SMM Salient Midstream and MLP Fund

HOUSTON, May 5, 2022 /PRNewswire/ -- Salient Midstream & MLP Fund (the "Fund") (NYSE: SMM) today announced a distribution of $0.0875 per share for the second quarter ending May 31, 2022. This distribution is payable to common stockholders on May 27, 2022.

At the close of business on April 30, 2022, the Fund's total assets were $223.6 million and the Net Asset Value (NAV) per share was $9.21. On April 30, 2022, the closing share price of the Fund was $7.94, which was trading at a 13.8% discount to the NAV.¹ For the month ending April 30, 2022 the Fund's NAV and market price total returns were -3.3% and -3.6%, respectively, compared to -2.2% for the Alerian Midstream Energy Select Total Return Index (AMEIX).² The Fund's NAV and market price total returns year-to-date (YTD) were 24.6% and 19.2%, respectively, compared to 18.9% for the AMEIX.²

The Fund's second quarter distribution will be payable on May 27, 2022 to common stockholders of record on May 19, 2022. It is anticipated that this distribution will be a combination of return of capital and ordinary income for tax purposes. The final tax status of the distribution may differ substantially from this preliminary information, and the final determination of such amount will be made in early 2023 when the Fund can determine its earnings and profits for the 2022 fiscal year.

The Fund's quarterly distributions per share over the past year are shown below:³

Since the Fund's inception, the portfolio management team has focused on generating top-tier total returns rather than focusing on maximizing distributions. The Fund's performance over multiple time periods versus its peers is provided in the table below along with a ranking of SMM vs. peers. 

Since inception in 2012, SMM is the second best performing closed-end fund on market price and the third best on NAV in the peer group of eleven funds.

SMM's inception to date (ITD) annualized total return (based on market price) of -2.0% has outperformed the RIC Average of -4.0% and C-Corp average of -4.4%. Likewise, on a NAV basis, SMM's ITD return of -0.8% compares favorably to the -3.3% return for the peer group of RIC Funds and -2.4% for C-Corp Funds.

April Market Commentary

April began strong for energy infrastructure equities with a 5% return as of April 20, but a correction late in the month caused such equities to finish down 2.2% as measured by the Alerian Midstream Energy Select Index (AMEIX).^2,4   April's correction came on the heels of energy demand fears with the threat that China would extend its lockdowns to include Beijing and the potential for a global economic slowdown due to the war in Ukraine and higher interest rates. Earnings announcements began in late April with a few large energy infrastructure companies announcing volume growth and healthy earnings increases compared to last year. For the remainder of 2022, we remain positive on the industry as 1) free cash flow after distributions is poised to increase rapidly year-over-year for the industry, 2) hydrocarbon volumes should grow as drilling activity improves and 3) capital allocation remains focused on returning excess cash to investors through buybacks and potential distribution increases.⁵

Crude oil as measured by the West Texas Intermediate (WTI) benchmark was up 7.9% for the month of April and is now up 35.3% for the year.⁴ Crude oil prices have moved sharply higher due to the war in Ukraine. Russia produces ~10 million barrels per day (mmbbls/d) of crude oil, or about 10% of global supply and is the second largest crude oil exporter after Saudi Arabia.⁶ Markets are worried that crude oil supplies may be disrupted which could lead to a spike in prices well above current levels. While sanctions so far have avoided Russian crude oil, sanctioning Russia's energy exports would likely lead to a further spike in global crude oil and natural gas prices. Even if crude oil sanctions are not implemented, we would expect a geopolitical risk premium to remain in crude oil prices for the near future. Should things normalize, we view crude oil prices in the $70-$80 range as being positive for long-term investment in the American energy industry. While the Ukrainian war will have an as yet unknown effect on crude oil supply, fundamentals remain robust as energy consumption continues to rise post COVID. Commodity analysts continue to see a tight supply environment for both crude oil and natural gas in 2022 and potentially into 2023 as energy demand appears to be on trend to exceed peak pre-COVID levels.⁷ We believe that current crude oil and natural gas prices are sufficient to lead to U.S. volume growth in 2022 and 2023, with increases in production already showing up in recent Energy Information Administration (EIA) data. The promise of these incremental volumes should be supportive of midstream companies.

The Fund's top ten holdings as of April 30, 2022 are shown below:⁸

The Fund's unaudited balance sheet as of April 30, 2022 is shown below:

Past performance is not indicative of future results.

Salient Midstream & MLP Fund is a Delaware statutory trust registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The Fund's investment objective is to provide a high level of total return with an emphasis on making quarterly cash distributions to its common shareholders. The Fund seeks to achieve that objective by investing at least 80% of its total assets in securities of MLPs and midstream companies. There can be no assurance that the Fund will achieve its investment objective.

This press release contains "forward-looking statements" as defined under the U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will," and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual future results to differ significantly from the Fund's present expectations or projections indicated in any forward-looking statements. These risks include, but are not limited to, changes in economic and political conditions; regulatory and legal changes; leverage risk; valuation risk; interest rate risk; tax risk; the volume of sales and purchase of shares; the continuation of investment advisory, administration and other service arrangements; and other risks discussed in the Fund's filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Fund undertakes no obligation to publicly update or revise any forward-looking statements made herein. There is no assurance that the Fund's investment objective will be attained.

About Salient
Salient Partners, L.P. ("Salient") is a real asset and alternative investment firm that offers a suite of strategies focused on energy and infrastructure, real estate and tactical alternative investments. Institutions and investment advisors turn to Salient to build smarter, more efficient portfolios. Strategies are offered in the form of open- and closed-end funds and separately managed accounts. Salient was founded in 2002 and has offices in Houston and San Francisco. Learn more about Salient at www.salientpartners.com.

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