It’s funny how the same company that was one of the most bearish on oil last year and back in the early part of 2016 was the same one that pushed the prices for benchmark West Texas Intermediate and Brent higher Monday. In fact, last fall Goldman Sachs said oil could trade below $20 a barrel, and to its credit oil did trade down to around $26. In February the firm reiterated the $20 level possibility, and other big firms chimed in agreement, citing strength of the U.S. dollar. Since that time oil has rallied over 75% off the lows, and Monday the black gold pushed close to the $50 level.

In a new research report, Deutsche Bank had some commentary on the firm’s inaugural MLP, Midstream and Natural Gas Conference, which wrapped up in New York City last week. One of the interesting tidbits we found in the report was the most requested company models that attendees requested. We noted three that were top energy master limited partnerships (MLPs). All three of the companies are well liked on Wall Street and some have some outstanding upside potential.

Enterprise Products Partners

This company is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Despite the energy slump, Enterprise Products Partners L.P. (NYSE: EPD) recently raised the distribution 1%. Enterprise Products maintains a very good long-term position in the market. It provides many of its services on the basis of long-term, fixed-fee contracts, insulating against some of the wilder swings of the commodities that it trades in.

One reason why many analysts may like the stock is its distribution coverage ratio. That ratio is well above one times, making it relatively less risky among the MLPs. The company’s distributions have grown for several quarters, and recently Enterprise Products increased the quarterly cash distribution paid to partners to $0.395 per common unit, or $1.58 per unit on an annualized basis.

This is the 56th distribution hike since Enterprise’s initial public offering in 1998. Also, this is the 47th time that the company has increased its quarterly payout. The distribution signifies a 5.3% increase over the distribution in the first quarter of 2015.

Enterprise Products Partners pays its investors a very solid 5.91% distribution. The Thomson/First Call consensus price target is set at $31.96. Shares closed most recently at $26.72 apiece.
MPLX

This company has reported very solid numbers and it may be more off the radar for some investors. MPLX L.P. (NASDAQ: MPLX) is a diversified, growth-oriented MLP formed in 2012 by Marathon Petroleum to own, operate, develop and acquire midstream energy infrastructure assets. It is engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids; and the transportation and storage of crude oil and refined petroleum products.

The company made a very well-timed and strategic purchase of MarkWest Energy last year for approximately $1.28 billion. The deal combined MarkWest, the second-largest processor of natural gas in the United States and largest processor and fractionator in the Marcellus and Utica shale plays, with MPLX. The combination created one of the largest MLPs, which is expected to generate a mid-20% compound annual distribution growth rate through 2019.

The company recently completed a massive $1 billion private placement that brings liquidity to the balance sheet. The funds will be used for capital expenditures, repayment of debt and general partnership purposes. MPLX had previously announced that the combination of some opportunistic equity issuances in the first quarter, and this private placement would provide for the partnership’s anticipated funding needs for the remainder of 2016 and into 2017.

MPLX unitholders are paid a very solid 6.41% distribution. The consensus price target is set at $36.77. The stock closed the day Monday at $31.64 per share.

Phillips 66 Partners

This is a very solid sponsorship name to buy now, as well as one that is well liked across Wall Street. Phillips 66 Partners L.P. (NYSE: PSXP) is a growth-oriented MLP formed by Phillips 66 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids pipelines and terminals and other transportation and midstream assets.

Following a successful equity offering, analysts like the company and the entry point, and it is considered a best-in-class drop-down story. The company recently announced it will buy a pipeline and the remaining 75% interest in other assets from Phillips 66 in a $775 million deal. The Houston-based partnership funded the deal with a combination of newly issued units to Phillips 66 and the assumption of notes payable to the company as well.

Phillips 66 Partners unitholders are paid a 3.6% distribution. The consensus price objective is $70.38, which is well above the $53.47 per share at which the stock closed on Monday.

While not the highest yielding of MLPs, these are solid plays for investors looking to be in the sector but not wanting to take undue risk. They all offer outstanding management, and they should have a clear path to continue to offer solid gains for unitholders. Keep in mind that MLP distributions may contain return of principal.

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