This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

MLPs Reduce Risk to Energy Sector

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.

By Ian Wyatt

NEW YORK ( TheStreet) - Income investors are frequently looking for high-yield investments in the energy sector, and the master limited partnership (MLP) is one of my favorite structures to help investors meet that goal.

A MLP, which has a common organizational structure for oil and natural gas producers, offers investors a way to reap the benefits of higher energy prices, but without a lot of risk. Perhaps the best reason to consider a master limited partnership is the cash distributions, which are similar to stock dividends. But often the yield is better than what a stock can offer.

A relatively new name in the MLP crowd is Crestwood Midstream Partners L.P. (CMLP). The stock currently yields 5.7 percent. The company is a Houston-based partnership that used to be known as Quicksilver Gas Services.

The original company began operations in 2004 and went public in August 2007. In October 2010, Crestwood Holdings, a partnership between private equity firm First Reserve Corporation and industry veterans led by CEO Robert G. Phillip, paid $701 million to take control of Quicksilver Gas Services. It subsequently changed the name to the current form.

Crestwood Midstream Partners is a natural gas gatherer and processor. The company handles the "midstream" part of the natural gas value chain, meaning its partners get the natural gas out of the ground and Crestwood takes care of the processing, storage, marketing and transportation functions.

Crestwood is paid a fee to move the natural gas along. While natural gas prices have hovered around $4 per thousand cubic feet on the New York Mercantile Exchange (despite the extremely cold winter that much of the country has been experiencing), midstream operators such as Crestwood have fees that are less tethered to the commodity price itself.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CMLP $6.18 -0.32%
COP $54.61 1.04%
CHK $5.51 4.55%
DVN $46.49 1.04%
AAPL $117.34 -0.81%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs