MLP Asset Valuations

By: Robert Schulte

In the U.S. economy, master limited partnership (MLP) arrangements are gaining significant attention. Energy-related MLPs now represent over $220 billion of aggregate market value as of late 2011, according to Credit Suisse. Three years ago that figure was just $87 billion. Consider these recent developments—all of which point to the importance and growing public profile of MLPs.

MLPs now own significant assets in the midstream oil and gas industry, and a number of midstream oil and gas corporations have yet to transfer permitted assets into more tax-efficient MLP structures and as a result have been mentioned as possible takeover targets.

Kinder Morgan Inc.’s purchase of El Paso Corporation is among the largest energy-related transactions in U.S. history. Kinder Morgan now controls assets of about $65 billion, primarily through its MLP affiliate Kinder Morgan Energy Partners, LP. Mutual funds and exchange-traded funds focusing on MLPs are now more available to retail and institutional investors. The entrance of institutional investors means MLPs are no longer the domain of mainly private-wealth management investors.

Since 2006, MLPs focused on exploration and production have made a comeback and are growing.

Read the full article as seen in MidStream Business: MLP Asset Valuations