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Chesapeake Midstream Partners, L.P. Message Board

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  • lner2512 lner2512 Sep 13, 2010 12:30 AM Flag

    Incentive distribution rights

    An IDR of 50% has not been uncommon for MLPs, but there is a move toward eliminating the GP that collects it. SPH, BGH, NRGY and most recently EDP, among others, have or are buying their GPs or eliminating the IDR split.

    As a newborn and controllee of CHK, I doubt CHKM can follow that pattern, however. CHK will likely drop down lots of assets to CHKM, because CHK wants/needs the cash. But CHK also will want the IDRs. I expect asset drop downs will benefit CHKM's distribution rates and market value, but that benefit will be less and less as they approach the "high splits". That'll probably be a good time to review my investment thesis on CHKM!

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