ttpnq.htm




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 811-22585



Tortoise Pipeline & Energy Fund, Inc.
(Exact name of registrant as specified in charter)


11550 Ash Street, Suite 300, Leawood, KS 66211
(Address of principal executive offices) (Zip code)



Terry Matlack
Diane Bono
11550 Ash Street, Suite 300, Leawood, KS 66211

(Name and address of agent for service)



913-981-1020
Registrant's telephone number, including area code



Date of fiscal year end: November 30


Date of reporting period: February 29. 2016
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 29, 2016
  
    Shares      Fair Value  
Common Stock - 100.6%(1)
            
Crude Oil Pipelines - 23.7%(1)
            
Canada - 14.7%(1)
            
Enbridge Inc.
     365,266     $ 12,901,195  
Inter Pipeline Ltd.
     415,182       7,616,273  
Pembina Pipeline Corporation
     30,265       754,500  
United States - 9.0%(1)
                
Plains GP Holdings, L.P.
     1,579,121       12,001,320  
SemGroup Corporation
     53,694       1,020,186  
                34,293,474  
                   
Natural Gas Gathering/Processing - 14.9%(1)
                
United States - 14.9%(1)
                
EnLink Midstream, LLC
     366,747       3,069,672  
Targa Resources Corp.
     339,285       9,119,981  
The Williams Companies, Inc.
     587,367       9,391,998  
                21,581,651  
                   
Natural Gas/Natural Gas Liquids Pipelines - 43.1%(1)
                
Canada - 10.9%(1)
                
Keyera Corp.
     36,599       1,014,655  
TransCanada Corporation
     403,735       14,817,075  
United States - 32.2%(1)
                
Columbia Pipeline Group, Inc.
     439,083       7,969,356  
ONEOK, Inc.
     677,824       16,267,776  
Spectra Energy Corp
     768,951       22,453,369  
                62,522,231  
Oil and Gas Production - 16.8%(1)
                
United States - 16.8%(1)
                
Anadarko Petroleum Corporation(2)
     40,600       1,540,770  
Antero Resources Corporation(2)(3)
     24,100       550,685  
Cabot Oil & Gas Corporation(2)
     115,900       2,333,067  
California Resources Corporation(3)
     2,556       1,437  
Carrizo Oil & Gas, Inc.(2)(3)
     14,600       313,900  
Cimarex Energy Co.(2)
     18,300       1,537,749  
Concho Resources Inc.(2)(3)
     25,000       2,256,000  
Continental Resources, Inc.(2)(3)
     39,100       906,338  
Diamondback Energy, Inc.(2)(3)
     10,400       741,000  
EOG Resources, Inc.(2)
     53,700       3,476,538  
EQT Corporation(2)
     8,500       473,790  
Gulfport Energy Corporation(2)(3)
     17,800       427,200  
Hess Corporation(2)
     11,500       501,400  
Laredo Petroleum, Inc.(2)(3)
     55,500       283,605  
Memorial Resource Development Corp.(2)(3)
     16,080       155,494  
Newfield Exploration Company(2)(3)
     40,000       1,089,200  
Noble Energy, Inc.(2)
     43,200       1,274,400  
Occidental Petroleum Corporation(2)
     27,200       1,871,904  
PDC Energy, Inc.(2)(3)
     2,600       130,286  
Pioneer Natural Resources Company(2)
     25,200       3,037,356  
Range Resources Corporation(2)
     40,500       961,065  
RSP Permian, Inc.(2)(3)
     23,100       552,321  
                24,415,505  
Refined Product Pipelines - 2.1%(1)
                
United States - 2.1%(1)
                
VTTI Energy Partners LP
     166,764       3,041,775  
                   
Total Common Stock (Cost $207,025,271)
             145,854,636  
                   
Master Limited Partnerships and Related Companies - 43.8%(1)
                
Crude Oil Pipelines - 16.2%(1)
                
United States - 16.2%(1)
                
Enbridge Energy Management, L.L.C.(4)
     722,003       12,050,238  
Genesis Energy L.P.
     18,700       478,907  
Plains All American Pipeline, L.P.
     194,400       4,164,048  
Shell Midstream Partners, L.P.
     55,452       1,971,319  
Sunoco Logistics Partners L.P.
     161,024       3,967,631  
Tesoro Logistics LP
     20,624       860,433  
 
               23,492,576  
Natural Gas/Natural Gas Liquids Pipelines - 12.2%(1)
                
United States - 12.2%(1)
                
