Take the money and run. "It's the first item on my list of bad reasons to form an MLP (master limited partnership). MLPs are the flavor of the month, but about half of them are formed for the wrong reasons," John Walker, president and chief executive of EnerVest Management Partners Ltd., told IPAA and Tipro members in Houston recently. Walker is also chairman of EV Management LLC, the general partner of EV Energy Partners LP, an MLP. "MLPs are one of the exciting things going on in the business. But I see instances where financial sponsors go out and buy assets when they see MLPs making 10 to 20 times cash flow. They want to get them to market. The temptation is to put debt on the entity, and then they move on, as in 'take the money and run,'" he said. "These are not long-term players. The end game is not about putting an MLP in place, it's about where that MLP is going to be in 10 to 20 years. Sometimes it's a matter of whether the management team has enough experience in acquiring assets for the long run." For more on this, see the June issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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