Surprisingly, These MLPs Still Have Hidden Upside

Texas' Permian Basin is quickly becoming one of the hottest oil plays in America. Its potential fueled 140% gains in the past year for investors in Diamondback Energy (NASDAQ: FANG  ) , which is solely focused on the Basin.

FANG Chart

FANG data by YCharts

Those same gains, however, have surprisingly eluded MLPs like BreitBurn Energy Partners (NASDAQ: BBEP  ) and Vanguard Natural Resources (NASDAQ: VNR  ) . Because of that, both MLPs still have hidden upside to the basin.

One key difference here, and the reason why the value is hidden, is that neither BreitBurn Energy Partners nor Vanguard Natural Resources are likely to join Diamondback Energy in fully developing the horizontal sections of the basin. Instead, these two are likely to follow the lead of another MLP and monetize these high decline horizontal positions. This will not only enable both to realize some of the hidden value of these assets, but at the same time will add in some low-decline properties that help to grow distributions.

I created the following slideshow to help investors better understand the assets BreitBurn Energy Partners and Vanguard Natural Resources have hidden in the Permian Basin. The presentation details how these assets are turning a company like Diamondback Energy into a growth story, but why these aren't the best assets to be owned by MLPs like both BreitBurn Energy Partners and Vanguard Natural Resources.

Do you know this energy tax "loophole"?
MLPs like BreitBurn Energy Partners and Vanguard Natural Resources put more money in your pocket each month thanks to a tax "loophole". Its a loophole that could make you even more money if you know the right way to play it. You can take full advantage of this profitable opportunity by grabbing our brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3025835, ~/Articles/ArticleHandler.aspx, 11/28/2014 1:11:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement