Master limited partnerships (MLP) are evolving in response to the shale gas market entering a more mature phase. Rather than focusing on distribution growth, companies are now focused on self-funding in order to improve. This move is resulting in a more diversified valuation metric for MLP investors than past metrics that have largely concentrated on yield.

According to a recent white paper from Alerian, “Why Yesteryear’s Valuation Metrics Aren’t Sufficient for Today’s MLP,” as more retail investors leave the MLP space there is a growing need to attract more general investors.

The paper noted that as more MLPs have stopped distribution cuts, distribution-based valuation methods are increasing their usefulness. On the flip side, these valuation methods are less useful for general investors since they are difficult to compare to other sectors.

Already have an account? Log In

Thanks for reading Hart Energy.

Subscribe now to get unmatched coverage of the oil and gas industry’s entire landscape.

Get Access