Just my opinion but the company is worth well North of $50 per share, especially after the Atlas acquisition. Time will tell.
Interesting the last few days...especially today on downdraft in the markets and NGLS keeps chugging along. Interesting. I wonder what's going on behind the scenes.
price action makes me think somebody is sniffing around NGLS for a buyout right now. $50 bucks right now would seal the deal.
I am thinking this will become a target in 2016 so I am definitely thinking a bit longer term. Plus, some of my holdings in NGLS are a few months shy of that magical 1-year capital gains rule so am in no hurry. We need the O&G markets to find the "new normal" whatever hat might be.. My guess is $70-75 oil and $3.25-3.50 gas by the end of 2016.
One thing is for sure ......... still going to need to move this stuff through the pipelines, store it in terminals, processes it for sale, and coming soon ........ increase exports to foreign markets.
I believe $80 per unit is doable. $100 might be a stretch!
Good luck longs!
I definitely share your positive outlook for the long term of NGLS. As for as takeout is concerned, I agree this would be a good fit for some other, larger companies, but I think your target for the price range is too aggressive, at least in the shorter run. In the current market, I wouldn't expect anything much north of $60ish. That said, as things stabilize and NGLS continues to grow, a longer term acquisition target price could get as high as you say. Honestly, the market cap of NGLS currently makes it quite an easy purchase for most larger players.
Sentiment: Strong Buy
NGLS is going to make us true longs a LOT of money. The Atlas acquisition already is showing signs of tremendous synergies and provides for significant and expansion and growth. I am a little leary of the extra $1Bn of debt the company took on but when we get $60-65 oil and gas north of $3.00 it will be no worry. Profits will come back up and distributions will increase, Joe Bob know how to run this company and once the oil market stabilizes (usually 12-15 months after a shake up ...... Thanksgiving is the 12 month period) we might see some other companies attempt to take over NGLS in the $80-100 range.
And we enjoy a nice 1:1 dividend LONG TERM coverage ratio which yields me about 9% at my entry points. NGLS is going to pay for the home we are going to build in Lakeway!
KEEPING THE LONG TERM FAITH IN NGLS!
You don't even know the definition of a Ponzi if you think this is one. The frac spread has been negatively affected but has stabilized. Natural gas production is going UP and not down moron, They have a 1.0 to 1 long term distribution goal and no reason to believe it cant be maintained. The notes are being used to complete growth CAPEX and finish out some connections from the Atlas acquisition and NOT to fund distributions.
What you don't seem to understand is that 1) with the Atlas Pipeline acquisition Targa now owns the entire supply chain of natural gas liquids from the cryo processing/processing of wet gas through fractionation to the Houston Ship Channel loading facilities filling ships for export..2) this set of assets is not easily duplicated by new competitors especially in these tough times and 3) when the business firms up as it will Targa is going to make us a ton of money..So,hey..enjoy some heavy distributions while you wait..since they seemingly sold the notes the distributions will be coming for awhile...and next year when ten plus Gulf Coast crackers gear up on ethane replacing naptha and Japan takes more propane from Targa through an enlarged Panama Canal Life will be good...
Debt to EBITDA is around 3.8x before these two notes which will total $1Bn which will bring Debt to EBITDA to 4.5x WHEN IT IS FUNDED by the Revolver. But this will be slow as they will pay off the Revolver with the proceeds. With a long term dividend coverage ratio of 1.0 they do NOT need to borrow to cover dividends. I have concern with the additional debt but this is not an automatic failure at all. If oil recovers to $70-75 and gas to $3.50 they will look like geniuses, This will clear out the Revolver which will then be used to fund the expected CAPEX of $700-800MM for the year. Moody's rated the new debt Ba2 and confirmed this rating for the company with a stable outlook. that is one grade below investment. This is a large company with ready access to capital markets.
