Both Brent and West Texas Intermediate crude traded sideways to down for months before the summer move higher. Many feel a rise to the $100 a barrel level and higher is a distinct possibility, and it could be sooner rather than later. While it is unlikely that oil will get back up and hit the $120 mark as it did in the summer of 2022, it is a good bet that both benchmarks could trade even higher than many anticipated this fall.
OPEC recently announced its production levels will stay in place going forward, and Saudi Arabia extended its million-barrel-per-day production cuts through the end of the year. In addition, with Russia cutting oil exports by 300 million barrels, the perfect storm was in place for a solid move higher.
Income investors looking to the energy sector, which was the only sector to outperform in 2022, are often drawn to the energy master limited partnerships (MLPs), and with good reason. While they do tend to trade higher when the crude benchmarks do, their services to transport and store oil and gas are contract-based regardless of commodity pricing. The good news is that any new contracts will be signed at much higher levels for crude and natural gas.
We screened our 24/7 Wall St. MLP research universe and found seven Buy-rated stocks paying huge distributions that look like great buys now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Antero Midstream
With shares trading at just over $10 apiece, this well-run company offers a huge total return package. Antero Midstream Corp. (NYSE: AM) owns, operates and develops midstream energy infrastructure. It operates through two segments.
The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collects and processes production from Antero Resources’ wells in West Virginia and Ohio.
The Water Handling segment delivers fresh water and offers other fluid handling services, such as wastewater transportation, disposal and treatment, as well as high-rate transfer services.
Investors receive a 7.57% distribution. UBS has a $14 target price on Antero Midstream stock. The consensus target is $13.20, and the closing unit price on Thursday was $11.81.
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