1 Energy Stock Ready for the MLP Life

Devon Energy's (DVN -0.46%) master limited partnership spinoff Devon Midstream Partners has filed its S-1 registration form with the Securities and Exchange Commission. The news means Devon is officially part of the MLP pile-on in the energy sector, and investors can begin their research. Today we'll look at which assets the partnership will bring to market, and how it plans to use its IPO proceeds.

The assets 
Devon Midstream will own a 20% stake in Devon Midstream Holdings, the entity that owns "substantially all" of Devon Energy's midstream assets, according to the filing. This is slightly different from what we've seen from IPOs in the past, when a newly launched MLP will make its debut controlling physical assets in their entirety. In this case, Devon is opting for a percentage stake in operations. Over time, Devon Midstream will acquire the remaining 80% stake from Devon Energy.

The primary assets of the holding company are gathering and processing systems in the Cana-Woodford and Barnett shales, as well as a stake in a Gulf Coast fractionating facility.

Going forward, Devon Midstream plans to acquire further interests in the holding company, pick up other assets from Devon Energy, and pursue organic growth projects to support Devon Energy as it develops its production portfolio.

On a pro forma basis, Devon Midstream generated adjusted EBITDA of $40.6 million through the first six months of the year. There is currently no information publicly available on the amount designated for its minimum quarterly distribution.

What's the cash for?
When I covered Valero's (VLO -2.86%) MLP spinoff last week, I received a great comment from Fool Community member "moweenfarmer," who wrote, "One thing I look for in an IPO is what happens with the proceeds." It's an excellent idea, so let's take a closer look at not only Devon Midstream's plan for its new cash, but what our other MLPs-to-be are planning as well.

Source: Company filings. Dollar figures in millions.

Devon Midstream Partners plans to use its IPO proceeds to reimburse Devon Energy for capital spent on the assets it contributed to the partnership. It will also use funds to pay for transaction expenses and fees. If anything is left over, DVNM will use it for general partnership expenses.

Valero Energy Partners will use its proceeds to pay "revolving credit facility origination and commitment fees", though it expects to retain the majority of its cash for potential future acquisitions.

Western Refining Logistics plans to use its proceeds to finance the IPO, and it will retain $50 million for general partnership purposes, sending the rest of it on to parent Western Refining (WNR) as partial consideration of the assets its contributing, as well as capital expenditures on those assets.

Plains All American GP Holdings is a little bit different from the other MLPs on the list (not the least of which is because it plans to be taxed as a corporation, but that's an article for another time). Remember, this is a holding company; the midstream MLP with assets already exists in Plains All American Pipeline (PAA 1.90%). PAGP plans to distribute the proceeds from its planned $1 billion IPO to existing owners. At some point, it may offer PAA loans, or buy assets on its behalf, but for now, proceeds go directly to stakeholders.

This information is usually included in the press release that follows the S-1 filing, but more detailed information is always in the S-1 in the section cleverly titled "Use of Proceeds."

Bottom line
It's a veritable MLP stampede at this point, which means the market is absolutely jam-packed with income-generating options for investors. You can afford to be choosy! Don't let the MLP headline hoopla sway you before you've done your research, lest you get trampled underfoot.