A lot of people are assuming NRGY will at some point drop down its remaining midstream assets to NRGM and subsequently NRGM will buy out the IDRs of NRGY in a merger akin to what NRGY did when it bought NRGP.
If so, what was the point of spinning off NRGM in the first place? Seems like MRGY could just have done the propane sale and they would already be in the same place these roadmaps are leading. Why go through the expense of spinoff and re-merger to end up back where you started?
Just a few comments on that Seeking Alpha article. When the author first published it, he forgot to mention the distribution cut. He also mentions the analyst upgrades without mentioning that the upgrades were to "neutral" and "market perform" which are hardly ringing endorsements.
There is a certain connotation that the "midstream" MLP space is where the value is, but part of that is based on the "gathering and processing" MLPs like MWE, EDP, NGLS and APL that have all had excellent stock runs and distribution increases. I'm not sure NRGM's business (and the remaining parts of NRGY) is exactly equivalent to those companies' businesses yet, but it is easy for Seeking Alpha writers to pronounce that all companies in the midstream space are equal and deserving of the same value metrics. Now that NRGY will be rid of propane, it may be easier to see how the storage assets really are performing and whether they are deserving of the higher value of a "midstream" company.
The new distribution post-sale for NRGY is going to be $1.14, not $1.50 as you state.. Yes, a unitholder will get $1.50 COMBINED from NRGY and the SPH shares, but the distribution on the SPH shares doesn't factor into a price calculation for NRGY. So the share price of NRGY post-sale depends on whether the market thinks a 10% or an 8% yield is appropriate. At 10%, the shares trade at $11.40, at 8% they trade at $14.25
If everyone so happy abt selling the prop. biz then why would we all not sell the SPH .11 when deal is closed as SPH all prop. biz--- better yet sell NRGY now since we got the pop in price --any thoughts please