U.S. energy production is higher than it has been in decades and, as a result, America's pipelines and processing centers are booming as well. Giant midstream companies like Kinder Morgan and TransCanada get a lot of press, but across the country there are many smaller, unheralded midstream outfits that may make great investments as well.
Remember, under-the-radar is not synonymous with underperforming.
With that in mind, today we look at three unheralded pipeline companies.
1. Western Gas Partners (NYSE: WES )
One of the top-performing midstream stocks of 2013, Western Gas is an Anadarko Petroleum (NYSE: APC ) company, with assets located primarily in the middle of the country. It provides the standard midstream business services: gathering, compression, treatment, processing, and transportation.
The partnership recently announced two new projects to drive growth. The first was merely acquiring a 25% stake in two Enterprise Products Partners fractionation trains at the Mont Belvieu natural gas liquids hub; they will start service by the end of this year. The second is the construction of a second cryogenic processing train at its Lancaster plant in Colorado. Capacity will be guaranteed by an Anadarko subsidiary, and the unit is scheduled to come online in 2015.
2. Targa Resources Partners (NYSE: NGLS )
Targa Resoures has been on a tear over the past week, climbing close to 12% in the last five days alone. Prior to that, it was up more than 30% year to date. So what is this popping stock? If you were to look at its ticker and guess "big-time NGL player," you'd be correct. Targa has gathering and processing assets as well as logistics and marketing assets. It also maintains one of the largest operations at the U.S.'s main NGL hub at Mont Belvieu, Texas.
Income-oriented investors will note that Targa increased its distribution 8% over the prior quarter earlier this year, which marked a 32% jump year over year.
3. Boardwalk Pipeline Partners (NYSE: BWP )
Most of Boardwalk's assets are concentrated in the Gulf Coast regions of Texas, Louisiana, Alabama, and Florida. The exception to this is its Texas Gas transmission line that extends south from Ohio and Illinois, and its current projects under development in the Marcellus Shale.
Boardwalk has disappointed investors for the last five quarters, holding its distribution steady at $0.5325. Exercising financial discipline is important, however, and now that Boardwalk is starting to get its ducks in a row, the market has rewarded shareholders. It climbed more than 5% over the course of last month, after news that it was finalizing an important joint venture project with Williams to build an NGL pipeline from the Marcellus Shale down to petrochemical customers on the Gulf Coast.
These three stocks don't capture the headlines the way other midstream companies do, but they could be a valuable addition to your portfolio.
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