A strategy focused on midstream and royalties
NEP Midstream and Royalty invests in the large and diverse U.S. and Canadian pipeline universe that supplies the world’s largest consumers of energy.
Our investments focus on midstream properties that generate steady landowner royalties from some of the world’s leading energy companies including BP, Chesapeake Energy, ConocoPhillips, and ExxonMobil. These steady fee-based revenues contribute to a low-risk business model for investment.
Specific areas that we find attractive include properties with long-haul pipelines. We also like other forms of energy infrastructure which gather, process, store, and distribute the following petroleum products:
- Natural gas
- Natural gas liquids
- Crude oil
- Refined petroleum products such as biodiesel and ethanol
As part of our strategy, NEP seeks North American energy infrastructure investments with these three characteristics:
- Substantial acreage interests
- Meaningful opportunities for long-term production volume growth
- Potential for high-quality total returns based on a combination of current income and capital appreciation
Attractive fundamentals support our investment strategy
More than $800 billion, or $44 billion per year, in midstream infrastructure investment is needed in North America by 2035 to meet U.S. and Canadian energy demand. This infrastructure projection is from the Interstate Natural Gas Association of America Foundation (INGA), which also estimates that more than half of this investment, or an estimated $417 billion, will be allocated toward building new natural gas midstream infrastructure, including gathering and transmission pipelines, processing plants, storage capacity, and LNG export facilities. These fundamentals provide significant long-term investment opportunities.
In addition to attractive fundamentals, we believe that valuations are structurally inexpensive relative to other yield-oriented equity classes. The attractiveness of these organic investments far outweighs the current competitive acquisition environment in the energy industry.
Read more about why we like the midstream energy market.