Are MLPs The Right Investment Choice? Despite Dividend Yields and Distribution Growth, Tax Complications May Push Away Some Investors

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: Energy Transfer Partners L.P. (ETP), Kinder Morgan Energy Partners (KMP), El Paso Pipeline Partners, L.P (EPB), Copano Energy LLC (CPNO), Sunoco Logistics Partners LP (SXL), Enterprise Products Partners L (EPD), EV Energy Partners LP (EVEP), Linn Energy, LLC (LINE), Atlas Pipeline Partners LP (APL), Plains All American Pipeline L (PAA), Dow Chemical Co. (DOW), Targa Resources Partners LP (NGLS) 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 right now and why?

Mr. Bellamy: Our top pick has been, frankly, very disappointing over the last four- to five-month period, but we're not giving up on it. That's EV Energy Partners (EVEP). For about a year now it's been apparent that they have a very strong land position in the Ohio Utica shale, and for about six months they've been actively pursuing a sale that was supposed to be completed by the end of the year. It did not get completed, and there is widespread speculation about why that did not occur.

We remain very positive on valuation on the expectation that ultimately those 150,000 net acres of royalty interest and a midstream investment that EV has in Ohio will bear fruit and will prove to be very valuable. The timing on a potential sale to another party is somewhat uncertain, and the stock has drifted lower this year as expectations around that sale have continued to falter in contrast to the rest of the MLP group, which is up pretty strongly this year. So that's been disappointing, but we still like it, and we still think there's pretty strong value there.

Within the downstream market, we're big fans of Lehigh Gas Partners (LGP), which is a very small, call it microcap downstream name that is a wholesale fuel distribution business. It's trading just above last year's IPO price. They've done a few significantly accretive acquisitions, and they have first-mover advantage along with Susser Petroleum Partners (SUSP), which has performed much better. We think that the next distribution announcement will be higher, and you can expect LGP units to react favorably when they raise their distribution. And I think they are, again, first movers in an area where they can potentially use their cost of capital to expand their business rapidly and in an accretive fashion, so we like that name as well.

We are also big fans of...

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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