Comparing 4 Midstream MLP Subsidiaries of Upstream C-Corps
EQT Midstream’s distributions
EQT Midstream Partners (EQM) has a strong distribution growth profile. It declared a quarterly distribution of $0.64 per unit for 2Q15. This represents a huge 23.10% YoY (year-over-year) rise compared to 2Q14. It’s a 4.90% rise over the previous quarter.
EQT Midstream’s distributable cash flows
MLPs’ distribution growth is driven by growth in distributable cash flows. EQT Midstream’s 2Q15 distributable cash flow of $102.8 million is 95.60% higher than the 2Q14 distributable cash flow of $52.6 million. Its recent distributable cash flow growth was mainly driven by higher firm reservation fee revenue. Its impressive distributable cash flow growth helped build a strong distribution coverage of 1.82x. A few midstream subsidiaries of refining companies like Valero Energy Partners (VLP), PBF Logistics (PBFX), and Shell Midstream Partners (SHLX) also have a high distribution coverage of 1.61x, 1.79x, and 1.59x, respectively. EQT Midstream accounts for 0.58% of the Global X MLP & Energy Infrastructure ETF (MLPX).
Distribution guidance
According to Wall Street analysts’ estimates, EQT Midstream’s distribution is expected to grow ~29.16% YoY (year-over-year) by the end of 2015—compared to 2014. Analysts’ distribution growth estimates are in line with management’s guidance of 20% distribution growth through 2017. EQT Midstream has also increased its distributable cash flow guidance for 2015. According to a company press release, “EQM forecasts third quarter 2015 adjusted EBITDA of $112 – $117 million and full-year 2015 adjusted EBITDA of $435 – $445 million. EQM is also increasing its full-year distributable cash flow forecast to $390 – $400 million.”
Distribution yield
EQT Midstream has a current distribution yield of 3.33%. The partnership’s low distribution yield indicates less risk. It can be attributed to solid distribution guidance, strong coverage, and minimal exposure to energy commodity prices.
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