Are these assets really suited to the MLP model? Or should they sell them and invest the proceeds in more boring, mature, long-lived, predictable type type assets?
The way I remember it was that was the start of a meteoric price rise. I held ATN and was bummed that they converted and eliminated the distribution. But I held on for another year or two and made pretty big capital gains. From memory, it was about $10 when they announced merger with ATLS and 1-2 years later I sold at $40-ish. Still would have rather kept the MLP though.
That's exactly what happened, I owned atn at the time and sold that day. They stopped the dividends ( I know, they are not dividends)and the stock tanked. I followed them for quite some time just to see if I made a bad decision to sell. Needlessly to say I was very happy with that decision. I followed it for a least year and I don't think it ever got back to the break even point. I don't know how I would have stood after Chevon bought them out, by that time I was long gone. I do know for sure I do not want EVEP to follow that route.
They are not going to convert to a C corp. You have to remember that the MLP has value to the parent, Enervest, as it is. Enervest, if they choose, can take the risk like a C corp. They have already mentioned in a previous call that they have to be careful how they handle these assets because of their MLP status.
I think you can trust John Walker to do the right thing. Just relax, give him some time and enjoy the ride. This is a gift, unexpected in an MLP. Everything is contingent on the Utica, but it appears things are working out from the one who knows-Aubrey McClendon.
Here's the way to look at this-ask the question; what will the share price and distribution be in two years. If you can't do that, you're in the wrong asset class. Go find a C corp. Five to ten years from now Utica wells will be dropped down into EV having experienced their major decline and morphed into low decline wells, just what fits the MLP.
The future looks bright. Take the long view.
Liza, I'm not sure what you're asking here.
EVEP is an exploration and production company, like LINE, ENP, LGCY, and others. They invest in properties to drill. Are you asking whether they should change their business model?
That's not exactly true.
E&P MLPs tend to be more development and production rather than exploration. The exploration side tends to be done by C-corps.
The MLP E&P model (similar to royalty trusts) is typically based on production of mature, low decline, long life assets, not risky exploration of the latest hot play.
For that reason, I question whether these Utica assets really fit that model.
Yes, I believe they are more likely to sell and invest the proceeds in more typical proven MLP properties.