Oasis Midstream Partners (NASDAQ:OMP) currently offers income-seeking investors an eye-popping 9% yield. On top of that, the master limited partnership (MLP) believes it can increase that payout at a 20% annual clip through at least 2021. That combination of high yield and high growth could enable Oasis Midstream to generate significant total returns for its investors.

The one knock against the midstream company, however, is its higher risk profile compared with its peers. It has been working to address that issue by taking several steps to improve its probability of success. Because of that progress, it's starting to look like a compelling option for income-seeking investors to consider.

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A big step in the right direction

One of the biggest concerns with Oasis Midstream is its lack of diversification. The company initially started with one mission: Support the growth of its parent, Oasis Petroleum (NYSE:OAS), in the Bakken Shale. Because of that, the business was entirely reliant on one company and one region to support its growth plan. The concern with that narrow focus was that Oasis Petroleum might run into issues that could slow its drilling plans, which would negatively impact the growth of its MLP.

However, Oasis Midstream has taken two important steps in the past year to reduce its dependence on both Oasis and the Bakken to drive growth. First, it signed multiple agreements with third-party producers in the Bakken last year to construct new oil gathering and transportation assets, natural gas gathering and processing facilities, and water infrastructure systems. These new customers not only helped reduce its reliance on Oasis Petroleum, but will add incremental revenue as they come online. As a result of these agreements, more than 15% of the gas volume on its Bighorn system now come from third parties.

Meanwhile, Oasis Midstream recently took an even more important step toward diversification by securing a new midstream opportunity in the Delaware Basin to support Oasis Petroleum's operations in that region by building out crude oil and producing water gathering systems. This opportunity will not only provide the MLP with a new growth engine but reduce its exposure to the Bakken, which is much more sensitive to changes in oil prices.

A few things left on the wish list

Oasis Midstream has made tremendous strides in reducing its reliance on both Oasis Petroleum and the Bakken Shale to fuel its distribution growth plan. That makes it a more attractive option for investors seeking both growth and income.

However, some concerns remain about whether the company can achieve its ambitious distribution growth plan, given that it's still very reliant on Oasis Petroleum. Further, it's solely focused on gathering and processing oil and gas, which is more sensitive to changes in commodity prices.

Those two issues could impact the company's ability to achieve its growth plan. That's why it needs to continue taking steps to reduce risk. One way it can do that is by securing more third-party customers to its Bakken assets as well as attracting them to its new Delaware Basin system. In addition to that, the company will eventually need to start investing in less commodity-price-sensitive midstream assets such as interstate pipelines or storage terminals. An investment in a long-haul pipeline opportunity, for example, would help address both concerns. That's because those systems not only carry significant third-party volumes, but also generate very stable cash flow, since customers pay for capacity even if they don't use it.

Still a bit too risky

Oasis Petroleum has made significant strides in diversifying its customer base and geographical focus over the past year. That progress helps increase the probability that the MLP will achieve its distribution growth plan. However, it's still too reliant on Oasis Petroleum as well as on gathering and processing oil and gas, which is sensitive to changes in commodity prices. Because of that, another big slide in crude prices could derail its expansion plans. That's why income-seekers might want to keep this MLP on their watch list until it makes a few more moves to reduce risk.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.