A subscriber asked last week about American Midstream Partners (NYSE: AMID), and I’m happy to report  the work I did as a result will be immediately accretive to the portfolio.

Following its merger with JP Energy Partners earlier this month AMID units yield an annualized 11.4% with targeted coverage of 1.2-1.3x and 5% annual distribution growth rate. Leverage is moderate, with pro-forma debt below 4x EBITDA.

The knock on AMID was always that its assets aren’t really strategic, and while that remains the case the merger further diversifies its mostly fee-based cash flow.

AMID’s stake in an offshore oil and gas production system and related partners now accounts for 42% of this year’s expected bottom line, while onshore gathering in the Permian, Cotton Valley/Haynesville, Eagle Ford and Bakken is penciled in for another 23%. The rest is due from crude and refined fuels terminals (17%), propane distribution (12%) and natural gas transmission (6%).

Source: American Midstream Partners

Most of both merger partners’ business segments performed surprisingly well last year and have upside potential should energy prices rise. AMID’s sponsor has committed up to $25 million to support targeted cash flow accretion of 5% in each of the next two years.

The unit price slumped from a high of $30 in August 2014 to a low near $4 just 16 months later. A little over two months ago, it was just below 18, only to pull back along with energy prices and the rest of the MLP sector.

It hasn’t helped that the partnership recently filed to delay its annual report after uncovering a material weakness in its accounting. But the resulting restatements aren’t likely to prove significant based on what the partnership has disclosed  to this point.

Meanwhile, the yield is rich and other financial indicators reassuring. I’m adding AMID to the Aggressive portfolio with a limit of $17.