Which Upstream MLPs are Strongest?
Currently I have two upstream MLPs on The Dividend Hunter portfolio list. Both Memorial Production Partners (Nasdaq:MEMP) and Legacy Reserves LP (Nasdaq:LGCY) are in the Hold section of the list. This means I do not recommend buying into or more units, but subscribers who hold MEMP and LGCY should continue to hang on to these investments.
A news update on Seeking Alpha just shared a Wall Street analyst’s view of the upstream sector. Here is the meet of the news report:
- Wunderlich analyst Jay Dobson finds a few worthwhile investments in an otherwise weak upstream energy exploration MLP sector that has too much debt on average and has suffered from the dramatic decline in oil, natural gas and natural gas liquids prices since late 2014.
- Also, a lack of hedging discipline has left the industry more exposed to declining prices and, in some cases, with very limited financial flexibility, Dobson says.
- But four Buy-rated MLPs are best positioned for the current energy environment, sharing the attributes of solid liquidity, a runway for improvement, and aggressive action, Dobson says: Memorial Production Partners (MEMP +0.3%), Vanguard Natural Resources (VNR +1.8%), LRR Energy (LRE +3.5%) and Legacy Reserves (LGCY +0.4%).
These are tough partnerships to be holding now, prices are down and volatility is high. I think that the quality companies will be able to improve their holdings and operations in response to the current energy price situation. Note, VNR has agreed to acquire LRE. The Dividend Hunter recommendations list includes two of the three better quality upstream MLPs.