Trouble Brewing In Oil & Gas MLP Land? (PAA, OGE, DVN, XCO, VQ, WES, APC, BSR)

We have tracked these Master Limited Partnerships (MLP’s) and spin-offs or carve-out IPO’s from larger oil and gas companies for quite some time.  What is amazing is that despite the rapid rise in oil and energy-related commodities has not translated to the "peak-IPO rush" like we saw with dot.com IPO flame-outs from 1999 and 2000.  Many have been withdrawn and many have gone in limbo.

Earlier this week, Plains All American Pipeline LP (NYSE: PAA) completed a public offering of 6.9 million common units at $46.31/unit, generating net proceeds of $315 million. In February, Plains withdrew a proposed IPO for a master limited partnership (MLP) in its general partner, which may have generated much more cash.

OGE Corporation (NYSE: OGE) withdrew a proposed MLP IPO in January, citing "market volatility."

Devon Energy (NYSE: DVN) had planned an MLP IPO for the third quarter of 2007, but the offering has neither gone forward nor been withdrawn.  This one is still in the "pending" category.

EXCO Resources Inc. (NYSE: XCO) filed in September 2007 for a public offering of 75 million common units in an MLP. Exco withdrew the offer in January, stating that "current market conditions do not support the completion of the offering in a manner that would result in the value enhancement to EXCO and its shareholders that was anticipated upon the initial filing of the registration statement."

Venoco Inc. (NYSE: VQ) announced an E&P MLP in February. This one is still outstanding as it is only 3-months old.  Venoco enjoyed a $3.00/share price jump on Monday’s earnings report.

Last week we saw a pricing from Western Gas Partners L.P. (NYSE: WES),a spin-out from Anadarko Petroleum Corp. (NYSE: APC) saw a lacklusterIPO with a pricing below the indicated levels.

You can join our open email distribution list to hear about other secondary offerings, IPO’s, secondary offerings, special financings, mergers, spin-offs, and other special situations.

If you want to see an even more broad example of this trend in MLP’s, you can look at the ETF: BearLinx Alerian MLP Select Index ETN (NYSE: BSR)… This is technically an ETN, but who’s counting.  Its chart has been highly unimpressive.

It’s not all bad out there.  Some will still come public and some will still continue to do well.  We’ll be showing some other pending or withdrawn IPO’s in deals thatare similar, but aren’t going to be oil and gas or pipeline MLP IPO’s.Stay tuned.

Paul Ausick
May 15, 2008