Actually he is trying to get the price of ERN up where he has been a board member for many years--ERN is a pos run by an untrustworthy CEO
Are you going to post this on every e&p MLP message board? How much are they paying you? Whatever this guys track record is in predicting the price of oil, you don't think he might just be a bit conflicted in trying to get the price of Shell stock up so that his options or restricted stock awards go back in the money?
I know there will be a rebound in oil prices as all the OPEC counties will cease to exist soon at these prices. I'll put our guys up against SA any time, anywhere. Ed
Hi Marklibera. You are usually sober in your analysis but you are missing something. Any acquisition they do will be accretive to DCF, almost regardless of the multiple. First, they have 60mm in cash on the books. If they use that cash and the asset is cash flow positive, it will be accretive. Second, when they tap their credit facility, they will borrow that cash at 2.5%. So, whatever they buy would have to be fcf negative for it not to be accretive.
Your other point about them sustaining the dividend is well taken. They should cut to a $1 distribution now and use the extra $1 they save this year to buy their sub-debt or keep it for dry powder for acquistions.
What nice gain? I want them to support the stock price, and paying out your cash does not seem to be working. The market is not paying up for a 25% distribution because it knows it is unsustainable. They are in essence eating principal. They aren't covering the distribution now, so what happens when the hedges roll off? Unless commodity prices spike, hedging will be at lower levels than they currently have. Meanwhile they aren't going to be able to do any asset sales at these commodity price levels and they can't buy any assets yet because the prices aren't bargain basement yet. So they are in no man's land and the stock will drift lower. No one knows when there will be a sustained rebound in oil and gas (unless the Saudis announce they are curbing production).
so you want to see a buyback so you can sell your nice gain right? use your brain... not getting an asset with their credit line would be the end, they need hedging
You guys need to do some math. They are paying out a distribution yield of 25%. There are no acquisitions that yield as much unless the price comes down to 4 times EBITDA (i.e. the inverse of 4 is 1/4 which is 25% and that doesn't account for maintenance, the gp share etc.). I think LGCY paid over 6 times. The best thing they could do now is to use the 60mm (which BTW was $75mm when they announced the sale -- what happened to the $15mm?) to buy back stock. In fact, they should draw the entire $500mm on the credit line and buy back stock. The entire market cap is $400mm and they have $560mm in cash and credit.
But you heard it on the conference call. Walker needs the distribution because he owns a ton of stock that he bought at $22. They can't find acquisitions that are accretive to DCF. They can't even do a jv for their Utica assets after having spent 3 years telling us they were worth $1 billion (or $40 per share). They are a deer in the headlights.
I had to laugh at this - even though I know it's a sad state of affairs. Ed cracks me up sometimes.
I am curious why they have to wait until October..? Is that when funds come from their asset sale?
If they are to acquire, are we thinking property similar to LGCY, or another company similar to what VNR has been doing? If a company, what do you guys think of MCEP as a possible target?
oil was up 10% today and EVEP was up 14%. OK I didn't expect that. But what happens if the market goes back down with oil going down another 15%? What if other commodities and treasuries go down? I suspect EVEP will go down with those assets. Will it happen. We will see!
Heres what happened today, Oil went up because US FED Reserve decided not to raise rates in September, this was at best a 50-50 scenario few weeks ago and it became a 75 not raise - 25 will raise in september, last few days. Today reality set in, now, with Oil expected to be lower during winter time vs interest rate hike delay, this may wash itself out and thus create a new wave of oil buying, heres why, first, the dollar will drift lower (next few days and weeks) so Oil will naturally go higher and if OIL is going higher during slower off peak times, what will happen when demand sets back in ?? Today, a Divergence took place, many shorts realizing that this is the EVENT to get off the short horse, ie not necessarily go long but just abandon short position, now the momentum crowd will wait and see, if you get a good solid oil/energy rally, the momentum players aka the "momo" crowd will join in going long, thus you have the recipe for stocks in this battered sector jumping 10-15% a day, they are so beat up, it only takes a whisper to get them moving higher. TIME TO BUY BUY BUY, STRONG BUY!
When you're dead, you don't know you're dead, but everyone who knows you or had to do with you knows it.
It's the same when you're stupid.
You bookmark this post because you will certainly want to remember what was written to you.
Down 90% in three years, biggest day in market in 4 years and this KIng of The POSs is up a GIGANTIC 2 cents. Once again, thanks go to Walker and the rest of his crack (mis) management team!
The price for EVEP is going and will continue to go lower. The bottom is not in yet. The oil turnaround and commodity price turnaround may not occur until December. U.S. interest rates mat be going higher. China is selling U.S. treasuries, and MLPs are affected by commodity prices and interest rates.
EVEP could bottom by the end of summer, but now it might not bottom until December.
Assuming that they fill the full $500-$600mm in acquisition capacity, next year poses an interesting dilemma. If prices just kind of drift up from here by $5 per barrel or so, they will have no problem keeping their dividend at $2.00 for all of 2016. However, all of their remaining hedges roll off in 2017 which will be a $0.50-$0.60 hit to DCF if prices are relatively flat in 2017 as well.
If I were running the show, if I close $500-$600mm in acquisitions, I would cut the dividend to $1.50 and show coverage of 1.3x+ in 2016. I would use excess cash flow to delever or buy back shares.
Agree with this, I'm just curious if they would be satisfied keeping it at .50 per Q if they find something in the next 4-5 months. Which as I said, I assume come October we'll see them pounce on something. With an acquisition done I'm sure they would do everything they can to keep the divi as is even if prices don't recover to well.
It's possible we may finally be seeing the bottom, and with most of OPEC pretty upset with how things are going we may see a shake up soon.
If prices stay where they are and they don't get any deal done, dividend will go to $1.00. They will definitely pay at least one more $0.50 quarterly dividend. This whole thing hinges on them buying as much as they can at the lowest prices possible. Then, if they are able to buy well and we see some sort of rebound in commodity prices in the next 12-24 months, we will be doubly rewarded as the value of what they bought will climb concurrently with what they already own.