We believe midstream energy companies are changing for the better. After the MLP business model was called into question in recent years for its reliance on capital markets, the industry has now begun to adopt better practices focused on management alignment with unitholders and returns on invested capital. This welcome shift comes at a time of positive trends in midstream fundamentals, which we believe will drive improved performance over time.
- Midstream energy fundamentals have strengthened amid broadly stable energy prices, which have prompted record production volumes.
- The industry is transitioning to a more sustainable business model—what we are calling “MLP 2.0”—improving long-term growth potential and attracting greater institutional interest.
- We believe discounts to private-market values are making investment through listed securities attractive.