Only thing I'm not so big a fan of is partial sale of the pipeline to private equity. That pipeline is worth a king's ransom, I'd prefer to hold all the action on it, and resist the pull to delever. 182 miles of 20 inch pipe, with noone else around, in a wet gas area? sheesh, you can't ask for anything better.
I generally agree with the sentiment that it is nice to retain ownership of the whole pipeline, but I cant imagine that Gary did not see the partial equity sale as a means to realize a higher net benefit to MHR at the end of the day. Listening to the presentation, I sense (could be wrong, but this is my impression) that extending the EH pipeline under the Ohio and into the Ohio extension of the play, will be costly (thus, the need for capital), yet very rewarding (as MHR is the first player in the area and will be the only pipeline to contract with for new production getting to market.
Yes, it does sound like the pipeline spinoff schedule has been delayed until late in the year ("hopefully before the end of 2012" were his words as I recall), but I suspect the delays, again, will work in our favor as the pipeline will be larger and the ability to have additional gathering contracts tied down and in place will increase the NPV of the pipeline at the time of the spinoff.
I love the understated tone of Gary's presentation remarks where he sounds like he is not selling anybody on anything, and even indicates he doesnt need to sell anything because his operation is running well on all cylinders. IMO, there is simply no getting around the fact that he has the ship moving in the right direction, he will be tweaking the capex budget to make the ship move even faster by focus on higher IRR development, and -- best yet -- simply comes out and said twice that the listeners could expect the stated production targets to rise throughout the year. Whether the 14,500 target moves to 15,500 or 17,500 is anyone's guess, but it wont stay at 14,500 for very long.
As a long time investor in BEXP before the takeout, I think BEXP made a transition from growing acreage to simply drilling like crazy to increase production over the last 1 to 2 years, and my reaction to the presentation yesterday is Gary is making this same transition. It is part of his "drilling factory" theme and I am tickled to be along for the ride.