In the case of evep, the g.p. suggests a price to the board. The board is mainly outsiders and they review the price. They do not push it and the gp admits that it is potentially a conflict situation. That said-overall the market has viewed most drop downs as fairly placed and when the firms putting the drop downs into the company have a vested interste via shares in seeing the mlp do well- the drop in pric generally works. Once again, in the past energy prices were rising so even if the price was high at the day of inclusion-overtime the pricing looked good. The MLP needs to add property to increase their payout. SC4
<< "drop down" >>
Enervest and Encap have been major supporters of EVEP's growth.
A "drop down" is essentially the sale of assets from a "related" entity to an MLP. The seller monetizes its producing assets so it can reinvest in higher IRR properties and the buyer exploits them in an MLP structure.
Yeah, good board. Too bad, in spite of all the civility, we're all losing money.
I just hope we're not like the orchestra on the Titanic, politely playing classical tunes even while the water was lapping at their ankles.....
When are they going to do that stinkin buyback -- anyone got any guesses?
In my opinion we are going to make money because high dividend paying stocks will be in demand as a slow economy means interest rates will remain low.The gov. is flooding the system with money which will cause the dollar to go down which is bullish for commodities.Exploration for oil and gas has been greatley curtailed which means when there is a uptick in demand,supply will be constrained.I think next year oil and nat. gas rally and mlps go up big time as ivestors gravitate to high yield stocks.
"I just hope we're not like the orchestra on the Titanic, politely playing classical tunes even while the water was lapping at their ankles....."
Not to be overly negative, but this is my nagging fear.
On the other hand, when I read about people buying oil and storing it on tankers because they expect oil prices to be higher a year from now, that encourages me to be more optimistic.
I suspect that if they do not do the buyback at these prices, they won't do it at all. I have questioned whether they should do the transaction at all and simply deploy the cash into picking up assets on the cheap. In reviewing what BadBernanke mentioned, that this cash came from a non producing asset, that was unlikely to be developed I have changed my mind. In that context, I would think it would be wise to see if the banks would allow them to use the whole 200 million to retire units. I would then think it would be prudent for Linn to use the savings from the reduction in distributions to de-leverage.