It looked like a clear road to $80 a barrel, and if you believe what the financial press was reporting, that is exactly where Saudi Arabia and many of the OPEC nations want the price of oil to go. However, the president has backed out of the Iran deal and once again imposed sanctions which curtail the oil exports from that country, and Venezuela’s situation is a mess, as that country’s output has dropped to the lowest levels in 28 years.
With OPEC countries and Russia promising to replace that missing production, and a huge stockpile build, the price of oil dropped a whopping 4% last Friday to under the $70 mark. In addition, oil stocks, which had been on a roll, got hammered, as trigger-happy investors were more than happy to take some of the big gains they have posted this year. While oil has bounced some this week, it remains well under $70 a barrel.
The good news for 24/7 Wall St. readers looking to add in energy positions is that some of the best plays also may be among the highest yielding in terms of dividends and distributions. We found four that are all rated Buy by top Wall Street firms.
Energy Transfer Partners
This company merged with Sunoco Logistics Partners last year to form one of the largest master limited partnerships (MLPs). Energy Transfer Partners L.P. (NYSE: ETP) engages in the natural gas midstream and intrastate transportation and storage businesses in the United States.
The company’s Intrastate Transportation and Storage segment transports natural gas from various natural gas producing areas, and through ET fuel system and HPL system. It owns and operates 7,500 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas. Its Interstate Transportation and Storage segment provides natural gas transportation and storage services; owns and operates approximately 12,300 miles of interstate natural gas pipeline; and has interests in various natural gas pipelines.
The Midstream segment gathers, compresses, treats, blends, processes and markets natural gas. It owns and operates 35,000 miles of in service natural gas, 31 natural gas processing plants, 21 natural gas treating facilities and four natural gas conditioning facilities.
Energy Transfer unitholders are paid a massive 11.81% distribution. The Merrill Lynch price target for the stock is $21, though the Wall Street consensus was last seen at $23.80. The shares closed at $19.14 on Wednesday.
Golar LNG Partners
This liquefied natural gas (LNG) shipping and storage play holds a big distribution for shareholders and is the top pick across Wall Street. Golar LNG Partners L.P. (NASDAQ: GMLP) owns and operates floating storage regasification units (FSRUs) and LNG carriers under long-term charters in Brazil, the United Arab Emirates, Indonesia and Kuwait. The company also engages in the leasing of its fleets.
The Marshall Islands–based company has a fleet of six FSRUs and five LNG carriers, a combined average remaining useful life of 25 years, and an average remaining charter duration of five-plus years. The company posted solid second-quarter results and also was successful in lowering leverage.
Golar LNG Partners has a diverse pipeline that includes its FLNG projects and, as a result, some Wall Street analysts feel the company has the largest growth potential over its peer group, with potential drop-downs/newbuilding inventories of 16 vessels.
Golar shareholders are paid a hefty 11.36% distribution. Merrill Lynch has a price target of $26 on the shares, while the posted consensus target is $23.39. The stock closed trading on Wednesday at $20.34 a share.