John Edwards, Director and Senior Equity Research Analyst at Credit Suisse Group, Interviews with The Wall Street Transcript: Strong E&P Levels Lay Base for Continued MLP Appreciation

Wall Street Transcript

67 WALL STREET, New York - March 21, 2013 - The Wall Street Transcript has just published its Oil & Gas: Master Limited Partnerships Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increasing Demand for Midstream Assets - U.S. Energy Infrastructure Build Out - Emerging Shale Plays - Oil and Gas Transportation Infrastructure Demand - Master Limited Partnerships Distribution Growth - Outlook for Natural Gas Liquids - Low Treasury Yields and MLP Dividends

Companies include: Genesis Energy LP (GEL), Plains All American Pipeline L (PAA), Targa Resources Partners LP (NGLS), Enterprise Products Partners L (EPD), Kinder Morgan Energy Partners (KMP), Magellan Midstream Partners LP (MMP) and many more.

In the following excerpt from the Oil & Gas: Master Limited Partnerships Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are your favorite names in your coverage universe right now? Tell us a little bit about why.

Mr. Edwards: Our thesis for the last year or so, maybe even longer, has been to overweight the oily-related infrastructure names. We think that that thesis - while it's played out in a very large way, there are still lots of tailwinds. There's probably another five to seven years of production increase coming, as we discussed earlier, so there's going to be an ample amount of opportunity for alleviating the bottlenecks that that increase in production creates.

The interesting thing is these production increases keep surprising to the upside. Probably a year ago, the outlook was over five to seven years we would hit 7 million barrels a day of production, and here we are less than a year later and we are already above that, so I think continuing to play the oily infrastructure thesis is a good way to play in the midstream area. There are more likely to be surprises to the upside than downside, or at least it certainly appears that way at this point.

One of the names that's on our focus list right now is Access Midstream Partners (ACMP). While it's not necessarily playing to the oily infrastructure thesis, it does play to very strong distribution growth and some of the best contracts in the business in terms of guarantees, fixed fee, long-term duration. But it's levered more to the infrastructure required to handle rising NGL production.

We also like Genesis Energy (GEL). GEL is levered to the oil infrastructure thesis. Its assets are very well-placed because they're along the Gulf Coast, and they have a very solid balance sheet - low leverage, very high distribution coverage and high visibility in terms of capital projects, actually about the highest visibility that we've seen in the four or five years that we've been covering it. They've raised the distribution something like 30 quarters in a row, including through the financial crisis; it's been averaging over 10% annually, and the lowest increase it ever experienced was still over 8% year over year. We think that one continues to be a very solid play.

We continue to like...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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