The following is a quick update on the MLP sector. As we enter in the core of the second quarter, we have now a better feeling about the sustainability of projected industry trends and from a micro perspective about corporate valuations.

The sector average yield for the midstream sector is at 5% which while a little low by historical standards still compares favorably to all other income related investment options. The yield on the much more volatile upstream sector is at 10.7%.  Valuations of MLPs are at historical averages but cashflow growth seems to continue at a reasoble pace keeping the sector from overheating.

The pace of IPOs coming to the market continues indicating an entrenchment of the trend by traditional energy companies toward a restructuring of some of their divisions into an MLP structure in order to take advantage of the much tauted US Energy Renaissance process.  Other trends visible in the space are increased activity in M&A, LNG and LPG exports ramp up and still wide-spread ethane rejection.

In conclusion, the space continues to grow and provide opportunities; however, such opportunites have become more selective and complex to analyze.