MLPs

[setliff]

With MLPs, some are far more exposed to plunging crude prices than others • 8:25 AM

Carl Surran, SA News Editor
•Energy MLPs have been subject to indiscriminate selling this week as crude oil prices plunge, and while RBC Capital analyst John Ragozzino would not step into the sector in a big way right now, he thinks investors already in the group should ride out the storm - depending on their oil price exposure.
•Many energy MLPs, especially pipelines, are less correlated to commodity prices than other energy investments, but more MLPs with cyclical oil and gas price exposure are now part of the mix, and some investors have been selling without regard for the relative quality of specific stocks, Ragozzino says.
•The analyst believes there is minimal risk to reduction in 2015 distributions; with commodity price hedging, he thinks MLPs on average will feel some pain, but can handle oil prices as low as $80/bbl.
•Ragozzino says the MLPs most highly levered to a sustained drop in crude prices are MidCon Energy Partners (NASDAQ:MCEP), LRR Energy (NYSE:LRE) and Legacy Reserves (NASDAQ:LGCY); names least exposed include Atlas Resource Partners (NYSE:ARP), Vanguard Natural Resources (NASDAQ:VNR) and EV Energy Partners (NASDAQ:EVEP).
•ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP,

[dan_s]

Unless oil and gas prices go a lot lower (like WTI down to $60/bbl) there is very little chance any of the MLPs in our High Yield Income Portfolio will have to cut their distributions. They all have revenues locked in by hedging a very high percentage of their production and the midstream companies have revenues by long-term contracts.