Columbia Pipeline Partners LP
     38,484       680,782  
Energy Transfer Partners, L.P.
     308,652       8,231,749  
Enterprise Products Partners L.P.
     201,431       4,707,443  
EQT Midstream Partners, LP
     28,046       2,008,935  
ONEOK Partners, L.P.
     68,184       2,003,928  
                17,632,837  
Natural Gas Gathering/Processing - 7.1%(1)
                
United States - 7.1%(1)
                
Antero Midstream Partners LP
     35,220       782,588  
DCP Midstream Partners, LP
     58,115       1,128,012  
EnLink Midstream Partners, LP
     55,955       513,667  
MPLX LP
     226,277       5,869,625  
Rice Midstream Partners LP
     42,736       566,252  
Western Gas Equity Partners, LP
     363       10,709  
Western Gas Partners, LP
     36,076       1,414,540  
                10,285,393  
Refined Product Pipelines - 8.3%(1)
                
United States - 8.3%(1)
                
Buckeye Partners, L.P.
     83,029       5,343,746  
Magellan Midstream Partners, L.P.
     44,609       3,014,676  
Phillips 66 Partners LP
     36,049       2,172,673  
Valero Energy Partners LP
     31,129       1,449,989  
                11,981,084  
                   
Total Master Limited Partnerships and Related Companies (Cost $76,589,642)
             63,391,890  
                   
Preferred Stock - 0.8%(1)
                
Oil and Gas Production - 0.8%(1)
                
United States - 0.8%(1)
                
Anadarko Petroleum Corporation, 7.500%, 06/07/2018 (Cost $1,875,096)
     39,500       1,182,235  
                   
Short-Term Investment - 0.1%(1)
                
United States Investment Company - 0.1%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.35%(5) (Cost $158,424)
     158,424       158,424  
                   
Total Investments - 145.3%(1) (Cost $285,648,433)
             210,587,185  
Credit Facility Borrowings - (10.3)%(1)
             (15,000,000 )
Senior Notes - (23.5)%(1)
             (34,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (11.0)%(1)
             (16,000,000 )
Total Value of Options Written (Premiums received $435,644) - (0.3)%(1)
             (395,677 )
Other Assets and Liabilities - (0.2)%(1)
             (231,442 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 144,960,066  
                   
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
                
(2)
All or a portion of the security represents cover for outstanding call option contracts written.
          
(3)
Non-income producing security.
                
(4)
Security distributions are paid-in-kind.
                
(5)
Rate indicated is the current yield as of February 29, 2016.
                

 
 
 

Tortoise Pipeline & Energy Fund, Inc.
                  
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
                  
February 29, 2016
    
 
              
                     
Call Options Written
Expiration Date
  
Strike Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
March 2016
   $ 40.00       406     $ (66,990 )
Antero Resources Corporation
March 2016
     26.50       241       (7,383 )
Cabot Oil & Gas Corporation
March 2016
     23.00       1,159       (28,975 )
Carrizo Oil & Gas, Inc.
March 2016
     25.00       146       (8,760 )
Cimarex Energy Co.
March 2016
     95.00       183       (20,130 )
Concho Resources Inc.
March 2016
     105.00       250       (8,750 )
Continental Resources, Inc.
March 2016
     23.00       391       (72,335 )
Diamondback Energy, Inc.
March 2016
     80.00       104       (5,200 )
EOG Resources, Inc.
March 2016
     77.50       537       (9,129 )
EQT Corporation
March 2016
     65.00       85       (3,400 )
Gulfport Energy Corporation
March 2016
     30.00       178       (2,670 )
Hess Corporation
March 2016
     47.50       115       (4,600 )
Laredo Petroleum, Inc.
March 2016
     6.00       555       (13,875 )
Memorial Resources Development Corp.
March 2016
     12.50       160       (1,600 )
Newfield Exploration Company
March 2016
     29.00       400       (30,000 )
Noble Energy, Inc.
March 2016
     32.50       432       (15,120 )
Occidental Petroleum Corporation
March 2016
     75.00       272       (6,800 )
PDC Energy, Inc.
March 2016
     55.00       26       (2,795 )
Pioneer Natural Resources Company
March 2016
     135.00       252       (20,160 )
Range Resources Corporation
March 2016
     29.00       405       (8,100 )
RSP Permian, Inc.
March 2016
     22.50       231       (58,905 )
                           
Total Value of Call Options Written (Premiums received $435,644)
             $ (395,677 )
                           

 
 
 

Various inputs are used in determining the fair value of the Company’s investments and financial instruments.  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, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following table provides the fair value measurements of applicable assets and liabilities by level within the fair value hierarchy as of February 29. 2016.  These assets and liabilities are measured on a recurring basis.
 
