Correct me if I erred, but I calculate midstream EBITDA for the first nine months averaged about 40M/quarter. The new estimate of a 2009 total of 175 to 190M implies the next quarter's midstream EBITDA should be in the range of 55 to 70M which equals or exceeds the average quarterly EBITDA for 2008 and is at least double the EBITDA for the 2009 third quarter.
Hence, with a higher EBITDA projection for midstream and higher current oil and nat gas prices, a much better fourth quarter report is likely.
I came to the same conclusion on the number for the 4th Quarter. The financials are confusing (I think purposely so) but this would appear to be management guidance. I think the reason is that Q3 had a realized loss on hedge contracts of $28m on purchased gas, and the increase in prices during Q4 should significantly reduce the hedging losses. I calculate $0.33 in distributable funds flow for Q4 so the payout gets back to less than 60% of funds flow, which is an appropriate number. There are still a lot of things that I do not like in the report and there are still hedging contracts in place for 2010 and 2011 that will show big losses. I see about $150m of unrealized hedging losses on the Balance Sheet (calculated using 9/30 prices) but these should now be much lower as they all relate to conracts taken out last year to buy Nat Gas at $7.83. Without these contracts hanging over the company the picture would be much better.
In the 2008 Annual Report, Letter to the unit holders, they say...
"Provident also completed an internal reorganization of legal entities within our structure to facilitate the eventual separation of our upstream and midstream business units."
That could mean a lot of things, but most likely it all stems from the coming tax law change. Perhaps the upstream ops will split off as a PGH-like trust and the midstream ops reconfigured to an MLP...or perhaps they entertain the idea of selling one or the other or both. Either way my guess is it would result in a higher price for PVX. Meanwhile at current prices or slightly lower, I would imagine the dividend is secure.