Salient to Investors:

Kevin McCarthy at Midstream/Energy Fund said:

  • the industry will increase profit in 2013, as the drilling boom in U.S. shale fields creates a need for more pipelines, processing plants and compressor stations.
  • the development of unconventional fields is a multi-decade process.
  • his top investments are general partners because that way you get the full-cycle economics
  • like in real estate, you want to have a pipeline or a processing facility in an area where you think there’s going to be multiple opportunities to grow.

Interstate Natural Gas Alliance of America in 2011 said it would take $251 billion over 25 years to build pipes, processing plants and infrastructure for all the new exploration. Eduardo Seda at Ladenburg Thalmann said spending is ahead of those estimates, and mostly done by MLPs. Seda said pipelines are popular with individual investors because much of their revenue comes from long-term transportation contracts and independent of the price of oil or natural gas.

Mike Taggart at Morningstar cautioned about a fund’s portfolio when paid for with borrowed money.

Read the full article at