Midstream energy infrastructure companies have, in our view, generally emerged from the balance sheet and financing challenges that had plagued the sector since 2014. With these issues now largely in the rearview mirror, oil and gas master limited partnerships (MLPs) and other midstream firms appear poised to capitalize on the North American energy renaissance – and we believe investors who embrace opportunities in this strengthening sector could stand to benefit over the long term.

Midstream energy companies provide the critical infrastructure linking the supply of commodities, such as crude oil, natural gas and natural gas liquids (NGLs), to end users and include pipeline operators and other firms involved with processing, storage and transport of petroleum products. Midstream firms generally operate under a business model with recurring fee-based revenues that depend on volumes and throughput, which tends to limit direct exposure to commodity prices.

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The Author

John M. Devir

Portfolio Manager and Head of Americas Credit Research

Greg E. Sharenow

Portfolio Manager, Real Assets

Mark R. Kiesel

CIO Global Credit



Past performance is not a guarantee or a reliable indicator of future results.  All investments contain risk and may lose value. Investing in MLPs involves risks that differ from equities, including limited control and limited rights to vote on matters affecting the partnership. MLPs are a partnership organized in the US and are subject to certain tax risks. Conflicts of interest may arise amongst common unit holders, subordinated unit holders and the general partner or managing member. MLPs may be affected by macro-economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards MLPs or the energy sector, changes in a particular issuer’s financial condition, or unfavorable or unanticipated poor performance of a particular issuer. MLP cash distributions are not guaranteed and depend on each partnership’s ability to generate adequate cash flow.  Many MLPs and other energy companies operate natural gas, natural gas liquids, crude oil, refined products, coal, or other facilities within the energy sector. As a result, they are susceptible to adverse economic, environmental, or regulatory occurrences affecting that sector. Midstream MLPs and other entities that provide crude oil, refined product and natural gas services are subject to supply and demand fluctuations in the markets they serve, which may be impacted by a wide range of factors including fluctuating commodity prices, weather, increased conservation or use of alternative fuel sources, increased governmental or environmental regulation, depletion, rising interest rates, declines in domestic or foreign production, accidents or catastrophic events, and economic conditions, among others.  Concentration of assets in one or a few sectors may entail greater risk than a fully diversified portfolio and should be considered as only part of a diversified portfolio.

PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2019, PIMCO.

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