This story was updated at 2:46 PM CST. Check back for updates from the Midstream Finance conference throughout the day.

DALLAS—As public equity has moved farther away from the wellhead, private equity and preferred equity have stepped up, according to Brian Best, executive vice president of commercial and corporate development at Vaquero Midstream.  Best made his comments while leading off the afternoon session of the inaugural Midstream Finance conference at the Fairmont Hotel in Dallas on Oct. 23.

It’s a trend that has been developing for quite some time. In July, Wil VanLoh, CEO of Quantum Energy Partners, told Hart Energy that from 2010 to 2014, private equity’s share of the A&D market grew from roughly 10% to 50%.

Best said the biggest risks are the producer risks and the basin risk, and he asked hypothetically, will the producer succeed in the basin? “Tremendous amount of risk that midstream guys are taking on today,” he said.

Ben Davis, a partner with Energy Spectrum Capital said that to make a partnership succeed, the sponsor must align interests economically and the management team must invest their own dollars.

Michael Casey, managing director and head of midstream for Goldman Sachs, continued the conversation about distribution spending. He told attendees that the sector needs a period of stability and consistency to bring capital back into the space. In other words, no distribution cuts.

Investors have been burned by capex being maintenance funds in disguise, added Samir Kayande of RS Energy Group. He said companies that beat production and raised capex were punished by investors.

Earlier in the day, Alerian’s president and CEO, Kenny Feng kicked off the conference by telling attendees not to expect much change in the energy mix over the next 20 years. Feng told the audience that not only is the energy mix expected to remain consistent, but also the U.S. sits on the low end of the cost curve.  

He reminded the oil and gas industry executives in attendance that the key to success remains capital efficiency. "This is a growth business," he said. "Growing the distributions of cash other than the rate of inflation is a bad use of that capital. Leverage targets need to come down."

Alerian's Kenny Feng and Drillinginfo's Bernadette Johnson were the first two speakers at the inaugural Midstream Finance conference in Dallas. (Source: Hart Energy)

On prices, Bernadette Johnson of Drillinginfo said the tight global oil market means upside price risk, but very little downside. She told the audience not to expect $50/bbl any time soon.

As far as natural gas prices are concerned, Johnson said that unless LNG exports grow dramatically—which they won’t—natural gas could drop as low as $2.15 by 2023.

She also touched on the Permian’s bottleneck saying, “I don’t see us solving the Permian gas takeaway this year, next year, probably the next.”

Meanwhile, Mark Huhdorff, managing director at Raymond James, discussed investor attitudes in the midstream sector. “We’ve seen a general investor apathy about energy. The midstream market is one of the weakest since the recession,” he told the audience.

Gerry Spedale, a partner with Gibson, Dunn & Crutcher, weighed in on the deal market. He indicated that the midstream market is largely seeing asset-level joint ventures. “There’s a whole lot of flexibility, he said. “[Companies] are able to take care of the midstream side and the private equity side.

Stay tuned for more coverage from Midstream Finance, including a look at midstream’s long-term trends and how private equity promises to be a factor in midstream finance.