Atlas Pipeline Partners, L.P. (APL) and Holly Energy Partners, L.P. (HEP): 2 Under-the Radar-Pipeline Companies

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U.S. energy production is higher than it has been in decades, and as a result America's pipelines and processing centers are booming as well. Giant midstream companies such as Enbridge Inc (USA) (NYSE:ENB) and TransCanada Corporation (USA) (NYSE:TRP) get a lot of press, but across the country there are many smaller, unheralded midstream outfits that may make great investments as well.

These companies may be potential buyout targets, destined for incredible growth, or about to go bust -- and they are worth a little research. With that in mind, today we look at two under-the-radar pipeline companies.

Atlas Pipeline Partners, L.P. (NYSE:APL)Smooth sailing ahead? Atlas Pipeline Partners, L.P. (NYSE:APL) was one of the best performing midstream stocks of 2011, but it was also one of the worst performing midstream stocks of 2012. Investors may be slightly more willing to tolerate erratic periods of unit price performance if Atlas was willing to increase its distribution. And it is.

Atlas announced that it's increasing its distribution to $0.58 per unit, marking the ninth increase in the past 10 quarters. As fellow Fool Matt DiLallo pointed out last week, a pattern of increasing distributions bodes well for share price over time.

Of course, the underlying fundamentals are what drive that distribution growth, and that's where investor focus should be this year. Atlas is taking steps to mitigate its year-to-year volatility by increasing its fee-based revenue.

At the end of last year, Atlas announced its plan to acquire Cardinal Midstream. More than 80% of Cardinal's gross margin is attributed to fixed-fee contracts. Absorbing those assets will go a long way toward smoothing out Atlas' performance.

Steady as she goes Holly Energy Partners, L.P. (NYSE:HEP) missed analyst expectations on EPS by $0.01 but beat revenue estimates by close to $10 million. The stock is up nearly 30% over the past 12 months, gaining 15.3% year to date.

Holly Energy has the sort of stable revenue that most midstream outfits are striving for: 100% of all revenues are fee-based, and it has zero exposure to commodity risk. The company benefits from a close relationship with HollyFrontier Corp (NYSE:HFC). The Midwest refiner has a 42% stake in the midstream company and has signed long term pipeline and terminal agreements that guarantee stable cash flows for Holly Energy.

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