What happened

Crestwood Equity Partners (NYSE:CEQP) made a massive comeback last month. Units of the master limited partnership (MLP) skyrocketed a jaw-dropping 173.5% in April, according to data provided by S&P Global Market Intelligence.

That enabled it to claw back some of its losses from March when it tumbled almost 80%. The main factor fueling its rebound was an update it provided investors on the impact this year's oil market downturn was having on its operations.

So what

Investors bailed on energy stocks in March as oil prices crashed. MLPs were among the hardest hit -- especially those like Crestwood that gather and process oil and gas -- because investors believe their producing customers will slash output. That would force MLPs to cut their payouts so that they could preserve cash. 

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Image source: Getty Images.

While many MLPs reduced their distributions last month, Crestwood bucked that trend. Instead, it plans to maintain its payout at the current level for the time being. That's because it entered this downturn in a strong financial position. Further, it was able to enhance its flexibility by cutting capital expenses and operating costs by $40 million apiece. 

However, Crestwood warned that it's monitoring the market and could take additional steps to enhance its financial position, including reducing its distribution. Investors seem to think this is a likely outcome, given that the company still yields an eye-popping 20%+ even after last month's rebound and its continued rally in May.

Now what

Crestwood reported its first-quarter results in May, which came in toward the high-end of its outlook. However, with many customers reducing their drilling programs and production, the company's earnings will fall well short of its initial forecast this year.

While Crestwood believes it can generate enough cash to maintain its payout during the downturn, further deterioration in market conditions could cause it to reduce its distribution and use the savings to pay off debt. Because of that, income-focused investors might want to wait things out a bit more before buying Crestwood for its enticing yield.

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