Typically when energy master limited partnerships (MLPs) have to make a distribution cut, it corresponds directly with commodity prices and current production. While it is a difficult decision to make, sometimes it is the only way to deleverage the company so it can hold on for higher oil and gas prices. While a bitter pill for investors, coupling distribution cuts with strategic maneuvers that can often allow for quicker delevering and a view to future growth often make the companies very appealing to investors.

A new RBC research report highlights three companies that did just that recently, and all three immediately traded much higher as investors actually saw the positives in the distribution cuts. Combined with strategic updates, all three companies were embraced by investors for taking positive action to reinforce corporate and balance sheet strength.

American Midstream Partners

This company cut its distribution by 13% on April 21 and is up 37% since. American Midstream Partners L.P. (NYSE: AMID) engages in gathering, treating, processing and transporting natural gas in the United States. The company’s Gathering and Processing segment provides gathering, compression, treating, processing, fractionating, transportation and sale of natural gas, natural gas liquids (NGLs) and condensate.

The Transmission segment transports and delivers natural gas from producing wells, receipt points or pipeline interconnects for shippers and other customers, which include local distribution companies, utilities and industrial, commercial and power generation customers.

The Terminals segment provides above-ground storage services for petroleum products, distillates, chemicals and agricultural products at its marine terminals that support various commercial customers, including commodity brokers, refiners and chemical manufacturers to store a range of products. It owns and operates 12 gathering systems, five processing facilities, three fractionation facilities, three marine terminal sites, three interstate pipelines, five intrastate pipelines and one crude oil pipeline.

The company also owns a 66.7% non-operated interest in Main Pass Oil Gathering System, a 50% undivided interest in the Burns Point Plant, a 46% non-operated interest in Mesquite and a 12.9% non-operated indirect interest in Delta House.

Shareholders are still paid a whopping 13.47% distribution. The Thomson/First Call consensus price target is $0.30. Shares closed above that on Friday at $12.25.

Crestwood Equity Partners

This company saw huge insider buying earlier this year and cut its distribution a massive 56%. The stock is up 43% since. Crestwood Equity Partners L.P. (NYSE: CEQP) owns and operates midstream businesses in multiple unconventional shale resource plays across the United States. Crestwood is engaged in the gathering, processing, treating, compression, storage and transportation of natural gas; storage, transportation, terminaling and marketing of NGLs; and gathering, storage, terminaling and marketing of crude oil.

Crestwood recently announced it will transfer four natural gas storage facilities (Stagecoach, Thomas Corners, Steuben and Seneca Lake) with a combined storage capacity of approximately 41 billion cubic feet and three natural gas pipelines (MARC I, North-South and the East Pipeline) with a combined throughput capacity of 2,960 million cubic feet per day to a new entity, Stagecoach Gas Services.

Consolidated Edison bought 50% of the new entity for $975 million, which the company is using to repay debt and reduce leverage. That, combined with the massive distribution cut, moved the 2016 leverage ratio to approximately 3.9 times and fiscal 2016 cash distribution coverage ratio of about 1.6 to 1.8 times.

Crestwood shareholders are still paid a large 13.02% distribution. The consensus price target is $13.10. Shares closed above that on Friday at $18.43.

NGL Energy Partners

This company cut its distribution by 39% and the stock is up 28% since the cut. NGL Energy Partners L.P. (NYSE: NGL) engages in the crude oil logistics, water solutions, liquids, retail propane and refined products and renewables businesses in the United States.

The Crude Oil Logistics segment purchases crude oil from producers and transports it for resale at pipeline injection points, storage terminals, barge loading facilities, rail facilities, refineries and other trade hubs. The Water Solutions segment is involved in the treatment and disposal of wastewater generated from crude oil and natural gas production operations; sale of recycled water and recovered hydrocarbons; and disposal of solids, such as tank bottoms and drilling fluids. The Liquids segment supplies propane, butane and natural gas liquids to retailers, wholesalers, refiners and petrochemical plants in the United States and Canada.

The company also has a retail propane segment that sells propane, distillates and equipment to end users, consisting of residential, agricultural, commercial and industrial customers, as well as resellers. The Refined Products and Renewables segment markets gasoline, diesel, ethanol and biodiesel products; refined products terminaling services; and own refined products storage facilities.

The company got a big investment from Oaktree, and combining the cut with a convertible offering and other sales was a huge boost to the balance sheet. RBC thinks that leverage will be reduced from 5.0 times to 3.0 to 3.5 times as the company repays close to $500 million in debt.

Investors are still paid a hefty 12.21% distribution. The consensus price objective is $13.36. Shares closed most recently at $12.78.

Again, RBC points out that companies that combine strong strategic moves with distribution cuts can be a huge winner for the companies as improved investor sentiment brings in buyers and also chases out short sellers.

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