American Midstream Partners LP: Be Cautious, Yield Moths!

Over the past several years, the stock market has rewarded investors who bought the dips in the energy sector.These fond memories and perceived low valuations have prompted many bargain-seeking investors to allocate capital to upstream names and oil-field services stocks in the hopes of finding a bottom.There will come a time to buy these names selectively, but smart investors should remain on the sideline for now. Regard any near-term rebounds as a sucker's rally-another opportunity to exit riskier positions.Energy analysts remain almost universally bullish on midstream master limited partnerships (NYSE: MLP), citing their fee-based contracts and resilience when commodity prices cratered in late 2008 and early 2009.But investors shouldn't assume that the entire MLP universe will be immune to the downdraft in commodity prices.Extended weakness in energy prices will reduce drilling and completion activity, slowing demand growth for new midstream infrastructure and expansions of existing systems.And as the competition for market share and funding within upstream operators' portfolios heats up, throughput volumes on systems serving higher-cost or otherwise out-of-favor areas could come under pressure over time.During midstream heavyweight Williams Partners LP's (NYSE: WPZ) fourth-quarter earnings call, management warned that weak NGL prices likely would pressure production volumes from plays that rely heavily on these commodities to generate an economic rate of... Read more