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Niska Gas Storage Partners

niskaOne of the side effects of surging natural gas production is figuring out where to store all the stuff once it comes out of a well. Without storage, natural gas firms are forced to dump their production on an already glutted market, ultimately causing prices to continue to fall further and hurt profits.

That’s where Niska Gas Storage Partners (NYSE:NKA) comes in. Currently, the firm operates approximately 225.5 Bcf of working gas storage capacity across three facilities. By providing the necessary storage, NKA is able to collect big fees from the E&P firms while the seasonality of the natural gas sector takes place. Overall, it’s a pretty booming business.

Unit holders are getting a pretty big “boom” as well. Niska recently did some deal-making where it converted subordinate units into new incentive distribution rights (IDRs). The company couldn’t increase its distribution to common unit holders (NKA holders) without paying minimum distributions owed to its general partner.

Basically, this reduces the risk that Niska will have to reduce its dividend to pay back these IDRs and gives upside potential for investors. NKA yields a huge 9.4%.

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