Tortoise hits Bloomberg

  • Simplification across midstream sector won’t kill off MLPs
  • There’s a race among pipeline owners to reduce capital costs

First came Kinder Morgan Inc., then Targa Resources Corp. and now Oneok Inc. — pipeline giants keep buying up their master-limited partnerships, once darlings of the energy world.
Their moves raise a question: Are MLPs — tax-advantaged, publicly traded partnerships that have proliferated in the past decade — dying out?
“Definitely no,” said Libby Toudouze, a partner and portfolio manager at Cushing Asset Management in Dallas.
What’s going on, Toudouze said, is pipeline operators are rushing to lower their costs of capital as competition heats up in America’s energy sector. The explosive growth of the shale boom is subsiding, ushering in a wave of consolidation among pipeline operators. Management teams are having to show increased caution with balance sheets after getting burned during the latest oil rout.
“Simplification is the continued theme — it started last year, continued into this year, and will continue in the sector for a while,’’ said Rob Thummel, managing director at Tortoise Capital Advisors.
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