The Drop In Oil Prices Could Lead To Losses For Midstream MLP Investors
With oil and energy stocks continuing to fall – Saudi Arabia’s threat to globally distribute millions of barrels of crude oil in order to win the oil price war over the United States and Russia has only exacerbated these declines. Investors may be wondering – what does this mean for Midstream Master Limited Partnerships (MLPs)?
At Shepherd Smith Edwards and Kantas (SSEK Law Firm), our MLP investment fraud lawyers work with investors that have sustained significant losses caused by fraud or negligence.
What Are Master Limited Partnerships?
MLPs are usually involved in the energy industry. They are public companies that trade on key stock exchanges. The majority of these companies have to do with the refineries, pipelines or processing plants for different kinds of energy sources, such as oil.
This means that MLP share prices are typically in direct correlation to the prices of these resources. Midstream MLPs tend to deal with the transportation, storing and processing of oil and natural gases. As a result, when oil prices drop, typically so do the value of MLPs for investors, resulting in losses.
It doesn’t help that a decline in oil prices can lead to producers having to further curb drilling activity, as well as spending. While not all Midstream MLPs should be too easily impacted, for others, there could be a limit in growth opportunities and a struggle to renew or replace contracts that expire while production dropped.
What many investors don’t realize is that even during turbulent times losses from MLPs may be grounds for a broker fraud claim.
Risks Of Investing In A Midstream MLP
Unfortunately, many Midstream MLP investors likely were not properly warned of the risks involved in these investments, which should only be recommended to investors that can handle a certain degree of risk.
Here are the more typical risks involved with MLPs even when oil prices aren’t dropping:
- They are not ideal for IRAs due to possible, but rare, business taxable income.
- These are complex investments that are hard to understand for the inexperienced investor.
- There could be long-term tax consequences.
- Yields can be exaggerated and are not comparable to yields from other kinds of investments.
If you lost money from investing in an MLP, including any of the companies mentioned below, and you want to explore whether fraud or negligence was involved, contact our oil and gas fraud attorneys at SSEK Law Firm.
MLP Companies Experiencing Losses
Some of the public companies that investors are currently experiencing MLP losses with include:
- Enable Midstream Partners
- BP Midstream Partners
- Oasis Midstream Partners
- Plains All American Pipeline
- Summit Midstream Partners
- DCP Midstream
- EnLink Midstream
- Phillips 66 Partners
- Magellan Midstream Partners
- Sanchez Midstream Partner
- Shell Midstream Partners
- CNX Midstream Partners
- Noble Midstream Partners
- Antero Midstream Partners
- Martin Midstream Partners
- American Midstream Partners
- Dominion Energy Midstream
Our Texas-based MLP investor fraud law firm works with investors throughout the US. Over the last 30 years, we have recovered many millions of dollars on our client’s behalf from broker-dealers, investment advisors, and their registered representatives. Contact SSEK Law Firm online or call 800-259-9010.