Description
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Assets
                        
Investments:
                        
Common Stock(a)
   $ 145,854,636     $ -     $ -     $ 145,854,636  
Master Limited Partnerships and Related Companies(a)
     63,391,890       -       -       63,391,890  
Preferred Stock(a)
     1,182,235       -       -       1,182,235  
Short-Term Investment(b)
     158,424       -       -       158,424  
Total Assets
   $ 210,587,185     $ -     $ -     $ 210,587,185  
Liabilities
                                
Written Call Options
   $ 388,294     $ 7,383     $ -     $ 395,677  
 
(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investment is a sweep investment for cash balances.
 
The Company did not hold any Level 3 securities during the period ended February 29, 2016.  The Company utilizes the beginning of reporting period method for determining transfers between levels.  During the period ended February 29, 2016, Rice Midstream Partners LP common units held by the Company in the amount of $558,987 were transferred from Level 2 to Level 1 when they converted into registered and unrestricted common units of Rice Midstream Partners LP.  There were no other transfers between levels for the Company during the period ended February 29, 2016.

Valuation Techniques

In general, and where applicable, the Company uses readily available market quotations based upon the last updated sales price from the principal market to determine fair value. The Company primarily owns securities that are listed on a securities exchange or are traded in the over-the-counter market. The Company values those securities at their last sale price on that exchange or over-the-counter market on the valuation date. If the security is listed on more than one exchange, the Company uses the price from the exchange that it considers to be the principal exchange on which the security is traded. Securities listed on the NASDAQ are valued at the NASDAQ Official Closing Price, which may not necessarily represent the last sale price. If there has been no sale on such exchange or over-the-counter market on such day, the security is valued at the mean between the last bid price and last ask price on such day. These securities are categorized as Level 1 in the fair value hierarchy.
 
Restricted securities are subject to statutory or contractual restrictions on their public resale, which may make it more difficult to obtain a valuation and may limit the Company's ability to dispose of them. Investments in private placement securities and other securities for which market quotations are not readily available are valued in good faith by using certain fair value procedures. Such fair value procedures consider factors such as discounts to publicly traded issues, time until conversion date, securities with similar yields, quality, type of issue, coupon, duration and rating. If events occur that affect the value of the Company's portfolio securities before the net asset value has been calculated (a “significant event”), the portfolio securities so affected are generally priced using fair value procedures.

An equity security of a publicly traded company acquired in a private placement transaction without registration under the Securities Act of 1933, as amended (the “1933 Act”), is subject to restrictions on resale that can affect the security's liquidity and fair value. If such a security is convertible into publicly-traded common shares, the security generally will be valued at the common share market price adjusted by a percentage discount due to the restrictions and categorized as Level 2 in the fair value hierarchy. To the extent that such securities are convertible or otherwise become freely tradable within a time frame that may be reasonably determined, an amortization schedule may be used to determine the discount. If the security has characteristics that are dissimilar to the class of security that trades on the open market, the security will generally be valued and categorized as Level 3 in the fair value hierarchy.

Exchange-traded options are valued at the last reported sale price on any exchange on which they trade. If no sales are reported on any exchange on the measurement date, exchange-traded options are valued at the mean between the last highest bid and last lowest asked prices obtained as of the closing of the exchanges on which the option is traded. The value of Flexible Exchange Options (FLEX Options) are determined (i) by an evaluated price as determined by a third-party valuation service; or (ii) by using a quotation provided by a broker-dealer.

The Company generally values debt securities at evaluated bid prices obtained from an independent third-party valuation service that utilizes a pricing matrix based upon yield data for securities with similar characteristics, or based on a direct written broker-dealer quotation from a dealer who has made a market in the security. Debt securities with 60 days or less to maturity at time of purchase are valued on the basis of amortized cost, which approximates market value.
As of February 29, 2016, the aggregate cost of securities for federal income tax purposes was $273,716,588. The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $10,393,873, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $73,523,276 and the net unrealized depreciation was $63,129,403.

 
 
 

Item 2. Controls and Procedures.
(a)  
The registrant’s Chief Executive Officer and its 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 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)  
There was no change 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 has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3. Exhibits.
Separate certifications for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) are filed herewith.

 
 
 

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.


 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: April 21, 2016
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Executive Officer  
       



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.

 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: April 21, 2016
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: April 21, 2016
By:
/s/ Brent Behrens  
    Brent Behrens  
    Principal Financial Officer and Treasurer