Energy MLPs are a critical link in taking the new oil and gas production in the U.S. and getting it to consumers, says Ethan Bellamy, a Senior Research Analyst at Robert W. Baird & Co., and so, from a secular standpoint, the fundamentals are robust for most of the sector because of this development and the current major oversupply situation on production increases.
“Probably, the healthiest place in the U.S. economy is the oil and gas development sector,” he said. “MLPs, both as upstream and midstream participants, benefit, both in terms of new oil and gas exploitation that’s occurring in the United States that’s creating opportunities for new upstream development and shifting of capital and resources in the upstream, and it’s also creating the need for infrastructure to move those products to new places.”
Bellamy names EV Energy Partners LP (EVEP) as his favorite pick in the sector, which he says is a repeat of 2011. He says he expects an outright sale later this year for EVEP, or potentially, a swap for assets with another U.S. energy firm, which he believes would add a significant amount of value to EVEP.
“We feel pretty strongly that they will monetize their 150,000 net acre position in Ohio in the second half of 2012, and when they do that, I think there’s going to be significant value creation for the partnership,” Bellamy said.