It's a Ponzi. NGL is not NGLS. The frac spread this quarter is half of what it was last quarter. That's why NGLS is trying to sell notes now. Third quarter was terrible. Natural gas production is going down. Not good. Moody's shows itself to be as clueless as they were during the subprime fiasco. There is no distribution coverage as they have to keep investing to keep EBITDA flat to declining slightly. You better hope some idiots buy these notes, because if not, the distribution is going to be cut severely.
Motley Fool article...
Master limited partnerships are known for their above average yield, but investors need to look beyond yield and seek out these five qualities in an MLP investment.
In an era of low interest rates, income investors are hungry for yield. One area that has been satiating that appetite for income is master limited partnerships, or MLPs. However, investors should avoid investing in an MLP based solely on its current yield. Instead, investors should look for the following five characteristics in a potential MLP investment.
1. A master limited partnership should have a bounty of fee-based assets
As we've seen over the past year, commodity prices can change on a dime. That can have a devastating impact on companies that derive their income from commodity prices as it fluctuates with those prices. That fluctuating cash flow isn't something income investors want because it could cause an MLP to cut its distribution.
Because of this, investors should seek MLPs that derive most of their income from fee-based assets because this provides stability. A good example of this is Targa Resources Partners (NYSE:NGLS), which continues to steadily grow its fee-based income as we can see on the slide below.
SOURCE: TARGA RESOURCES PARTNERS INVESTOR PRESENTATION.
Just a quote from Berkshire...
NGL Energy Partners LP (NYSE:NGL) today reports an expected increase in the Company’s Adjusted EBITDA guidance for fiscal 2015 to $425 million or greater. Previously NGL reported Adjusted EBITDA guidance in the range of $410 - $425 million for the fiscal year ending March 31, 2015.
Looks like EBITDA is in fact going up, not down. Even in this environment.
And it's a "distribution". Not a dividend, shorty.
They are borrowing to pay the dividend. Their operating cash flow barely covers their capex requirements. This like many other MLP's is just a Ponzi.
"use the net proceeds from the offering to reduce borrowings under its senior secured credit facility, and will use any remaining proceeds for general partnership purposes, which may include repaying other indebtedness, redeeming or repurchasing some of its outstanding notes, working capital and funding capital expenditures and acquisitions."
Unsecured? In this market? With debt to EBITDA at 5? With EBITDA going down? If this flies, it will tell you that Wall Street is good at selling subprime #$%$. They obviously need to borrow to pay any dividend. If this fails (and it should), look out below!
5 Things Targa Resources' Management Wants You to Know
These quotes from Targa Resources' most recent conference call shed some light into what management is thinking about today and the future.
The last couple of years have brought about loads of changes to the oil and gas space, and one of the companies playing a very interesting angle on those changes is Targa Resources Corp. (NYSE:TRGP). Today, it is one of the largest exporters of natural gas liquids, and it is looking to expand that business even further with the export of other oil- and gas-based products in the future. On its most recent conference call, Targa's management discussed some of the achievements in this export business and how it plans to grow its business through both the parent company and its limited partnership, Targa Resources Partners (NYSE:NGLS). Here are five quotes from management that highlight what it is thinking today.
1. Our Atlas acquisition really helps one corporate entity
Last year's acquisition of Atlas Pipeline Partners was a bit of a transformative buy as it gave the company a natural gas and natural gas liquids system that could deliver from the first mile of pipeline all the way to end markets with its export facilities. From an operational standpoint, it makes the company a better operator, but from a financial standpoint, it's pretty clear that the parent company is receiving the better part of the deal:
Our distributable cash flow for the quarter of $219 million resulted in distribution coverage of approximately 1.1x based on our second quarter declared distribution of $0.825 or $3.30 per common unit on an annualized basis. The partnership's second quarter distribution represents a 6% increase compared to the second quarter of 2014. At the [Targa Resource Corp] level, the second quarter dividend of $0.875 or $3.50 per common share annualized represents a 27% increase compared to the second quarter of 2014. -- CEO Joe Bob Perkins
Because of the struct