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EnvestorFirst (< 20)

Oil And Gas Pipeline Picks



August 12, 2011 – Comments (2) | RELATED TICKERS: ETP , BWP , WHXT

We looked at exploration and production companies and oil service companies too. Can’t leave out the oil and gas pipeline stocks! These are yet another great way to expand your portfolio within the energy industry. Some of these are relatively new to TKO and may be new to you. However,Jared Cummans assures these picks are great because of the high yields. 




Whiting USA Trust is a royalty of Whiting Petroleum Corporation (WLL) and was founded in 2007. The subsidiary represents the right to receive 90% of the net proceeds from Whiting’s interests in oil and natural gasproducing pipelines, the majority of which lie in the Rocky Mountain and Gulf Coast regions of the US. The company then passes on distributions to its shareholders, allowing it to pay out a robust yield. But investors should be wary that while this stock is paying out a dividend of 17%, its 19% losses on the year may be of some major concern to those who are unsure of how this stock will fair in our current environment.



Another MLP, Boardwalk is primarily engaged in the transportation and storage of liquid natural gas. In fact, in 2010 their systems carried approximately 10% of the nation’s average daily consumption of natural gas, making them a major player in the oil & gas pipeline sector. The company has over 14,000 miles of pipeline through out 12 states, as well as three subsidiaries to keep operations focused in different regions across the US. BWP is one of the larger companies on this list, as their market cap comes in at just over $5 billion with a P/E ratio of nearly 23. But while the 7.9% yield seems like an attractive option, investors should consider that BWP’s current quarterly earnings growth (yoy) is -72%, painting a hazy future for this stock in the near term. You can also get NatGas exposure."


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2 Comments – Post Your Own

#1) On August 12, 2011 at 4:37 PM, chk999 (99.96) wrote:

Be very careful with WHX and BWP in a tax advantaged account. They issue K-1s rather than 1099s and this can get very messy very fast. If you have enough unrelated business taxable income, the IRA will have to file a tax return. This is not a no, but you have to understand the tax implications before you buy.

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#2) On August 12, 2011 at 4:39 PM, mm5525 (< 20) wrote:

As I posted in a previous thread by this blogger..... FYI, I am long EPD, PAA, MMP, EPB, CHKM, OKS, PNG.  Sure enough. I added, yet again, to my position in the company PAA (Plains All American Pipeline), who announced a secondary offering of units last night. Sure enough, the units tanked today. I bought on the weakness, as the price was well below the secondary offering of $61.10/unit.

Also, when these secondaries are announced, big hedgies come in and short it to no end since these MLPs have very little volume. It's a good way to get some great value/yields on some very stable companies.

Original post from this morning from that other thread........

In my view, the best time to buy the MLPs is after a secondary offering is announced. In PAA's case, they announced yesterday a new round of shares (called "units") priced at $61.10. PAA will trade much lower today than yesterday, and you could easily get it well below the $61.10 offer between now and August 17. The secondary offerings is not something to be alarmed about. This is part of the MLP model. Since 90% of earnings have to be paid out to unitholders, most slowly but surely issue more units/shares for funding operations/expansion. Take some short-term pain for some long-term gain. There's a major pipeline shortage in North America. PAA is as solid as they come, just look at their earnings report recently announced.

More about the PAA secondary... article one is the announcement, article two is the pricing information.



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