Linn Energy, Breitburn Could Be Tip of Iceberg for MLP Bankruptcies
With master limited partnership (MLP) Breitburn Energy Partners LP’s bankruptcy filing Monday, it becomes the second upstream MLP to do so in less than a week. Houston-based Linn Energy filed for bankruptcy May 11.
But it wasn’t unexpected, said Hinds Howard, vice president and senior financial analyst for CBRE Clarion Securities.
“MLPs in general are going to continue to struggle … every single one of them has cut their distribution and every single one of them seems to be in real distress,” Howard told Rigzone, adding that he doesn’t believe the recent filings have any broader implications for midstream MLPs, which seem to be faring well. “The Alerian MLP Index, which doesn’t include any upstream MLPs anymore, is up 2.5 percent right now.”
Reuters reported that Breitburn listed its assets and liabilities as $1 billion to $10 billion.
Howard said the business model – trying to pay out cash flow on mature producing properties that have a high cost relative to current oil prices – just doesn’t make sense anymore.
For upstream MLPs to stay afloat, Howard said they’ll have to continue doing what they’re doing – restructuring debt, shedding assets, laying off workers, or ultimately, filing for bankruptcy.
“Midstream MLPs are OK. They don’t need oil prices to go up,” he said. “They need volumes to continue to stabilize and they need rigs to come back in 2017 and 2018 to drive volumes through their midstream assets, but I think they’re largely OK.”
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension