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Breitburn Energy Partners LP Message Board

  • rlbeard6734 rlbeard6734 Nov 23, 2010 3:41 PM Flag

    Profit taking

    I decided it has been a nice run from 15 to 20.30 plus distributions so I decided to sell 8k/10k shares I had and have only 2k shares left along with distirbutions of 600plus shares which is bacically my profit to see if it continues but 40% return in 7 months is great enough to take some off table and protect my money. I dont see it going another 40% in the next year. I will redeploy in AAPL and/or COP for now. I want to thank all you that have been so informative on this board. I will continue to watch to see if another opportunity arises or I change my mind but I have watched it go to 7 and back up unfortunately missed the 7.

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    • Nothing wrong with taking profits.This has been a bumpy road but I doubled my position between $8 and $13.My overall picture of the market suggests to me that this as good as most other energy plays.

      • 1 Reply to lmsfs80
      • I have been fully invested along with margin since march 08 so sometimes I have to pick and choose, so I just didnt see the gain here I did somewhere else. I still believe it is a great company with great returns and prospects of more and was not stating otherwise by selling in fact I only sold enough to recapture my original investment. And once I get out of a few positions that I am in I will reenter given price is right.

    • another 60 cents and I might have to get back in.

    • We have entered the more difficult phase of the market, when things are more fairly valued. There are few good opportunities, so one has to decide whether to hold (roughly) fairly valued positions or sit in cash and earn nothing. I think if someone is on margin or 100% invested, then it probably makes sense to raise some cash. You never know when the next buying opportunity might occur. Of course, you would want to sell your "worst" or most fully valued positions first. I do not put BBEP in that camp right now.

      I have not sold any shares yet, but I probably will if it moves much higher. I started buying at $20 2+ years ago, all the way down to $5.50 and back up to around $14.50. I have not done any trades since the spring.

      The company overall seems well run, and they avoided to many problems during the recession. I think their expansion of oil production in Florida is a nice positive. Collingwood might offer some upside as well.

      I would note 2 things of caution for those valueing the company. One issue will be the dropoff in nat. gas hedge revenue over time. The current year is hedged at $8.29. If you drop that to $6 in future years, they would lose $39MM/year in revenue.

      Second, they have about $20MM/year in non-cash compensation. People looking at the EBITDA cashflow tend to ignore that, but it is not free money. Eventually that will result in some dilution for the rest of us. If you add those together, it is over $1/share/year. The first will go away gradually, and if we are lucky it may never happen. However, it seems the glut will continue for quite a while. I have not studied the impact of their compensation plans that closely (has anyone analyzed it?). My main point being, that the cashflow per share might not be quite as good as it appears right now.

      • 3 Replies to cheapstkbuyer
      • I dont agree with all the 5 star rating comments but the point was that I sold because the upside was limited and it had made me a 40% profit and I couldnt see it doing that again even counting dividend that 15% was probably the top. Since reinvesting in AAPL, COP and CLF with proceeds in 2 months they have returned 15%, 18% and 27% so there are a lot of good stocks were more can be made. This is now a grandparents stock, hang on for distributions and not much appreciation. That was not nor is my goal. Appreciation will more than make up for most dividends or distributions, IMO over the long run. I continue to wish you all good luck and glad to see it is up a $1 from where I got out but not regretting the decision even though this is a greatly run company. I just have very high goals for my portfolio growth. Did 40% overall last year and would like to repeat that, mostly due to aapl and cop and bbep. By next november it will be a greater discrepancy If I had held here, IMO. B ut who knows maybe I give it all b ack.

      • cheap good observations. in running my scaled back version of an economic value added model I can derive a unit price value in the range of $22 to $24 unit based on year end 2009 standardized measure value @10% and current debt. I would tend to lean more to the $24 number based on their high level of proved developed reserves; which is indicative of a lower risk of development dry holes compared to E&P C- companies with high levels of exploration risks

    • Correction, their bank debt is now about 200M. Their credit facility will be reviewed the end of November. I would expect that the max of 340M will be reduced somewhat. Remainder of debt is convertibles, about 80 million comes due in 2012, remainder in 2015.

