Pump it up

23 January 2013 By Christopher Swann

The likes of BP own mature wells that often don’t generate a decent return. Until now they had few options for offloading them. But the emergence of tax-exempt partnerships that pump oil and gas provides buyers that can pay top dollar and extract fat returns for investors.

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New Source Energy Partners and Quicksilver Production Partners look set to list on the stock market this year. Both filed with the Securities and Exchange Commission for an initial public offering last year.
The two firms are master limited partnerships that specialize in energy exploration and production.
MLPs are exempt from paying corporate income tax and distribute most of their earnings directly to investors.
Linn Energy is the largest exploration and production MLP with a market capitalization of $7.5 billion. Last year Linn bought $2.8 billion of assets from the likes of BP and Anadarko Petroleum, compared to $1.5 billion of asset purchases in 2011.

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