition spend by seller Peer GroupUS M&A - the rise of the MLPs: Image 9C-Corp USL48 onshore portfolio analysis: near-term unit capex vs. reserves life, by company, by play
What's included
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