BTW, you are correct that the proceeds of those asset sales went to pay down debt, but the other side of those transactions flowed through the P&L.
Without a secondary, they will very likely need to go to the revolver to fund the difference between the $25-30M they say they have approved and the $75-100M they actually need in purely growth cap-ex, just for 2010. If they go to the revolver, do you not think any distribution may be delayed a quarter or two?
Funding growth thru debt is common in MLP world. The only issue is this: is it wise and accretive to earnings above the cost of the debt? In this credit crisis we have gotten the idea that debt is bad. It's not if it's used in a judicious and wise way. So, the use of debt for growth could actually increase funds available for distributions. It's all in how you play the game.
I understand how MLPs normally fund growth but XTEX is not in a normal situation just now. They have been busy selling assets as fast as they can while they try to save the business, and they've been successful to date. Now they have to make money with the assets they have left. Their fate is basically tied to two shale plays; I think they need the revolver--and maybe a secondary--primarily to preserve their competitive position in those plays.
I assume you would rather they not touch the revolver to fund 2010 distributions.
And, yes, growth cap-ex usually generates cash flow, but not usually in the same year. And XTEX does not have a spotless record in that regard, or they would not have been forced to sell all those assets they bought in the last few years.
I think XTEX will survive, but I'm not willing to put any money on it, at least until they put together a couple decent quarters of good DCF from operations.