Forth Worth, Texas-based Encore Energy was formed in February by Encore Acquisition Co. to acquire, exploit and develop oil and natural gas properties and to operate related assets. Encore Energy plans to raise about $172 million from the offering of 9 million units, which are expected to price between $20 and $22, and to use the proceeds to repay debt.

"This space has seen a lot of activity over the last two years with the proliferation of cheap debt and a strengthening of the commodity pricing environment," said Sam Snyder, a senior analyst at Renaissance Capital's IPOHome.com. "These structures have been really attractive investments."

In a typical corporate structure, a company pays taxes on its income, and the shareholders pay taxes on the company's dividends. Owners of an MLP only pay taxes on their individual portions of the MLP's income, gains, losses and deductions. MLPs make distributions that are similar to dividends. The size of the distribution drives the value of the units, which are equivalent to shares of ownership.

According to IPOHome.com, 22 limited partnerships have gone public since the beginning of 2006. The 10 MLPs trading at the highest percentage gain over their offering price all went public last year, according to Thomson Financial.

Shares of Constellation Energy Partners LLC, which went public in November of last year, are up more than 100 percent over their offering price of $21. Likewise, shares of Breitburn Energy Partners LP, which went public in October 2006, are up roughly 70 percent over their offering price of $18.50. Both are oil and gas exploration and production companies like Encore. And both companies have increased their cash distributions to unitholders since going public.

Scott Sweet, managing director of research firm IPO Boutique, says Encore's initial distribution rate of 35 cents per unit is fairly attractive and will likely increase based on the company's production and the amount of cash it generates.

Some MLPs have been stagnant of late, though, due to fluctuations in oil and natural gas prices and the increased volatility of the market. MLPs by nature depend on completing acquisitions to drive growth, and when credit spreads widen, acquisitions become less accretive, Snyder said.

But being backed by a large, publicly traded company, which will provide Encore with a steady cash flow, is a definite plus, Snyder added.

Encore Energy plans to list its common units on the New York Stock Exchange under the symbol "ENP."