This really is outrageous when you compare this fee to the total equity of this entity. Those who are invested for the teaser distribution should be warned. Management taking 15% of the equity for a management fee. What happens the next time they do this.
Better to invest with one of the other MLPs where management does not have such a onerous fee structure. For example, Linn Energy has no incentive fees, no general partner.
I hate to bring this up, but a major financial institution will raise their fees on an equity offering based on their projections of the stock or MLPs future (near and short term) value, which would allow them to recoup their investment through the upward movement of the equity. I don't really understand why QRE is heading south right now, because I read where the amount of imported crude and NG has fallend dramatically over the past year. Hence our domestic producers should be showing record earnings. I feel that somewhere there is a monkey wrench being thrown into domestic drilling by the Obama DOJ, EPA etc.
Even the Russians are raising hell (of all people) that we are no longer subjudgating ourselves to the political whims and tides of the middle east. (RT today report some two weeks ago...real propaganda about how Putin knows best for the world economy. If the PRC are ready to go to war to secure offshore drilling rights in the South China Sea and the Tonkin Gulf, what are the Russians playing at?
"Linn Energy has no incentive fees, no general partner."
and is much bigger meaning it takes much more to move the distribution needle.
Compare LINE's distribution growth over the last 18 months to QREs.
For that matter, LINE's unit price has hardly moved in over 2 years.
Try using your brain power. Linn Energy shares are close to an all time high.
QRE shares are close to an all time low. Why do you think that is? Stock brokers, financial planners, institutional investors are buying into Linn Energy and that is why they will have a market cap of $12 billion after they close their purchase of Berry Petroleum while QRE has a market cap of $700 million of which the GP has not siphoned off 15% of those shares for a management fee. I would be surprised if any analyst, financial advisor, CPA, stockbroker or institutional money manager would advise buying QRE with the management fee the management just collected. Any good financial adviser would tell their client that Linn Energy and QRE are in two different leagues. One is in first class and other is in the minor leagues. After doing my due diligence on both entities I would never suggest someone to invest in QRE.
Just remember, their is a reason QRE is closing in on its all time low in price. The market is not stupid. Just as their is a reason that Linn Energy is near the high of the last 5 years.
They have given up 80% of the Managment Incentive Fee for all future quarters. This is worth about $3 milliion per quarter and has no effect on the distribution coverage. So for next quarter, the Management Incentive fee will be about 750k instead of 3.7 million. At 50cents per quarter, 6 million units will get 3milliion/per quarter of distribution, so it is a wash. There is no effect on unitholders at all.
They didn't take anything, they converted 80% of the manager's cut into units rather than taking cash. In essence, they made an investment in the company. I don't see anything going on that wasn't part of the underlying structure of the mlp. What matters is dcf and coverage, not how they get there.