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Master Limited Partnership

Down but not defeated…

Karatzas-Basil


By Basil M. Karatzas


Chief Executive, Karatzas Marine Advisors & Co.

www.karatzas.com

 

MLPs may be out of favour, but their potential cannot be ignored, says industry expert

The master limited partnership (MLP) investment structure has worked well for risk-averse small investors because its revenue streams are locked in for years and not tied to commodity prices. Some have questioned whether MLPs can insulate small investors from a turbulent energy market. But rumors of their demise have been exaggerated, says industry expert Basil M. Karatzas

Pipelines are an interesting type of investment since they require a lot of resources and the whole capital investment upfront, even before a barrel of oil can be shipped. But, once in place, they almost can guarantee to perpetuity predictable cash flows. Every time a barrel passes through the pipeline, a toll must be paid, even when the original pipeline was laid several decades ago.

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