C172 pilot reported an engine malfunction during initial climb from a non-towered airport in night visual conditions. The engine malfunction limited the ability to climb and the pilot was able to maintain an altitude to continue 20 miles to the destination airport and landed safely.

Narrative

During a my night flight on Day 0; at After departing Runway X at ZZZ airport; I experienced substantial loss of engine power on the climbout at 300 ft. while turning crosswind from the upwind leg. At the moment the power loss occurred we were just passing 400 ft. and the engine dropped from 2500 RPM (full throttle for climb-out) to 1900 RPM. When the power loss occurred I assumed that it was an engine failure and set the aircraft pitch for best glide. I began running through the engine failure checklist and realized the aircraft's engine controls had not been displaced from the climb settings: Mixture was full; throttle full carb heat in and tanks set to both. I also realized that the engine RPMs were no longer decreasing and that engine oil pressure not decreasing and engine oil temperature was not rising (there were no signs of an impending engine failure). After a few moments of adjusting the pitch I managed to stabilize the airplane at 75 KIAS and then 80 KIAS with no more losses in altitude and no more losses in engine power.As I analyzed the situation I determined that a return to ZZZ would not be acceptable as I could not risk losing the engine entirely while being over open water at that altitude that I was at (300 ft.). I scanned the area ahead and determined that my best course of action was the to stay over a lighted highway and maintain my airspeed and my altitude as that would allow me time to further assess the situation. I knew that based on my location that turning north and heading for ZZZ1 Airport was not a good idea because of the presence of towers listed on the chart space closely together at heights between 300 to 600 ft. I decide at that point that it was best to continue to the east over a major lighted highway and to keep myself in a position to land the airplane on the highway in the event of a full engine failure. It was at the this time that I decided to test the climb performance of the airplane. I was able to set pitch for climb at a speed of 68-70 KIAS and climb to an altitude of 700 ft. but I was unable to climb any further above 700 ft. with the reduced power that was available to me (holding steady now at 2;000 RPM).I began communicating with ZZZ2 Tower about 20 miles from the field as that was my intended destination. I was following highway XX east at the time and explained to them the details of the engine indications that I was experiencing; my height above the ground; aircraft speed and intentions. My wife was with me in the airplane and I asked her if she could pull up Maps to verify the road that I was following. I then asked her if there was a north south round that I could follow on the way to ZZZ2 Airport. Having lived in the area for about 10 years I knew that highway XY; was sure to be close and that it too was a wide enough lighted highway to permit a safe engine out landing if the engine were to fail completely. I was advised by the Tower at this point that ZZZ3 Airport was off to my left and that 'I can do whatever I want… I may proceed as to ZZZ2 or proceed to ZZZ3…' they did not advise me on a course of action but simply notified my of its location and informed me of my options. At that moment I realized that my position south of Both ZZZ2 and ZZZ3 was really equidistant and that either airport could be a viable option. My only concern with ZZZ3 Airport was that it is surrounded by dense housing and that there were some towers west and south of the field at about 200 ft. and 300 ft. I decided to continue on Highway XY north and track for ZZZ2. Based on my position at that moment I determined that ZZZ2 Airport was my best course of action for the following reasons: 1) the absence of densely populated areas on the approach side of Runway Y; 2) that absence of towers at or above 300 ft. within 3 miles of the approach end of Runway Y; 3) The presence of a large pasture on the approach end of Runway X that would permit the safest engine out landing opportunity; safest for both us in the air and the people on the ground; should the engine fail completely. I asked my wife if there was an east west road that we could follow to ZZZ2 and she was able to identify a street which I turned to track eastward. I announced my intention to ZZZ2 Tower and set up for the approach into X. I conducted a no lap landing keeping altitude and airspeed for as long as possible until I was in a position to the make the field i.e. a no flap landing that was high and fast. I maintained 80 KIAS down to the runway and only reduced power during the roundout and flare. We landed safely on the runway and taxied under our own engine power. Airport Operations met us on the south east ramp and obtained our information.Engine Power loss is a serious event especially when piston powered airplane loses 500 RPM and is not able to climb above 700 ft. or hold an airspeed above 80 KIAS. This event was complicated even further and made more dangerous by that fact that this happened at night and during a departure from an airport that is surrounded by water on 3 sides sandwiched between obstacles and towers of varying height. The decisions that I made throughout this entire ordeal were guided by what seemed to make the most sense from the perspective of safety. Most importantly I wanted to be in a position to make a safe engine out landing at all times. I believe that after I experienced engine power loss that my flight profile was in accordance with 91.119 (a) Anywhere: An altitude allowing if a power unit fails; an [priority] landing without undue hazard to persons or property on the surface. I was always in a position to make that [priority landing] without landing on a wide well lighted highway and I attribute my knowledge of the local area. I chose not to [request priority handling] because the situation was not deteriorating. The airplanes airspeed; altitude and engine performance had stabilized and no deviations of instructions by ATC were made. No airspace violations were made either. Perhaps the most critical moment of the whole ordeal was the first 30 seconds when the power loss occurred. With altitude decreasing and an airport 3 miles behind me I can see how an inexperienced pilot might have tried to return to the field with low altitude; high angle of attack; and lower available power setting using excessive bank (most likely uncoordinated) to position the aircraft back to a landing point. That problem with that decision is the high potential for an unrecoverable stall/spin situation at very low altitude. When the power loss occurred my first course of action was to stabilize the airspeed on a straight ahead course: either best glide (if truly power out) or whatever speed the aircraft settled at. By the time the aircraft had stabilized the course took me to the first highway that I followed. The next logical thing for me was to continue the course and maintain my ability to land the airplane safely at all times.