While I am now long the stock, I don't want this to be seen as a pump.
NRGY current div is 2.82. They earned 68% in 2011, this includes a number of things including a freakishly hot winter so far.
That means they earned 1.91.
Lets call it 1.90.
they could drop the dividend to 1.60 to be safe and give a buffer, plus lets assume their earnings will be somewhat smaller going forward due to the spin-out (although they paid down a lot of debt with that cash)
At the current crazy drop price, the POST cut div in my scenario is a yield of over 9% nominally. The fed just told you rates aren't rising to 2015.
So NRGY has in front of it:
A) new projects coming online in the next two years that have already been started and are in various states of advancement, with some to be online soon.
b) All the bad news I can imagine already out (worst winter possible for them, terrible cost spreads, div cut, mass hatred, huge cuts in analyst ratings etc)
C) a continued super low rate environment which may give them refinancing abilities.
D) some kind of results from cost cutting initiative.
Why given this scenario above (which I think is reasonable but is in no way the final word) would I expect large further drops from here?
This is not a hostile "What you talking bout!?!" post, actually looking for thoughts.
All of these count in the positives as you mention. However, they will have to issue new units to finance the new projects and that will be much more expensive now. It will lower the returns on these projects and probably also their execution. I would not expect very much from NRGY in the next two years. Most of the new projects would be done by NRGM, which can still issue equity at a good rate and that will eventually help NRGY with their IDR revenue. However, it will be a long arduous ascend, not the quick turn-around that one would like to see.
Also: with the cost of issuing new equity so high, I now expect NRGY to cut distribution much more than I originally estimated. My original estimate was for $1.75/year, based on the same calculations you've done and a typical 1.1X coverage. I read a rumor of cutting to $1.40/year, which I dismissed as too low. I now think this makes more sense. The stock price is not likely to be affected short-term by yield rate; it will be affected by growth, natural gas/propane prices and how cold next winter is going to be. This winter was unfortunately a bust.
I predict the stock to fluctuate between $15-17 for a while before picking up. That won't be for at least another year. As good as the management is, it cannot turn things on a dime. Let's be patient.