Plains All American Leads Rebound in Pipeline Partnerships

  • Market beginning to isolate Kinder Morgan, investor says
  • Kinder Morgan shares extend losses after dividend reduced

Plains All American Pipeline LP led gains among pipeline stocks on speculation recent losses were exaggerated by dividend concerns at Kinder Morgan Inc.

Plains, based in Houston, rebounded 9.4 percent to $20.47, recovering most of Monday’s 12 percent drop. The Alerian MLP Infrastructure Index increased 2.8 percent, the most since mid-November. Targa Resources Partners LP, Energy Transfer Equity LP and Williams Partners LP all rose.

The index of master limited partnerships has lost 44 percent of its value this year, under pressure from falling oil and gas prices. Losses accelerated Monday after an announcement at the end of last week by Kinder Morgan that it was reviewing dividends. Plains said Tuesday it has no plans to cut its distribution, while Kinder slashed next year’s payout by 74 percent.

“The market is ready to say, we understand this is a Kinder-specific problem,” said Rob Thummel, who helps manage $15 billion of energy securities at Tortoise Capital Advisors LLC in Leawood, Kansas. “We don’t think this is a problem that impacts all other MLPs.”

Kinder Morgan fell 6.6 percent to $14.68 a share at 4:43 p.m. in New York, after the close of regular trading. Gainers included Targa Resources, up 12 percent to $16.18, Energy Transfer Equity, up 1.6 percent to $13.20 and Williams Partners, up 4.9 percent to $23.08.

“We’re not forecasting any distribution growth for 2016, but we’re also not planning on reducing our distribution,” Plains Chief Executive Officer Greg Armstrong said Tuesday in a webcast from a Wells Fargo & Co. investor conference in New York. “We don’t see any need for it.”

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