Analysts estimate the market has placed a value on Niska's storage at just $7 million per billion cubic feet, which is less than half of the current market cost to build new storage. The biggest concern surrounding the company was that due to the soft operating environment, the dividend distribution was at risk. However, the company has taken necessary steps to protect the payout to common unit holders by repurchasing $62 million of debt this year. The company is also in the process of monetizing $200 million worth of its current natural-gas inventory. Thanks to these maneuvers, Credit Suisse analyst Yves Siegel projects Niska will have enough cash to cover the current distribution to common unit holders for the next year and a half. When the operating environment improves, the company will be well positioned due to its size.

Unit holders shouldn't expect distribution increases any time soon, but a 14% yield and a unit price below tangible value is a decent-enough incentive.

Risks to consider: In researching this article, this five-year chart of the Alerian index concerned me.



While I'm not a wiggle reader by trade, this is self explanatory, thus confirming why the energy MLP space made me nervous in the first place. Focusing on names that have already been beaten down is a good way to play defense.

Another risk consideration is uncertainty concerning U.S. tax policy. The potential change in the tax treatment of pass-through entities such as MLPs could negatively affect distributions available to unitholders. Widespread economic slowdown would also compound the pullback in commodity prices, which in turn would affect energy MLP prices.

Action to Take--> After a mostly sideways year with lots of volatility in between, I'm still somewhat bearish on energy MLPs as a whole. That said, the volatility has created the opportunity for some selective nibbling in particularly beaten-down areas. Natural Resource Partners and Niska Gas Storage Partners are intriguing ideas: NRP for stability and predictability of its income, thanks to a limited-risk business model; and NKA for its higher yield and deep asset-value characteristics.

-- Adam Fischbaum

P.S. -- We recently came across an unusual energy stock that has crushed gold, silver, oil and just about anything else you can think of over the past 10 years. What's amazing is that even after its 2,000% run-up it's STILL paying an 8.6% dividend yield right now. Click here to get the name of this stock...