In looking for additional places to dump my Roth IRA money, I came across Duncan Energy Partners (DEP: chart, web, Y!).

Duncan Energy Partners is a limited partnership formed by Enterprise Products Partners in September 2006 to acquire, own and operate a diversified portfolio of midstream energy assets. Operations are organized into three business segments:

• NGL & Petrochemical Storage Services segment, which consists of 33 salt dome caverns located in Mont Belvieu, Texas, with an underground storage capacity of approximately 100 MMBbls

• Natural Gas Pipelines & Services segment, which consists of an onshore natural gas pipeline system that gathers, transports, stores and markets natural gas in Louisiana

• Petrochemical Pipeline Services segment, which consists of two petrochemical pipeline systems totaling 284 miles, including the 263-mile Lou-Tex Propylene Pipeline and the 21-mile Sabine Propylene Pipeline.

Unfortunately, there is not a lot in the way of financials since the company has only been traded for the past couple months. However, there is a lot of good information in their recent annual report.

DEP’s assets are strategically located in the Gulf Coast region and include interests in Texas and Louisiana. They have an interest in more than 1,000 miles of natural gas transmission pipelines and can transport about 1 bcf (billion cubic feet) per day.

DEP owns approximately 66 percent of the equity interest in these assets, with affiliates of Enterprise Products Partners L.P. (EPD: chart, web, Y!) owning the remaining 34 percent interest.

Duncan Energy Partners is a master limited partnership (MLP). As such, it does not incur income taxes. Its income is distributed to its partners in proportion to their ownership interest. To qualify for the tax benefit, 90 percent of an MLP’s income must come from activities in real estate, commodities, or natural resources such as mining, timber or energy production and related activities.

Currently, I’m still digging through the DEP annual report, but I like their position in the market at this stage. If you’re bullish on crude over the next couple years, a pipeline-based MLP may be a good place to put some cash.

I’ll write more about the MLP structure in a future post.

Investing, Oil & Gas