This 11%-Yielding Stock Just High-Graded Its Growth
Fears over slowing economic growth have caused traders to sell the oil and gas sector in recent weeks. However, that has likely opened up some opportunities. Many U.S. shale producers can profit with oil prices over $50, so given that oil prices are still over $100 per barrel despite the recent sell-off, there could be some bargains out there, especially if we don't have the recession some think we will.
One interesting subsector is the midstream segment, which offers high yields, and whose revenues are largely tied to oil and gas volumes irrespective of price. So if long-term bond yields go down on an economic downturn but oil and gas prices remain high enough for U.S. producers to drill, the high yields paid by midstream operators could find favor with investors. And master limited partnership Crestwood Equity Partners (NYSE: CEQP) sticks out even amid this attractive group.
While most midstream operators deal in pipelines, Crestwood's operations are concentrated in natural gas gathering systems and processing facilities near the drillers themselves, and they are primarily concentrated in the Williston Basin of the Bakken Shale in North Dakota. Crestwood also owns storage and logistics facilities, along with assets in other basins, but the vast majority of its cash flow -- nearly 70% up until recently -- comes from its Williston assets.
Source Fool.com
