.....or what? Last chance to bail out before the real crash? It has been totally obvious for many months that low rates were about to come to an end. This is very old news. That doesn't explain the sudden weakness now. Any rise in rates is likely to be very gradual given the cautious Yellen. My concern is that there's more to the present weakness than we're seeing in the news. We won't see the bottom until Cramer finally throws in the towel and says SELL, SELL, SELL. But that could be 30% below the present price.
skinz, EPD took advantage of weakness in pipe area, that's good as EPD will not fund this with added units but borrowing.
We have not seen the end, MLP's are not REITs
It may be accretive but the price is full. 2.1B for assets generating 100MM cash flow. There's synergy with other EPD assets and locks in condensate supplies for export. Would love to know what EPD's internal cash flow multiple calculation is on this purchase.
The market doesn't seem to think it's good. This is a big time blood-letting. I'm sitting on a pile of cash, but I'm tired of burying it in under-performing garbage. The sentiment is worse now than it was when oil was plunging. I stayed away from bonds because I was afraid of this, so I'm getting it with MLPs instead. I'm exactly even on MMP and down big on EPD.
THE $100mm of cash flow is only the PXD 50.1%..Epd is paying about 10x for all...Good price..Will lock in at least another 5 years of Quarterly Dist. increases.
I'm as frustrated as you in regards to EPD's current unit price. I was expecting high $30s rather than low $30s considering how rock solid the cash flow is and along with it the distribution.
If that is true that is a 21 year "pay back" period...which typically is a horrible investment. About a 3% annual return. What are we missing here ?
Good catch. 10x looks good and will be better in synergy w/ other EPD assets. Classic bolt-on to strengthen growing EPD condensate export franchise.
If this deal is only generating 100mil a year in cash flow, as a prior post states, if that is true that is a 21 year "pay back" period...which typically is a horrible investment. About a 3% annual return. What are we missing here ?
Also, PXD up 4 points on news, I know their does not always have to be winners and losers in these deals, but in the short run their usually is, and right now the independent market is voting that PXD got the better deal. Disclosure: Long EPD
as rachehorse already pointed out PXD owns 50.1% so cash flow for all of it is actually 200 m so EPD is paying 10.8x cash flow, still seems pricey but without I haven't put pen to paper yet and deal does plug in nicely to EPD's export infrastructure vision, the value is greater than in just what they paid for it without that context
No I don't either, EPD is my largest holding, I started buying at 38, now deeply n the red, I'm going to hang on, I still love the long term story.