Consisting mostly of publicly traded master limited partnerships (MLPs), oil and gas midstream suppliers, for better or worse, are beholden to a breed of investor as interested in the return of capital (i.e., distribution yield) as in the return on capital (i.e., unit-price appreciation and/or distribution growth).
With oil and gas prices currently weak, the attractiveness of MLPs as income and growth investments is waning. Midstream customers, made up mostly of upstream entities, are hunkered down. Drilling and development budgets have been slashed, and suppliers of all stripes are being asked to lower costs till it hurts. Continue reading “Opportunity Looms in the Midstream”