Master Limited Partnership

A Master Limited Partnership (MLP) is a type of business organization that combines the tax benefits of a partnership with the Liquidity of publicly traded Securities. MLPs are typically engaged in natural resource-related businesses, such as oil and gas extraction, transportation, and processing, but can also operate in other sectors. They are structured to provide investors with a steady stream of income, often in the form of quarterly distributions, and are not taxed at the corporate level, allowing for a pass-through of income to investors.

MLPs generally consist of two types of partners: the general partner (GP), who manages the partnership and has unlimited Liability, and the limited partners (LPs), who provide Capital and have limited Liability. This structure allows MLPs to attract Capital for large projects while offering investors the benefits of regular income and potential Capital-appreciation/">Capital Appreciation.

Examples of MLPs include:

• Enterprise Products Partners L.P. – Engaged in natural gas and natural gas liquids transportation and processing.
• Magellan Midstream Partners, L.P. – Focused on the transportation and storage of Petroleum products.
• Brookfield Renewable Partners L.P. – Involved in renewable power generation.

Cases illustrating MLPs:

• The 2014 decline in oil prices affected many MLPs, leading to a reduction in distributions and increased volatility in their Stock prices.
• In 2020, the COVID-19 pandemic created challenges for MLPs due to reduced demand for energy, impacting their Cash Flows and distributions.