E American Midstream Partners: Strong Segment Performance To Continue In 2018

American Midstream Partners (AMID) is a strong growth-focused master limited partnership. It is specifically involved in gathering, treating, processing, fractionating, and transporting natural gas, oil, and condensate to link producers and suppliers to diverse natural gas, NGL, and oil markets.

Like similar MLPs, this particular partnership operates more than 3,000 miles of pipelines that gather and transport over 1 Bcf/d of natural gas, including three interstate and five intrastate pipelines. In this column, we provide an update to operations of the company that partners who have invested or are considering investing should be aware of.

Big Moves in 2017

During 2017, American Midstream made considerable progress in executing on a capital redeployment strategy of simplifying its businesses while gaining asset scale and density in core operating areas. After reviewing and investigating the activity this quarter we will tell you that this has been a very busy year, and especially busy fourth quarter for the partnership. 

It is our opinion that the company has taken important steps to optimize its spending and operations this year. In 2017 the company acquired and announced more than $1.8 billion of accretive growth transactions ultimately continuing the transformation into a growth-oriented partbership. There were notable strengths and weaknesses to be aware of. Let us discuss.

Offshore Pipelines and Services

The offshore and pipeline services is a key segment for the company, but margins have taken a lump. Segment gross margin was $22.9 million for the three months ended December 31, 2017, a decrease of 6% compared to the same period in 2016.That said, cash distributions are up here.

Cash distributions were $29.6 million for the three months ended December 31, 2017, a 40% increase compared to the same period in 2016.Cash distributions increased due to additional equity ownership interests in Delta House to 35.7% and Destin to 66.7%. 

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