| Sempra Energy to Form MLP with LNG, Green Energy Assets - Analyst Blog | |
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San Diego, CA-based energy services holding company Sempra Energy SRE has announced its plans to form a master limited partnership or MLP, to be called Sempra Partners LP. The company’s board has given its green signal for the formation of the publicly traded MLP that will provide steady, long-term revenue streams and dividends, while also enjoying tax advantages.
What is an MLP?
An MLP is a type of limited partnership that is publicly traded on a stock exchange. It is generally made up of two types of partners – limited partners and general partners. The investors providing capital to the MLP are known as limited partners. The MLP, in return, will have to disburse a certain amount periodically to these partners as specified in the contract with the general partner.
The general partner receives incentives based on the performance of the MLP. Usually, a general partner starts with a partnership stake of 2% in the MLP, which it may increase over time.
Sempra Energy’s MLP
The MLP is initially expected to own an interest in a U.S. entity with contracts related to deliveries of liquefied natural gas (“LNG”) at the Energia Costa Azul regasification facility in Mexico, interests in some of Sempra Energy’s contracted renewable energy ventures and other assets.
The company also expects to grant the MLP a Right of First Offer on certain LNG-related infrastructure projects, including its 50% interest in the first three trains of the Cameron natural gas liquefaction terminal in Louisiana and its 100% interest in Cameron Interstate Pipeline, along with interests in certain wind and solar projects.
The company expects Sempra Partners, once formed, to file a registration statement with the U.S. Securities and Exchange Commission in the second half of the year. The MLP will likely be listed on the New York Stock Exchange under the ticker symbol "SREP”.
MLPs: A Recent Trend
Energy companies are increasingly forming MLPs, as the company structure makes it more convenient to raise fresh capital from the markets. MLPs also enjoy tax exemption which is generally passed on to the unitholders.
In 2014, electric and natural gas provider NiSource Inc. NI announced that it will follow the MLP route to unlock value from its high quality natural gas midstream assets. The decision to form an MLP seemed justified given the presence of NiSource’s midstream assets near the reserve rich Marcellus and Utica shales.
In Jun 2014, CONSOL Energy Inc. CNX and Noble Energy Inc. NBL jointly announced their plan to form an MLP that would provide midstream services for production from their joint venture in the Marcellus Basin.
Zacks Rank
Sempra Energy currently holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CONSOL ENERGY (CNX): Free Stock Analysis Report NISOURCE INC (NI): Free Stock Analysis Report SEMPRA ENERGY (SRE): Free Stock Analysis Report NOBLE ENERGY (NBL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Sempra Energy
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CODE : SRE |
ISIN : US8168511090 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Sempra Energy is based in United states of america. Sempra Energy is listed in Germany and in United States of America. Its market capitalisation is US$ 18.4 billions as of today (€ 17.2 billions). Its stock quote reached its highest recent level on November 25, 2016 at US$ 99.96, and its lowest recent point on April 25, 2024 at US$ 71.98. Sempra Energy has 255 324 212 shares outstanding. |