Williams Cos. Added to Goldman’s Conviction Buy List, Buckeye Dropped (GS, WMB, BPL, PAA, EPD, MMP, NDRO, OKS, SXL, WGL)

Analysts at Goldman Sachs Group Inc. (NYSE: GS) have made a number of changes to the firm’s rating of oil & gas pipeline companies. The major changes were the addition of Williams Companies Inc. (NYSE: WMB) to Goldman’s ‘Conviction Buy List’ and the dropping of Buckeye Partners L.P. from the list. Goldman retained its ‘buy’ rating on Buckeye.

Other ratings changes include Plains All American Pipeline LP (NYSE: PAA) raised to ‘buy’ and ‘buy’ ratings maintained on Enterprise Products Partners L.P. (NYSE: EPD), Magellan Midstream Partners L.P. (NYSE: MMP), and Enduro Royalty Trust (NYSE: NDRO).

Two companies were downgraded from ‘neutral’ to ‘sell’: Oneok Partners L.P. (NYSE: OKS) and Sunoco Logistics Partners LP (NYSE: SXL). A ‘sell’ rating was maintained on WGL Holdings Inc. (NYSE: WGL).

The changes appear to revolve around Goldman’s analysis of the potential of each of the pipeline companies to transport liquids — crude oil and natural gas liquids — from various shale gas plays. Just being able to transport natural gas is not enough. Cash flow is another concern because most of the pipeline companies pay distributions quarterly and the payments should be fully funded by cash flow, not additional borrowing.