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Evercore leading the pack of advisors in midstream MLP restructuring deals

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Evercore leading the pack of advisors in midstream MLP restructuring deals

Evercore Group L.L.C. has been at the front of the Rolodex for midstream energy companies that have decided to ditch or consolidate their master limited partnerships since 2017.

The subsidiary of investment banking advisory firm Evercore Inc. led the pack serving as financial adviser for seven announced and completed midstream restructuring deals from the start of 2017 through the beginning of October 2018. Midstream energy companies in S&P Global Market Intelligence's North American coverage universe were involved in 14 deals that included advisory information in that time frame.

While Kinder Morgan Inc. kicked off the midstream simplification trend in 2014, the movement picked up speed over the past two years as stock prices lagged behind as oil prices recovered. The disconnect prompted analysts and investors to pressure management teams to ditch the cash-leaking MLP model, which is based on funneling distributions to general partners and making high quarterly payments to shareholders.

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The two i-banks were also on opposite sides of Archrock Inc.'s roll-up of Archrock Partners LP that closed a year later, with Citigroup advising Archrock and Evercore Group advising the MLP for a combined $7.8 million in fees. Evercore Group worked on one of the first consolidation transaction among in the wave, advising Midcoast Energy Partners LP in its merger with parent company Enbridge Inc. that closed in April 2017. Citigroup Global Markets Inc., which has advised five announced and completed midstream restructuring deals since 2017, worked for Enbridge.

Some parent corporations, such as Williams Cos. Inc., were further incentivized to roll up their partnerships after federal tax policy changes, including the Federal Energy Regulatory Commission's March 15 decision to potentially extinguish a key tax benefit for oil and gas pipelines organized as MLPs. That ruling sent midstream stock prices into a tailspin.

Evercore Group advised Williams Partners LP in its recently completed $10.5 billion merger with Williams, which cited tax policy changes as factors in its decision to restructure the company. The i-bank earned $4.25 million in fees.

Evercore Group also worked on other higher-profile deals, such as EQT Midstream Partners LP's acquisition of Rice Midstream Partners LP in July 2018 following the parent companies' earlier merger.

Citigroup, meanwhile, is advising Energy Transfer Equity LP, whose $26.55 billion merger with Energy Transfer Partners LP, or ETP, is due to close before the end of the year. The i-bank also represented Sunoco Logistics Partners LP in a 2017 merger that made ETP a subsidiary of the partnership.

JP Morgan Securities LLC's earned the largest recorded fee since 2017 for an i-bank's advisory services, with a $15 million paycheck for representing ONEOK Inc. when it rolled up ONEOK Partners LP in June 2017.

JP Morgan is also advising Antero Resources Corp. in the Appalachian shale driller's midstream consolidation plan announced Oct. 9 to combine Antero Midstream Partners LP and Antero Midstream GP LP into a new corporation.

Company filings for Dominion Energy Inc.'s planned roll-up of Dominion Energy Midstream Partners LP and Loews Corp. affiliate Boardwalk GP LP's completed purchase of Boardwalk Pipeline Partners LP did not provide details about financial advisers.