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Legacy Reserves LP Message Board

  • m20m75ph m20m75ph Mar 26, 2014 6:39 PM Flag

    Acquisition

    Looks like a sweet deal - maybe 5x cash flow - gonna be very accretive at that price.

    Ironic that it got announced today as LGCY flirted with its 52 week low.

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    • I must say that I am surprised that this clearly accretive acquisition, which addresses the concerns that were expressed by critics about possible slow cash flow growth, hasn't been reflected at all in the unit price. We remain near 52 week lows.

    • Mgt said they didn't want to pay too much and they were worried about frothy prices in the permian. Looks like patience and discipline paid off for them.

      Also interesting that they didn't play the analyst's game by ponying up guidance numbers that were dependent on acquisitions - they got punished for that by JP, but now look who is going to look bad - JP claimed LGCY would be sub 10 percent total return this year and that investors should redeploy capital into other MLPs. we will easily see more that 10 percent this year and LGCY has the best mgt team of any upstream except VNR.

    • it does look like a very good price, 12$/bbl. in the ground when many deals are done @20$+. unless royalty % is unusually high or extraction/production cost are out of the norm this should work well. small unit holder looking to add along at a hopefully good price, don't plan on holding more than ten or fifteen years.

 
LGCY
11.50-0.430(-3.60%)Feb 27 4:00 PMEST

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