The downturn in the oil market that began in 2014 has had a long-lasting impact on the MLP sector. Many MLPs have shifted to a self-funding model rather than regularly tapping into equity markets, there have been several high-profile transactions which have seen MLPs consolidated by C-corp parents, and there have also been moves to moderate distribution growth.
While there has been a lot of change in the space, the fundamentals of the MLP sector remain strong with record-high U.S. natural gas and oil production and growing exports that are creating a lot of opportunities for midstream operators.
“Fundamentally things look very good, but there’s been some frustration with performance. Despite this fundamental strength, we need more money to come back into the space and more interest coming into energy, including the midstream,” Stacey Morris, director of research at Alerian, told Hart Energy.