MB Capital Strategies Glossary — Updated June 2026
Midstream is the segment of the oil and gas value chain that moves, stores and processes hydrocarbons between the upstream producer and the end user. Midstream companies are essentially toll roads for oil, gas and NGLs — they charge a fee per unit of volume transported, largely regardless of the commodity price. This fee-based structure gives midstream one of the most stable dividend profiles in the energy sector.
US midstream companies come in two legal structures with very different tax treatment for foreign investors:
| Structure | Examples | US Tax | European Investor Impact |
|---|---|---|---|
| MLP (Master Limited Partnership) | Enterprise Products (EPD), MPLX | No corporate tax; K-1 partnership tax | Withholding complex; K-1 filing required; may create US tax filing obligation. Often held via German brokers as "distributions" with 15% withholding + Quellensteuer complexity. |
| C-Corp | Enbridge (ENB), Kinder Morgan (KMI), TC Energy (TRP), Williams (WMB) | Corporate tax paid; dividends from post-tax income | Standard 15% US withholding on dividends (recoverable via DBA treaty). Far simpler for European investors. |
| Canadian Pipeline C-Corp | Enbridge (ENB, Canadian-listed), TC Energy (TRP) | Canadian corporate tax | 25% Canadian withholding (reducible to 15% via DBA); simpler than US MLPs; Quellensteuer credit available in Germany. |
Marco's approach: For European hard-asset portfolios, C-Corps (Enbridge, Kinder Morgan, TC Energy, Williams) are almost always preferable to MLPs. The tax simplicity alone justifies a slightly lower headline yield in many cases. MLPs are only worth the complexity if the yield differential is substantial (>2%) and you have a tax adviser familiar with US partnership income.
| Metric | What It Measures | Target |
|---|---|---|
| Distributable Cash Flow (DCF) | Cash available for distribution after maintenance capex | Coverage ratio >1.5x dividend |
| EBITDA Coverage | EBITDA ÷ annual interest + scheduled debt repayment | >2.0x |
| Net Debt/EBITDA | Leverage; pipelines can carry more than E&P | <4.5x comfortable; >6.0x = warning |
| Contract Tenor | Average remaining contract length (years) | >7 years = strong revenue visibility |
| Take-or-Pay % | Share of revenue from minimum volume guarantees | >85% = very stable |
Marco Bozem
Investor & Analyst | Hard Assets, Dividends, Shipping | MB Capital Strategies
Marco analyses commodity and dividend stocks with a focus on shipping, mining and energy. All analyses are based on publicly available annual reports and his own assessment. Not investment advice.