MIDLAND, Texas—There is no question that when it comes to deciding on which midstream projects to invest in, quality of rock is where it starts.

As far as Jim Benson, founding partner of Energy Spectrum Partners, is concerned the Delaware Basin tops them all when it comes to rock quality. He doesn’t see that changing anytime soon.

“I still think the Delaware Basin is probably the best rock in the country right now and will continue to be for some time,” Benson said during the Finance Roundtable: Wheeling & Dealing at the recent Midstream Texas Conference. “There is still a lot of infrastructure needs out there so we are focused there. “

In recent years midstream investing has been challenged, but with so many good values out there experts believe this may be the time for investors to get onboard. More infrastructure and transportation are needed to keep up with production in places like the Permian Basin as well in Oklahoma’s Scoop and Stack plays and the Denver-Julesburg Basin, where technology is helping to improve production and ramp up opportunities.

J. Zachary Kayem, vice president with EnCap Flatrock Midstream; Ethan Bellamy, managing director of Robert W. Baird & Co.; and Benson shared the stage to discuss the ins and outs of mainstream finance. Kayem said right now the midstream assets are attractive assets with cash flow. The key is how you build and develop those assets to move to market.

“You may have more retail want to be involved, you may have more institutions you may have a time when less knowledgeable capital will want to move out of the space,” Kayem said. “What we have seen is as long as you build an attractive asset and you have a quality position on top of a great resource base like the Permian Basin and have a franchise position, a portfolio of contracts we’ve seen that is always attractive and can find capital and can raise capital. It really doesn’t matter the source of the capital, we really do believe there is always going to be a need for that capital.”

Kayem went on to say he believes 15 to 35 cents of every upstream dollar will be spent on midstream.

“The source of that capital can change over time, but that actual need for that development has not slowed down,” he said.

Benson agreed but also said there has been a shift in buys. Investors are looking for projects that have the best chance of producing returns.

“As everyone has talked about, you have to be the better rock, you’ve got to be in the best part of the basin,” Benson said. “If you are there is going to be an attractive set up capital chasing those assets.

“We’ve seen shifts. Going back 15 to 20 years you had the Enrons, the El Pasos being the buyers then it shifted to the MLPs and now today it has shifted to the financial buyers. A lot of people are looking for capital market strategies or they are trying to consolidate these type of assets and do a public offer.”

But Bellamy said even in this shift MLPs have remained viable. He pointed out that Noble Midstream has managed to come to market in a difficult time and issued equity. Bellamy said the equity is somewhere in the double digits and is a paying at a 5% yield.

“The timing was good and timing being good at the right leverage,” said Bellamy. “So they are in the right place at the right time.

“They are just on top of a lot of really good rock and that’s what it comes down to. So they are in the right place with the right balance sheet to make it happen. They are a complete outlier compared to the names that we cover that have too much debt.”

Terrance Harris can be reached at tharris@hartenergy.com.