Our portfolio management and investment research teams share their insights.
Flash Commentaries address timely issues affecting the MLP space.
Natural Gas Price Weakness and What It Means for Midstream MLPs
As the price of natural gas has fallen below $3.00 per millions of British thermal units (mmbtu as priced at Henry Hub) and made a bid toward the $2.00 level, there has been some concern that the decline could result in collateral damage to midstream Master Limited Partnerships (MLPs). This Flash Commentary is intended to provide investors both with our perspective on the decline in natural gas prices as well as an overview of how midstream assets and services may be impacted by such a decline. As will become evident, we generally believe the sector has only minimal exposure to the price of the commodity and we reiterate our thesis that the owners and operators of true energy infrastructure assets remain largely unaffected by commodity prices.
For our Analyst Insight publications, a series of questions are posed to our investment and research teams on a topic that has recently been on investors’ minds. Read or hear our team’s most recent thoughts.
Crude Oil on the Move
|Over the past couple of years, MLP management teams have been extremely focused on liquids rich shale plays and the growth opportunities surrounding them. In addition, the press has featured many articles covering these shale resources. For the December 2012 installment of our Analyst Insight, Erin Moyer provides an overview of crude oil production in the United States and how it is changing the demand for energy infrastructure.|
Weathering the Storm: MLPs Resilience
Understanding General Partnerships
The Outlook for Natural Gas
|In early 2010, natural gas prices retreated again after a brief winter rally and few investors were bullish on natural pricing in the short-term. However, the resource’s abundance, clean burning nature, and low price had many investors bullish on the trajectory of natural gas volume demand over the long-term and they were curious how this dynamic might affect the need for natural gas infrastructure. For the April 2010 Analyst Perspective, Portfolio Manager Gabriel Hammond addresses questions on the outlook for natural gas infrastructure.|
Interest Rates and MLPs
|In March 2010, the 10-year Treasury rate had spent the better part of the past two years below 4.0% and the Fed Funds rate had been at a historic 0.25% low for a year in an attempt to stimulate the economy. However, over the past months, the economy appeared to have been doing better and investors were curious about what impact higher interest rates might have on the master limited partnership (MLP) space. For the March 2010 Analyst Perspective, Portfolio Manager Stuart Cartner addresses questions on interest rates and the MLP space.|
Are Distributions Safe
|In January 2010, two master limited partnerships (MLPs), both involved in shipping, cut their distributions. Many investors were surprised by the cuts since the economy appeared to have been rebounding and they had been asking about the safety of distributions. For the February 2010 installment of the Analyst Insight, Director of MLP Research and Portfolio Manager, Brian Watson addresses questions on MLP distribution safety.|
Natural Gas and MLPs
|In December 2009, natural gas prices had rallied sharply after spending most of the year falling. Given all of this volatility many investors were curious about what impact natural gas prices would have on Master Limited Partnerships (MLPs). For the January 2010 installment of the Analyst Perspective, Director of MLP Research and Portfolio Manager, Brian Watson addresses questions on natural gas prices and how natural gas fundamentals relate to the MLP space.|
*The Alerian MLP Index is a composite of the 50 most prominent energy Master Limited Partnerships that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The index, which is calculated using a float-adjusted, capitalization-weighted methodology, is disseminated real-time on a price-return basis (NYSE: AMZ). It is not possible to invest directly in an index. Performance information provided for the Alerian MLP Index and the Alerian Infrastructure Index is not indicative of the performance of the Oppenheimer SteelPath Funds. Performance data is calculated from the date of inception, 3/31/2010 for Oppenheimer SteelPath MLP Alpha Fund, Oppenheimer SteelPath MLP Income Fund and Oppenheimer SteelPath MLP Select 40 Fund. Performance data is calculated from the date of inception, 12/30/2011 for Oppenheimer SteelPath MLP Alpha Plus Fund and Oppenheimer SteelPath MLP Infrastructure Debt Fund.
**Yield information discussed above is historical and relates to MLPs generally. Such yield information does not represent the performance of Oppenheimer SteelPath MLP Funds. Past performance does not guarantee future results.
Investing in MLPs involves additional risks compared to the risks of common stock, including risks related to cash flow, dilution, and voting rights. Energy infrastructure companies are subject to risks such as fluctuations in commodity prices, reduced volumes of natural gas or energy commodities, environmental hazards, changes in macroeconomic conditions, regulations or extreme weather.
MLPs may trade less frequently which may result in erratic price movement. MLPs are highly regulated and may be adversely affected by changes in the regulatory environment including the risk that an MLP could lose its tax status as a partnership.