    • I found 12-18 month price targets ranging from C$3.50 to $4.75. If it hit that upper target, it would be 21% appreciation plus 9% distributions (assuming div not cut further) based on today's price. So possible 30% gain potential which is not bad. And if they are successful with the plan to increase oil and liquids production then upside could be greater.
      Yes, this is probably a reasonable entry point for a holding period of a couple of years (higher risk though) may go to mid 3s but is probably closer to lows than highs at this long as distribution is not cut further. I expect it will hang around in the upper 3's/low 4's for a while but if NG prices improve in 2011 or 2012 that should be a catalyst for it to move higher.
      I have been planning to add some more Canadian income payers so I may take a half position.
      Other consideration is US tax uncertainty. If tax cuts expire and dividends go to ordinary income that makes the yield from these Canroys less attractive, in comparison to MLPs which are significantly tax deferred (although distributions taxed at ordinary income rates eventually if/when you sell).

    • Hmmm...don't know how they are forecasting debt at more than 2x present level, if gas prices stay weak, they wouldn't be able to borrow. There debt level now is around 200 million after the recent asset sell.

    • Perpetual Energy (PMT : TSX) - Sell - Target: C$3.50
      Kyle Preston
      Comment: Dividend cut too little too late, debt levels a serious concern; reiterate SELL, lower target to $3.50 from $4.00

      We are maintaining our SELL rating on Perpetual and reducing our target price to $3.50 (from $4.00) following a more detailed review of the Q3/10 results and financial outlook. Our target price is based on a 2011E EV/DACF multiple of 7.7 times. We have updated our model with the Q3/10 results, new monthly dividend (cut to $0.03 from $0.05, versus our forecast of $0.02) and forward guidance. Although a recently completed hedge crystallization will bring approximately $50 million of realized gains into Q4/10, this now leaves the company almost entirely exposed to natural gas prices in 2011 and beyond. Taking all this into account, we now forecast 2011 ending net debt of $590 million with an alarming D/CF ratio of 5.3 times. While the company has made some positive developments on its new light oil and liquids-rich resources plays in the Cardium, Wilrich and Montney, we question how much longer Perpetual will be able to fund this development given its extensive unhedged exposure to
      conventional natural gas. Unless natural gas prices make a remarkable comeback this winter or the company is able to sell some of its oil sands leases to generate funds, we believe the upcoming year will be a very challenging one. Perpetual is currently trading at a 2011E EV/DACF multiple 8.3 times and a P/NAV of 128%, which compares with the Intermediate Producers/Trust peer group average of 7.9 times and P/NAV of 126%.

    • Could be. Might be worth buying a bit down at these levels. If we wait till they show success the price will be higher, after all. And the dividend is still good even after the cut. Maybe I will look at it again.

    • rl what would keep one in bbep who came in around 15 like you and me. just my view

      most important is dcf coverage is over 1.4 almost 1.5. Their goal is bring it down to 1.2. points to continued strong distribution growth for some time to come. safety is in hedge position, new oil wells and manageable debt position

      • 1 Reply to mlpvestor
      • I don't know people, but I am not taking profits here since I have a hard time finding anything I like better. Most of my position was bought at $6 and some at $11 while on the way up, so I have been thinking hard about taking my profits but I don't know of anything that is paying 7.6% (or much more based on my original investment)that is reducing debt(increasing potential to acuire more income producing assets), increaseing dividends, in a business sector that looks like prices (and therefore profits)are increasing and a hedge against inflation.

    • I started selling a much smaller position, will keep a few shares. I'm moving the proceeds into perpetual energy formerly paramount energy trust also a little into prospect capital.

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