Midstream Master Limited Partnerships (MLPs)-those quiet, unassuming entities that don’t exactly throw parties but manage to keep the world running. These companies live in the in-between space: not flashy, not nearly as glamorous as their upstream or downstream cousins, but they make their money the old-fashioned way-transporting, processing, and storing oil and natural gas. And they do it with such consistency that, if you blink, you might miss them.
Now, let’s take a look at three pipeline stocks that, if you can stomach their steady pace, might reward you over the long term. Not much fanfare, just business as usual.
1. Energy Transfer
Energy Transfer (ET) has been through the wringer-cleaning up its balance sheet like an obsessive compulsive cleaning spree. It’s back in growth mode now, though. The company’s pumping $5 billion into expanding its U.S. midstream network, up from $3 billion the year before. I guess if you’re going to invest in pipelines, now’s as good a time as any, right?
Much of its expansion plans will focus on the Permian Basin, with the Hugh Brinson pipeline designed to meet the surging power demands of Texas, which-let’s face it-will likely be fueled by more and more artificial intelligence data centers. Meanwhile, the Desert Southwest pipeline will snake its way into Arizona and New Mexico, probably hauling gas to places you’ve never been.
Oh, and that Lake Charles LNG export terminal? It’s getting closer to reality, which is kind of a big deal, since global demand for liquefied natural gas (LNG) is expected to soar in the coming years. If it gets the green light, Energy Transfer will lock in long-term, fee-based revenues. That’s all fine and dandy if you like reliable, predictable cash flow. But then again, who doesn’t?
The company’s financial position is about as solid as it’s been in a while, with leverage hovering near the low end of its target range. Around 90% of its EBITDA is backed by fee-based contracts, which means you won’t find any surprise twists here. The nearly 8% yield is secure, with management promising 3% to 5% annual distribution increases. It’s all so… steady. So it goes.
The stock’s been lagging this year, so you can grab a share or two at a discount if you’re feeling lucky. It’s like finding a forgotten book in the back of the library shelf. Not a bestseller, but still valuable if you can see past the dust.
2. Western Midstream Partners
Now, if you’re after something that’s relatively safe-like the person who never misses an 8:00 AM meeting and insists on using a planner-there’s Western Midstream Partners (WES). Backed by Occidental Petroleum (they own more than 40%), Western has a remarkable degree of visibility into its cash flows. The company’s contracts are designed to ensure stable revenue, regardless of commodity price swings. Those cost-of-service and minimum volume commitments will keep the lights on even during market meltdowns.
Western is pivoting into a new growth phase, with water handling and natural gas processing at the forefront. A $2 billion acquisition of Aris Water Solutions adds over 625,000 acres of dedicated acreage. The Pathfinder project, scheduled for 2027, will establish one of the largest produced water systems in the Permian. Now, that’s a lot of water. But hey, we’ll always need it, right?
Expanding its North Loving gas processing plant is part of the plan to keep cash flowing faster than distributions. So, you won’t see a stagnant payout here. Western’s well-positioned for those seeking yield, with a 9.4% return and a strong balance sheet. If you’re allergic to risk, this might be your guy.
3. Genesis Energy
Genesis Energy (GEL) has undergone a makeover. It’s a comeback story. The company sold its soda ash business for $1.4 billion and used the proceeds to pay down debt. Gone are the expensive preferred units. That alone saves the company about $84 million annually in interest and preferred distributions. So, things are looking up. It’s like the corporate equivalent of a financial diet-cleaner, leaner, and ready for the next stage.
The real intrigue lies in Genesis’ involvement with two major Gulf of Mexico oil projects: Shenandoah and Salamanca. These offshore operations are just ramping up, and when they hit full capacity, they could generate an additional $150 million annually in operating profit. Shenandoah is already churning out 100,000 barrels per day, with plans to expand to 140,000 by 2026. Salamanca should produce 40,000 to 50,000 barrels daily once it gets going.
The company’s marine transportation business is solid, too. And management expects free cash flow to be within reach soon. If everything goes according to plan, they’ll have paid off their revolver by the end of 2025. After that, we can expect distribution growth to follow. But, of course, nothing’s certain. Life never is. But if these projects succeed, the upside could be significant. A gamble worth taking? Maybe. Maybe not.
So, there you have it: a trio of midstream stocks. They’re not going to blow your mind, but they might grow your wealth-if you don’t mind the waiting game. 🚀
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2025-10-13 17:43