Midstream MLP Buybacks Surge in Q2 2025 Amidst Equity Weakness

Midstream MLPs and corporations increased buyback activity in Q2 2025 due to equity weakness. The number of companies completing buybacks and the absolute dollar spend rose significantly compared to recent quarters.

Midstream MLPs and corporations significantly increased buyback activity in the second quarter of 2025, driven by equity weakness. According to data from the Alerian Midstream Energy Index (AMNA), nine companies repurchased $956 million in equity during the quarter, marking a substantial increase from the first quarter of 2025, when six names repurchased a combined $693 million [1]. This is the highest aggregate spend on repurchases since the second quarter of 2024, when AMNA constituents collectively had $1.02 billion in buybacks.

Targa Resources (TRGP) led the way in the second quarter, with $324 million in repurchases and an incremental $1 billion share repurchase authorization. Cheniere Energy (LNG) closely followed, with $306 million in repurchases. Enterprise Products Partners (EPD) and MPLX (MPLX) also saw notable increases in their buyback activities, with EPD repurchasing $110 million and MPLX $100 million in common units, respectively [1].

The increased buyback activity comes as midstream companies prioritize capital allocation plans. While dividend growth remains a key focus, buybacks serve as a tool for enhancing shareholder returns, especially during periods of equity weakness. For instance, the equity market experienced a significant sell-off in April, leading to a 13% decline in the AMNA [1].

Despite the heightened buyback activity, companies continue to compete with other uses of capital, such as dividend growth and new projects. For many midstream names, investing in growth projects tied to growing natural gas demand is a higher priority today [1].

The Zacks Oil and Gas - Pipeline MLP industry, which comprises midstream MLPs, faces challenges such as high debt levels and a shift towards renewable energy. However, pipeline players benefit from steady, fee-based income through long-term contracts with shippers. The industry's outlook remains uncertain, with a Zacks Industry Rank of #168, indicating dull near-term prospects [2].

References:
[1] https://seekingalpha.com/article/4814812-midstream-mlp-buybacks-jumped-q2-2025
[2] https://www.theglobeandmail.com/investing/markets/stocks/PAA/pressreleases/34081671/3-oil-pipeline-mlp-stocks-worth-watching-despite-industry-weakness/