John Walker at EnerVest/EV Energy Partners will tell you that half of the existing and proposed upstream MLPs won’t be around in three to five years. After the recent, and well-attended (500 key M&A decision-makers, advisors, marketers and financiers), annual A&D conference in Dallas, several attendees summed Walker’s forecast up as, “Making an upstream MLP is good for EnerVest but not anyone else.” It’s a fun exaggeration of Walker’s comments. Truth is, he may be spot on. Upstream financial markets work in real-time now. What is in vogue today may not tomorrow——literally. In preparing Oil and Gas Investor’s weekly newsletter (Oil and Gas Investor This Week; it’s a hot, must-read), the upstream financial markets and M&A scene turned on a dime in the past several weeks. In one Monday issue, there were 10 or so news items on MLP formations, S-1 filings and significant M&A deals. The next week and following weeks (in the midst of the still-unresolved credit-market turmoil and I-bankers taking off for the rest of summer): none, except for more U.S. exits from Canada. (That’s an interesting story in itself: Why exit now? Mark McMurray at Rundle Energy Partners in Calgary explained that at the A&D conference: There is still a very hungry and active M&A market in Western Canada.) Meawhile, all went quiet on the U.S. upstream MLP and general M&A front beginning mid-August. Smart financial markets are healthy for the upstream industry: money will flow to good deals and take the path of greatest yield (with similarly weighted risk). In the 1980s, money continued to chase oil and gas well into 1985 when the market had actually fallen out in early 1981 when Reagan took office, and oil became publicly traded (causing the fall of the Soviet Union). Why wouldn’t the upstream MLPs be a good deal? They won’t always be, if for one simple reason: They compete with interest rates on yield. The threshold has been put at various levels. Some say 7.5%; others, 8.5%. And, upstream MLPs are weighted a bit riskier than U.S. Treasuries. Another reason some upstream MLPs won’t work out: They’re won’t always be made of the right assets (high-PDP and -PUD) or the model may be mismanaged. That not to say the many MLPs being considered, and still to be imagined, won’t work out should be good for the U.S. upstream industry. Upstream MLPs are counter to what a U.S. “upstream” needs: exploration. The more U.S. assets that go into harvest and development mode will result in less-compelling work for geoscientists. Once these professionals are fully out of much G&G work, they’ll be out. The average age is roughly 50 now and advancing 11 months each year. If the U.S. is to continue to have an oil and gas exploration industry, there needs to be sufficient, compelling exploration projects.