Most midstream companies rallied on Thursday, May 17, outpacing other energy sectors, after announcements of rolling up their master limited partnerships. Meanwhile, utilities and broader markets settled on the negative side of the ledger, with the Dow Jones Industrial Average retreating 0.22% to end at 24,713.98, and the S&P 500 slipping 0.09% to close at 2,720.13.
Williams Cos. Inc. shares rose 2.34% on about three times average volume to finish at $28.01, after the company announced plans to acquire the 256 million Williams Partners LP shares it does not already own for $10.5 billion. Williams Partners closed the day 7.99% higher on more than four times average volume to $41.49.
Company executives said they opted to roll up the master limited partnership in part because they think a fight between the pipeline industry and federal regulators over a recent tax policy change has the potential to drag on for years.
Following the announcement, Fitch, Moody's and S&P Ratings are considering upgrades to the company's credit ratings.
Shares of Enbridge Inc. settled up 0.93% to C$42.19 on the Toronto Stock Exchange after a strong trading day. The company also proposed to acquire all of the outstanding equity securities of its sponsored vehicles Spectra Energy Partners LP, Enbridge Energy Partners LP, Enbridge Energy Management LLC and Enbridge Income Fund Holdings Inc. that it does not already own in separate deals valued at C$11.4 billion combined.
Management said that Enbridge's proposal to roll up its U.S. energy pipeline partnerships is a consequence of prolonged valuation declines and American tax changes.
Spectra Energy Partners climbed 1.18% in four times average trading to finish at $33.49, and Enbridge Energy Partners concluded the day 2.08% higher on strong volume to $10.29.
Cheniere Energy Inc., meanwhile, shed 1.10% on slightly below-average volume to finish at $62.06, following an offer to buy all of the outstanding shares of Cheniere Energy Partners LP Holdings LLC that it does not already own. The partnership advanced 2.65% on more than 10 times average trading volume to finish at $28.69.
The Alerian MLP Index settled 1.24% higher to 268.489.
Among large cap oil and gas companies, Marathon Petroleum Corp. rose 5.19% to $80.71; Valero Energy Corp. climbed 4.10% to $119.71; and EOG Resources Inc. advanced 3.83% to $126.15, all on brisk volume. Benchmark oil prices hit their highest levels since late 2014 in trading on May 17, though closed below those highs.
In the power sector, Vivint Solar Inc. shares saw an increase of 1.22% in brisk trading to close at $4.15. The company will offer customers energy storage based on batteries from LG Chem Ltd., after Daimler AG canceled U.S. residential battery sales through its Mercedes-Benz Energy unit.
Just Energy Group Inc. tumbled 6.90% on more than five times average volume to finish at C$4.72, after it reported fiscal fourth-quarter 2018 base EBITDA from operations of C$68.9 million, compared to C$75 million in the same quarter of fiscal 2017.
The S&P 500 Energy Sector was up 1.31% to close at 578.51, while the S&P 500 Utilities Sector shed 0.90% to settle at 247.35.
June natural gas futures were higher Thursday despite the report of the first triple-digit and larger-than-anticipated build to natural gas inventories for the week to May 11. The contract settled the session with a 4.4-cent gain at $2.859/MMBtu while trading a range of $2.780/MMBtu to $2.862/MMBtu.
Market prices and index values are current as of the time of publication and are subject to change.
