Tristan Richardson is Vice President and Equity Research Analyst of SunTrust Robinson Humphrey. Tristan Richardson joined the firm in 2014 as Vice President covering the midstream/MLP sector. Previously, Mr. Richardson was a research analyst at D.A. Davidson & Co. in Portland, Oregon, covering energy infrastructure and oilfield services firms. Prior to this role, he supported coverage of the engineering and construction sector as a research associate. In this exclusive interview with the Wall Street Transcript, Mr. Richardson reveals some new developments in the midstream Oil & Gas sector.
“We saw, in the early part of this decade, a very strong build cycle of new pipeline and other infrastructure to accommodate growing domestic production. That ended about 2015 with the start of the broader energy downturn. The problem that occurred then was the pipeline companies, although not directly exposed to the commodity, had less volume going through the pipe. On top of that, the midstream space had taken on a lot of leverage to finance the buildout of this huge re-plumbing in the U.S., if you will.”
“Our view with respect to the MLP structure overall is that tax reform doesn’t have that big of an impact. That said, if you are already a C-Corp and you own midstream assets, as in pipelines, tanks, etc., chances are you probably were not a cash taxpayer to begin with because depreciation costs are very high on these assets, and you use depreciation to write off against taxable income. I don’t know that it made that much of a difference to the C-Corps within the midstream space either. ”
“Another name we like that is a little bit different and out of left field is Macquarie Infrastructure Corp. (NYSE:MIC). It is a company that doesn’t necessarily fit into any given box at any given time. Half of the business is traditional refined products tanks, so large tanks storing gasoline and jet fuel serving U.S. demand, which has demonstrated to be a very stable business…The other half of the business does not fit into any one box. It owns long-term leases on private aircraft airfields, referred to as fixed base operations, or FBOs. This business essentially leases and operates airfields that receive private aircraft and traffic. The company generates cash flow from that business primarily from refueling private planes. Think of it roughly as a gas station for private aircraft whereby they generate margin on the fuel sold.”
For more on this stock pick and many others from Tristan Richardson of SunTrust Robinson Humphrey, read the entire interview in the Wall Street Transcript.
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