For Energy MLPs, It's All About That Basin

It's been a tough slog for energy master limited partnerships, or MLPs, those once high-flying developers and operators of transportation, processing and storage assets that pay sweet dividends to their shareholders.

While these energy infrastructure providers are less impacted by lower oil prices due to their long term, fee-based revenues, eventually they begin to feel the pain when oil and gas explorers and producers don't have a need for their services. Those worries sent shares of the Alerian MLP ETF (AMLP) down almost 56% from their peak of $19.31 in August of 2014 to $8.53 per share in January, although they've since risen 46% to $12.47.

Even so, as contracts roll off over the next few years, which could lead to lower tariffs, and oil and gas producers begin allocating capital to their more profitable areas, where energy MLPs have their assets will become increasingly important, according to a report by bond research firm CreditSights.

Using data from the U.S. Energy Information Administration, CreditSights said the Marcellus/Utica Shale in the northeast and the Permian Basin in West Texas have the best outlooks while the Haynesville in east Texas and northern Louisiana, the Barnett in north Texas and the Eagle Ford in South Texas are most challenged.

MLPs operating in the natural gas-weighted Marcellus/Utica, which has seen a 12% jump in production volume over the past year, include MPLX (MPLX) , Williams Partners (WPZ) , Spectra Energy Partners (SEP) and Columbia Pipeline Group (CPGX) . Large oil and gas producers operating in the area include Range Resources (RRC) , EQT (EQT) , Chesapeake Energy (CHK) , Antero Resources (AR) and ConocoPhillips (COP) .

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