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EV Energy Partners LP Message Board

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  • marklibera marklibera Nov 11, 2009 6:13 PM Flag

    Dividend

    There are many on this board who could probably provide a better answer to your question, but I'll try. The exploration and production MLPs ability to grow and continue to pay good yields depends on many factors but the keys are: 1) that their properties continue to produce energy that can be sold at prices that produce the required return on their investment, 2) that they can acquire more properties that add to their revenues and replace any properties that are not as productive or declining, 3) that the price that they can sell their oil and gas is stable or allows them to acquire hedges at prices greater than what it costs to produce plus overhead, and 4) that they can get financing in the form of bank credit facilities, debt and equity on good terms that allows them to acquire such properties that add to their cashflow without overpaying for such properties.

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    • Thanks for your reply Mark. But doesn't the low cost of natural gas hurt all these MLP's.

      • 2 Replies to lwhilby
      • To some extent the current low price of nat gas hurts (possibly more from a perception), but you have to remember that they buy hedges out several years and the price of those hedges can be significantly higher than the current price. Their hedge info is in their reports. Current low nat gas prices presents opportunities for them to buy properties from overleveraged owners who may not have hedged or who need to sell to fund other projects.

        The great thing about this company is that they seem to be very disciplined about buying properties. They said in their recent conference call that they target a 20% return. If a property's price doesn't meet that standard, they won't buy. Then they are good at operating the property and knowing when to hedge and how much of their production to hedge. And you don't have to worry about the CEO buying the stock on margin like CHK's CEO.

      • "doesn't the low cost of natural gas hurt all these MLP's."

        like the hurt I feel when I have to downgrade from 1st class to business on the flight to London -

        maybe it makes them a little less comfortable.

 
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