N-Q 1 d135139dnq.htm CLEARBRIDGE ENERGY MLP OPPORTUNITY FUND INC. Clearbridge Energy MLP Opportunity Fund Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-22546

ClearBridge Energy MLP Opportunity Fund Inc.

(Exact name of registrant as specified in charter)

620 Eighth Avenue, 49th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-888-777-0102

Date of fiscal year end: November 30

Date of reporting period: February 29, 2016

 

 

 


 

ITEM 1. SCHEDULE OF INVESTMENTS.

 


CLEARBRIDGE ENERGY MLP OPPORTUNITY FUND INC.

FORM N-Q

FEBRUARY 29, 2016


CLEARBRIDGE ENERGY MLP OPPORTUNITY FUND INC.

 

Schedule of investments (unaudited)    February 29, 2016

 

SECURITY

  SHARES/UNITS      VALUE  
MASTER LIMITED PARTNERSHIPS - 134.1%     

Diversified Energy Infrastructure - 32.7%

    

Energy Transfer Equity LP

    2,096,620       $ 14,676,340   

Energy Transfer Partners LP

    689,427         18,387,018   

Enterprise Products Partners LP

    1,495,527         34,950,466   

Genesis Energy LP

    519,400         13,301,834   

ONEOK Partners LP

    559,320         16,438,415   

Plains GP Holdings LP, Class A Shares

    997,190         7,578,644   
    

 

 

 

Total Diversified Energy Infrastructure

       105,332,717   
    

 

 

 

Gathering/Processing - 21.3%

    

Antero Midstream Partners LP

    438,000         9,732,360   

Blueknight Energy Partners LP

    418,725         2,072,689   

DCP Midstream Partners LP

    869,385         16,874,763   

Enable Midstream Partners LP

    352,480         2,044,384   

EnLink Midstream Partners LP

    960,658         8,818,841   

Midcoast Energy Partners LP

    11,984         50,692   

NGL Energy Partners LP

    300,000         2,427,000   

Rice Midstream Partners LP

    861,537         11,415,365   

Rice Midstream Partners LP

    384,000         5,070,767 (a)(b)(c) 

Western Gas Partners LP

    257,040         10,078,538   
    

 

 

 

Total Gathering/Processing

       68,585,399   
    

 

 

 

General Partner - 2.2%

    

Crestwood Equity Partners LP

    180,331         1,635,602   

Tallgrass Energy GP LP

    346,630         5,535,681   
    

 

 

 

Total General Partner

       7,171,283   
    

 

 

 

Liquids Transportation & Storage - 52.8%

    

Buckeye Partners LP

    524,206         33,737,898   

Delek Logistics Partners LP

    328,530         10,489,963   

Enbridge Energy Partners LP

    1,174,344         19,470,624   

Global Partners LP

    203,670         2,668,077   

Holly Energy Partners LP

    280,732         8,247,906   

Magellan Midstream Partners LP

    496,520         33,554,822   

PBF Logistics LP

    575,000         10,062,500   

Plains All American Pipeline LP

    1,235,150         26,456,913   

Sunoco Logistics Partners LP

    472,210         11,635,254   

Tesoro Logistics LP

    169,600         7,075,712   

World Point Terminals LP

    484,640         6,721,957   
    

 

 

 

Total Liquids Transportation & Storage

       170,121,626   
    

 

 

 

Natural Gas Transportation & Storage - 10.5%

    

Columbia Pipeline Partners LP

    460,670         8,149,253   

TC Pipelines LP

    230,630         10,209,990   

Williams Partners LP

    791,417         15,606,743   
    

 

 

 

Total Natural Gas Transportation & Storage

       33,965,986   
    

 

 

 

Oil/Refined Products - 9.0%

    

JP Energy Partners LP

    428,000         1,908,880   

MPLX LP

    785,597         20,378,386   

Rose Rock Midstream LP

    684,519         6,838,345   
    

 

 

 

Total Oil/Refined Products

       29,125,611   
    

 

 

 

Propane - 1.6%

    

AmeriGas Partners LP

    125,690         5,124,381   
    

 

 

 

Refining - 1.1%

    

Western Refining Logistics LP

    157,115         3,426,678   
    

 

 

 

 

See Notes to Schedule of Investments.

 

1


CLEARBRIDGE ENERGY MLP OPPORTUNITY FUND INC.

 

Schedule of investments (unaudited) (cont’d)    February 29, 2016

 

SECURITY

  SHARES/UNITS      VALUE  

Shipping - 2.9%

    

KNOT Offshore Partners LP

    330,971       $ 5,245,890   

Teekay LNG Partners LP

    113,870         1,164,890   

Teekay Offshore Partners LP

    994,312         2,943,164   
    

 

 

 

Total Shipping

       9,353,944   
    

 

 

 

TOTAL MASTER LIMITED PARTNERSHIPS

(Cost - $525,028,397)

       432,207,625   
    

 

 

 
    SHARES         
COMMON STOCKS - 7.7%     
ENERGY - 7.7%     

Oil, Gas & Consumable Fuels - 7.7%

    

Targa Resources Corp.

