The following are some highlights from a conference on MLP I recently attended:

 It was highlighted how the yield spread between the Upstream and Midstream sectors is really wide by historical standards; the Upstream averages 10% versus 5.2% in Midstream.  The projection was for a shrinking of such spread.

-          Staying with the Upstream theme, two deals were noted:

•    Breitburn acquired QR Energy in a $3 billion deal
•    Linn Energy (a component of most of our MLP portfolios) acquired Devon Energy’s conventional oil and gas assets for $2.3 billion.  This deal was deemed to be very positive as Linn continues to change its asset base and improve its wells’ overall decline rate

-          Distribution Coverage rate for the industry seems healthy  at 1.1 average

-          Distribution growth is expected to bet at 5% to 8% for the next 12 months

-          On the subject of valuations, a case was made for a transition of the MLP sector from a yield-based model to an equity growth-based metric. Personally, I have some doubts on this idea.

-          MLPs as an asset class: the MLP space is now, by market cap, almost as big as the REIT sector and bigger than the traditional Utilities sector.