EVEP owns thousands of acres in Ohio that is held by shallow gas production (refer to EVEP's latest presentation). CHK is currently leasing open acreage and buying out small operators to gain a major position in the play. It appears to be similiar to the Eagleford Shale in Texas. Theres no doubt that this play is CHK's next unannounced joint venture. Go take a look at GPOR most recent presentation for maps and an overview of the play. EVEP has recently raised equity and issued bonds in order to strenghten their balance sheet so they can exploit their Ohio Utica Shale position. If the Utica Oil Shale is as good as the Eagleford Shale then EVEP will be a $100 stock. Run the numbers: $100/BBL oil, shallow oil above 6000', HBP'd leasehold with no lease expiration issues, CHK gaining major position all around them and currently drilling (core tests) test wells, and a friendly state to the industry to do business in. This is a stock to own for the long haul in addition to a cash dividend/distribution (not all of it is taxable) while you wait. It just doesn't get much better than this. For a bigger bang, own the stock and buy some long dated options. Hang on, enjoy the ride and stay on your surf board. If oil prices get hammered down then obviously this stock will back up some, however with the combination of increasing oil price, weak US dollar, and increasing worldwide demand for oil (China), its one of the best energy stocks to own.
At the IPAA Conference in New York during the week of April 11 presentations were given by CHK, GPOR and EVEP. Aubrey (CHK) said that they have 1.3 million acres in the Utica shale and still buying. John Walker (EVEP) said that they sold CHK some of their leasehold for many $$$ retaining a 7.5% overriding royalty interest and EVEP will also receive a 25% back in after payout (undefined whether on the project or individual well payout). GPOR reported that they had scouted one of CHK's test wells and that it had 150 frac tanks on location (each frac tank holds 500 BBLS. GPOR also reported that each 300' stage of the frac job uses 500 bbls of fluid, therefore it can be assumed that CHK was fracing somewhere in the range of 45oo' of reservior in the horizontal wellbore. The well is located in Harrison County (refer to the GPOR presentation) and its name is the Beuller No. 1. Industry scouts claim that the well has tested at the rate of 15,000mcf and 1,000bbls of condensate per day. Go to website GoMarcellus.com to see a land plat of the well that was drilled horizontally for 7000' on a 175 acres tract. Also, rumor has it that DEVON is buying many thousands of acres in the play and that acreage prices have moved up.
It appears that EVEP is a stock to own for the long term not only because of the yield but because of the large potential growth in cost free cash flow ie the 7.5% orri and the 25% backin.
Go long and stay strong.
the cat's gonna leap out of the bag soon.... Utica will be better than Eagleford... huge oil and huge distillate and loads of nattie gas.
CHK gobbling up all of Eastern Ohio... EV complete DUMB luck... Exco gave EV all the acreage for a pittance and couldn't get to PA and W. Va fast enough to their beloved Marcellus.
Exco walked away from the last LARGEST pure Oil play left in this country
Should be interesting to see what kind of value Walker can wring out of this... it's gonna be huge
Just a couple of points. Some of us are making a lot more than 5% with EVEP. I'm at 10% and haven't been in all that long. The worries that shorts raise are on my mind--yet I can't help noticing how complacent shorts are. Shorts have been losing money--and yet express this amazing complacency. What does it mean--aside from the obvious need shorts have for the market to come down?
Hey nice post. Your good at what you write. and only your 2nd day. But your pitching to some newbies and retirees who can't afford to lose more money in the stock market. My advice is sell/hold but do not buy at these levels. In fact I just sold my long position and now I hold some naked 45 and 50 calls in June. Writing covered calls is the right thing to do if you can't find another place to park your capital. This pump job is almost over and people will realize all Shale is the same, plentiful but not much profitable than the rest. EVEP unit holders will be lucky to get a 1 penny increase this year like they always do.
And last but not least for the newbies, this is an MLP. 5% yield is not worth the tax hassles (I was cursing MLPs on my last tax return), go check out a regular stock with better dividends and lower/easier tax rates. The time to get into MLPs was 2009, the time to get out is looking like 2011 and 2012 before capital gains taxes rise again.
I respect you opinion however, I do like the 5% distribution and the fact that some of it is sheltered because of the flow thru entity that allows deducts and improves the overall yield on an after tax basis. I dont understand your comment on how difficult it is on your tax return because all of the information comes directly from a simple K-1.
Also your comment on shales is incorrect. Due to new technology ie. horizontal drilling and the utilization of high volume, high rates associated with low sand concentration fracing, the EUR's (Economic Ultimate Recovery) have improved significantly. I will agree within a shale basin/trend there will be certain areas that will prove out to be sweet spots and there will be areas that are poor and uneconomic. The game changer has been the new technology associated with higher oil prices. As for gas, the technology has found many years of supply however the gas industry has gotten blistered because gas prices have dropped to $4.00 per mcf which caused most gas plays to become uneconomic. In reality its all about the price, even if you find large quantities of reserves.
I am very bullish on EVEP however I will be the first to admit noone has a crystal ball. Time will tell.