    752,233         20,220,023   

Williams Cos. Inc.

    275,760         4,409,402   
    

 

 

 

TOTAL COMMON STOCKS

(Cost - $29,534,868)

       24,629,425   
    

 

 

 

TOTAL INVESTMENTS* - 141.8%

(Cost - $554,563,265#)

       456,837,050   

Mandatory Redeemable Preferred Stock, at Liquidation Value - (7.1)%

       (23,000,000

Liabilities in Excess of Other Assets - (34.7)%

       (111,602,629
    

 

 

 

TOTAL NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS - 100.0%

     $ 322,234,421   
    

 

 

 

 

* The entire portfolio is subject to lien, granted to the lender and Senior Note holders, to the extent of the borrowing outstanding and any additional expenses.

 

(a) Restricted security (See Note 3).

 

(b) Illiquid security.

 

(c) Security is valued in good faith in accordance with procedures approved by the Board of Directors (See Note 1).

 

# Aggregate cost for federal income tax purposes is substantially the same.

This Schedule of Investments is unaudited and is intended to provide information about the Fund’s portfolio holdings as of the date of the schedule. Other information regarding the Fund is available in the Fund’s most recent annual or semi-annual shareholder report.

 

See Notes to Schedule of Investments.

 

2


Notes to Schedule of Investments (unaudited)

 

1. Organization and significant accounting policies

ClearBridge Energy MLP Opportunity Fund Inc. (the “Fund”) was incorporated in Maryland on April 5, 2011 and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Board of Directors authorized 100 million shares of $0.001 par value common stock. The Fund’s investment objective is to provide long-term investors a high level of total return with an emphasis on cash distributions. The Fund seeks to achieve its objective by investing primarily in master limited partnerships (“MLPs”) in the energy sector. There can be no assurance that the Fund will achieve its investment objective.

Under normal market conditions, the Fund will invest at least 80% of its Managed Assets in MLPs in the energy sector (the “80% policy”). For purposes of the 80% policy, the Fund considers investments in MLPs to include investments that offer economic exposure to public and private MLPs in the form of equity securities of MLPs, securities of entities holding primarily general partner or managing member interests in MLPs, securities that are derivatives of interests in MLPs, including I-Shares, exchange-traded funds that primarily hold MLP interests and debt securities of MLPs. The Fund considers an entity to be within the energy sector if it derives at least 50% of its revenues from the business of exploring, developing, producing, gathering, transporting, processing, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids (including propane), crude oil, refined petroleum products or coal. “Managed Assets” means net assets plus the amount of any borrowings and assets attributable to any preferred stock of the Fund that may be outstanding.

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”).

(a) Investment valuation. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors.

The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Directors. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.

 

3


Notes to Schedule of Investments (unaudited) (continued)

 

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Directors quarterly.

The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

 

   

Level 1 – quoted prices in active markets for identical investments

 

   

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

   

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:

 

ASSETS

 

DESCRIPTION

   QUOTED PRICES
(LEVEL 1)
     OTHER SIGNIFICANT
OBSERVABLE INPUTS
(LEVEL 2)
     SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
     TOTAL  

Long-Term Investments†:

           

Master Limited Partnerships:

           

Gathering/Processing

   $ 63,514,632       $ 5,070,767         —         $ 68,585,399   

Other Master Limited Partnerships

     363,622,226         —           —           363,622,226   

Common Stocks

     24,629,425         —           —           24,629,425   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Investments

   $ 451,766,283       $ 5,070,767         —         $ 456,837,050   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

See Schedule of Investments for additional detailed categorizations.

2. Investments

At February 29, 2016, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:

 

Gross unrealized appreciation

   $ 76,441,298   

Gross unrealized depreciation

     (174,167,513
  

 

 

 

Net unrealized depreciation

   $ (97,726,215
  

 

 

 

3. Restricted securities

The following Fund investment is restricted as to resale and, in the absence of a readily ascertainable market value, is valued in good faith in accordance with procedures approved by the Board of Directors.

 

Security

   Number of
Shares
     Acquisition
Date
     Cost      Fair Value
at 2/29/2016
     Value per
Share
     Percent of
Net Assets
    Distributions
Received
 
Rice Midstream Partners LP      384,000         11/15       $ 4,935,744       $ 5,070,767       $ 13.21         1.57   $ 75,456   
        

 

 

    

 

 

       

 

 

   

 

 

 
         $ 4,935,744       $ 5,070,767            1.57   $ 75,456   
        

 

 

    

 

 

       

 

 

   

 

 

 

 

4


ITEM 2. CONTROLS AND PROCEDURES.

 

  (a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

 

  (b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

 

ITEM 3. EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ClearBridge Energy MLP Opportunity Fund Inc.

 

By   /s/    JANE TRUST        
  Jane Trust
  Chief Executive Officer

Date:

 

April 20, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By   /s/    JANE TRUST        
  Jane Trust
  Chief Executive Officer

Date:

 

April 20, 2016

 

By   /s/     RICHARD F. SENNETT        
  Richard F. Sennett
  Principal Financial Officer

Date:

 

April 20, 2016