Mark Twain probably never heard of a master limited partnership but one of his most famous quotes may fit MLPs today: “The reports of my death have been greatly exaggerated.”

That was the message in a lively panel discussion, entitled “The MLPs are Finished Myth: Why and How to Keep Investing,” at the 15th annual Master Limited Partnership Association (MLPA) investor conference in Orlando. (MLPA formerly was known as the National Association of Publicly Traded Partnerships.)

However, there will be tweaks in the MLP structure overall and there may be areas of the energy business that don’t work well as an MLP, specifically upstream, production-focused firms, the panelists said. They agreed that the MLP concept is not broken and still provides a meaningful investment and operational vehicle. Growth is a key driver for investors, they noted.

Ed Russell, managing director at Tortoise Capital Advisors and panel moderator, opened the discussion by acknowledging the sector “came out of a really rough 2015 and a rough early 2016. But the fundamentals for MLPs are much better than the market reflected.” He noted concerns in the second half of 2015 about distribution cuts by a handful of partnerships—concerns that many investors assumed would be the case for the entire sector.

“For the first time right now, we are beginning to see evidence that people are recognizing the concerns of an individual company and not applying those concerns to the entire sector,” he added. Some firms still have distribution-cut issues and investors will need to consider how they will handle investing in those partnerships.

The bottom in unit prices occurred in February, concurrent with crude oil prices, “and since that time we’ve seen a pretty dramatic improvement.” Russell credited the upswing to, first, commodity price improvements, then by “data showing U.S. production coming down and that supply-demand can come in balance in the latter half of this year.

“But in general, the investor appetite appears to be strong” for MLPs, he emphasized.

Mike Clarfeld, portfolio manager for Clearbridge Investments, pointed to “commodity price headlines” that spooked many investors, many of whom failed to realize the limited commodity price exposure of most midstream MLPs. But he focused most of his presentation on simplification trends, “something that has been a part of the MLP life-cycle. They are nothing new and nothing to be afraid of.”

Clarfeld said structural changes to MLPs include the elimination of general partners or the elimination of general partners’ incentive distribution rights (IDR). He added many of the largest midstream MLPs, which typically are popular now with investors, went through structural simplification in the 2008-2009 downturn. “And in general, simplifications only happen when times are tough” because they require a general partner to give up often-lucrative IDRs.

Simplification can be done in different ways and for different reasons to avoid over-leverage after the deal or the avoidance of tax obligations. Clarfeld said the sector is becoming more diverse with varying partnership structures and distribution models.

The panel’s third member, Kevin McCarthy, managing partner of public funds for Kayne Anderson Capital Advisors, admitted to “being a member of the MLP mafia for 32 years now” and noted he has heard the question about a broken MLP model multiple times. While the model hasn’t been wrecked and totaled, MLPs “probably deserved a speeding ticket in 2014,” McCarthy said. Problems came from the way MLPs finance themselves “and in terms of [a lack of] structural protection for investors.”

He emphasized financing of growth must come from outside the company. “This instills discipline, it has to be a good deal,” McCarthy said. Also, MLPs must have a predominantly fee-based revenue structure.

“So what can we learn as a sector from the past 18 months?” he asked. “First, don’t bite off more than you can chew.” He recommended big projects start at the general partner level, to be dropped down after completion and cash flow begins. “And if you have large equity commitments, you can’t always count on the equity markets being open. You have to be under your target ratios, not over them.”

McCarthy emphasized that “the MLP model just does not work for upstream companies” due to inherent commodity and volume risks.

“We went through this before in the late 1980s and it blew up again this time for many of the same reasons. And just like last time, it was too easy to underestimate the capital required to maintain production,” he said.

He also focused on the role of IDRs, adding they can be valuable for an enterprise but can become unwieldy as it grows and payments to the general partner grow disproportionately.

Paul Hart can be reached at pdhart@hartenergy.com.