JPMorgan: More MLP Distribution Cuts Coming In 2016

In a new report, J.P.Morgan analyst Gabriel Daoud Jr. updated the firm’s outlook for many of the MLPs under coverage. Based on the firm’s new commodity price projections, J.P.Morgan has made the following price target and ratings changes:

BP Prudhoe Bay Royalty Trust BPT from $18 to $11

EV Energy Partners, L.P. EVEP withdrawing $7 target

Legacy Reserves LP LGCY withdrawing $6 target

Memorial Production Partners LP MEMP withdrawing $8 target

Vanguard Natural Resources, LLC VNR from $10 to $5 and downgrading from Overweight to Neutral

“We believe the market has come to the realization that supportive yield-based valuation metrics remain inadequate as distributions appear unsustainable against liquidity and balance sheet concerns,” Daoud added.

In addition to the target changes and downgrade, he also noted that J.P.Morgan expects that the harsh oil and gas market conditions will force distribution cuts in 2016 from EV Energy Partners, Memorial Production Partners and Legacy Reserves.

Disclosure: the author holds no position in the stocks mentioned.