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Pipeline ETFs pulling in funds; DCP enlarges Sand Hills project


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Pipeline ETFs pulling in funds; DCP enlarges Sand Hills project

Midstream ETFs pulling in funds despite poor sector stock performance

Midstream energy stocks lagged behind utilities and broader indexes in May even though exchange-traded funds tracking the sector took in more investments than broader energy ETFs.

The Alerian MLP index, a bellwether ETF for the oil and gas pipeline master limited partnership sector, saw net inflows increase from $59.5 million in April to $97.5 million in May. Still, the index by the end of the month had dropped to its lowest level of the year, down 5.3% since the end of 2016 on a simple price-return basis.

"During the first quarter MLPs dodged the overall energy complex malaise," Barclays research analysts said in a June 5 note. "In April there were indications of contagion. In May the rash out in full bloom." Despite the Alerian's downward market movement, midstream funds continued to show more resilience to lower oil prices than broader energy ETFs. Data for funds tracked by S&P Global Market Intelligence showed that 11 midstream-focused ETFs had total net inflows of just over $270 million for the month, up from $168 million in April.

DCP Midstream boosts scale of Sand Hills NGL pipeline expansion

DCP Midstream LP launched an additional expansion of its Sand Hills NGL pipeline that would increase capacity by 85,000 barrels per day to about 450,000 bbl/d, a project estimated to cost about $500 million.

The partnership expects to spend $105 million on long-lead equipment and right of way, according to a May 30 news release. The initial phase of the expansion will include partial looping of Sand Hills and seven new pump stations. The pipeline carries product from the Permian Basin to the Mont Belvieu market on the Texas Gulf coast.

The plan is in addition to the existing expansion that would boost capacity to 365,000 bbl/d by adding three new pump stations and a lateral. This expansion is already underpinned by long-term, third-party plant commitments.

Fitch gives Enbridge, MLP investment grade first-time ratings

Fitch Ratings assigned investment grade first-time ratings to Enbridge Inc. and Enbridge Energy Partners LP, reflecting the entities' "beneficial" size and scale and stable cash flows.

The rating agency gave Enbridge a long-term issuer default rating and senior unsecured rating of BBB+, while Enbridge Energy Partners received a long-term issuer default rating and senior unsecured rating of BBB, according to a June 2 news release.

"ENB's 'BBB+' rating also reflects the diversity of cash flows, low customer credit risk, an array of credit-supportive financial policies concerning both liquidity and hedging, the company's proven ability to tap multiple deep pools of debt and equity capital, and its decade-plus demonstrated competence in the construction phase of its development undertakings," Fitch said.

Marathon Petroleum hires president from its MLP, nabs ETP exec as successor

Marathon Petroleum Corp. announced changes in its executive team with the appointments of MPLX LP executive Donald Templin as president of the parent company, effective July 1, and Mike Hennigan as Templin's successor.

Templin is the president of the general partner of MPLX LP. Hennigan will take over his post June 20, according to a May 30 news release.

Both Templin and Hennigan will be on the board of directors of the general partner of MPLX and will report to Gary Heminger, Marathon's chairman, president and CEO.

Cardinal Midstream establishes new company with $250M equity from EnCap Flatrock

Cardinal Midstream LLC formed a new midstream acquisition and development company called Cardinal Midstream III LLC with a $250 million equity commitment from EnCap Flatrock Midstream.

Cardinal III would focus on midstream opportunities in both conventional and unconventional North American resource plays, supporting Dallas-based Cardinal Midstream's core businesses of natural gas and crude oil gathering, natural gas processing, centralized compression facilities, condensate stabilization, vapor recovery and natural gas treating, according to a May 31 news release.