Teekay LNG Partners L.P. (NYSE:TGP)

There is not enough natural gas in the ground in the countries that use it in large quantities, therefore other sources must be utilized. The largest producers are in the Middle East. A 6000 mile undersea pipeline is considered an impossible task. The most economical means of transportation is the use of LNG tankers. Teekay LNG Partners has 4 LNG tankers operating under 20 year contracts and the company does not commit to buy more LNG tankers until they have secured 20 year contracts for their use. Cash flow prjections issued by TGP indicate an annualized 15% growth in cash flow.

Further, the MLP structure provides a steady tax efficient return for the income investor without great risk. Current returns of 6% are expected to rise to over 7% in the next 12 months.

Little attention has been given this company because of the (NIMBY) lack of approval for LNG ports in the United States. However, the IEA predicts a need for 28 TCF per annum by 2015, and currently the biggest LNG tanker can carry ONLY 217,000 cubic meters. Hence there will be a need for multiples of LNG tankers needed and TGP is one of the top leaders in this field. The company will grow organically as the LNG local resource gap becomes more evident.