The first question every investor should ask when shopping for takeover targets is whether you’d want to own if there were never any deal. Only those with inside information can know for certain if a merger is in the works between companies. And they can only act on it at the risk of eventually wearing an orange jumpsuit.

Both of this month’s Best Buys own attractive energy assets and they’re small. Inergy Midstream LP (NYSE: NRGM) weighs in at a market capitalization of just USD1.75 billion. General partner (GP) Inergy LP (NYSE: NRGY) owns 74.4 percent of the limited partnership (LP), which is its only real asset. It would presumably have to be part of any deal. Given its market value of USD2.9 billion, that likely means a total price of USD4 billion to USD5 billion.

Mid-Con Energy Partners LP (NSDQ: MCEP), meanwhile, has just USD435 million in market value.

That compares to USD3.2 billion for Copano Energy LLC (NSDQ: CPNO), the current quarry of Conservative Holding Kinder Morgan Energy Partners LP (NYSE: KMP). (See In Focus, MLPs: Size Matters.)

By contrast, Kinder Morgan Energy’s market cap is north of USD31 billion, Enterprise Products Partners LP (NYSE: EPD) is larger than USD50 billion and Energy Transfer Partners LP (NYSE: ETP) and Plains All-American Pipeline LP (NYSE: PAA) come in around USD18 billion. Linn Energy LLC (NSDQ: LINE), the largest MLP producer, as a market cap of roughly USD8 billion.

Inergy Midstream’s USD425 million acquisition of the COLT Crude Oil Logistics Hub takes its Marcellus Shale midstream operation to the Bakken Shale for the first time.

The new assets include an oil rail terminal as well as storage and pipeline facilities. Rail has emerged as a critical midstream asset in the Bakken, owing to the lack of interstate pipeline access at this time.

Inergy Midstream’s ability to make such a large acquisition is a major plus, and the purchase is expected to be accretive to earnings.

The MLP was forced to pay 6 percent to issue debt maturing in eight years to complete the deal. That’s still low enough to ensure the deal is accretive to earnings. By way of contrast, however, Enterprise Products’ eight-year debt has a yield of maturity of just 2.7 percent.

Fourth-quarter and full year 2012 results were solid, as the company’s assets continued to grow and produce. Fourth-quarter cash flow rose 8 percent, while distributable cash flow surged 14 percent to USD29.5 million. That produced a distribution coverage ratio of roughly 1-to-1.

Storage revenue was flat, reflecting overall market weakness and gas surpluses. Sales at the Hub services and Salt divisions declined but more than made up for by increases in Transportation services and Oil-related operations, as overall revenue rose 7.7 percent.

On the whole these results suggest a healthy company capable of growing on its own, even if market conditions remain weak. And project additions should keep growth going in 2013 for the distribution.

The prospect of faster growth as part of a larger enterprise, however, may make a generous merger offer too good to refuse for general partner Inergy LP. And the company has several assets that could entice a suitor.

The Marcellus Shale, for example, is likely to see increased activity in coming years, as eastern utilities demand more natural gas to generate electricity and ultimately as liquefied natural gas exports flow from Dominion Resources Inc’s (NYSE: D) Cove Point facility on the Maryland coast.

Rail assets in the Bakken are also increasingly attractive. Plains All-American, for example, has emerged as a major rail player in the region after spending USD1 billion on rail depot projects in the fourth quarter of 2012. And Warren Buffett is a big investor through Berkshire Hathaway Inc (NYSE: BRK/A, NYSE: BRK/B) unit Burlington Northern Santa Fe LLC.

Even if no deal occurs the MLP has increased its payout every quarter since its initial public offering (IPO) and spinout, including a 1.3 percent increase announced Jan. 25, 2013.

That’s enough for us to rate Inergy Midstream a buy again, so long as it trades below USD24.

Mid-Con has only been around since an IPO in December 2011. We added it to the Aggressive Holdings roughly a year ago.

And despite a difficult year for smaller energy producers, it’s nonetheless turned in a solid total return as well as distribution increases in each of the last two quarters.

The 2.1 percent increase announced in late January pushes the payout 4.2 percent above the IPO rate.

And despite the yield of nearly 9 percent, it appears there’s more in store as management executes on its drilling program and navigates the often volatile pricing environment.

We’ll know more about how Mid-Con is faring when the company releases fourth-quarter and full-year results on March 5. But its 97 percent oil waterflood assets in Oklahoma and Colorado are apparently on still on target to meet management’s growth targets.

Waterflood drilling basically involves injecting water into older, mature fields to get at previously uneconomic oil. Using hydraulic fracturing can also potentially further extend those fields’ life. And being located in areas of traditional production means Mid-Con can get its product to market readily as well.

The latter may prove particularly fortuitous in 2013, as new pipelines narrow the price differential between benchmark West Texas Intermediate crude at the company’s Cushing hub and global Brent crude.

Like all producers, Mid-Con is at risk to weaker oil prices in 2013. But so long as production stays on track the company’s small size and success in waterflood technology will make it attractive as a potential buyout target–as well as a long-term energy investment with a large yield. Distribution coverage looks set to improve from a current 1.12-to-1. And there’s no debt due until a USD250 million revolving credit line–on which USD70 million is drawn–is up for renewal in December 2016.

Mid-Con Energy Partners is still a buy up to USD26.50.