What amazes me about EVEP is not
the company, as it ramps-up to get
something like $1.5 to $2 billion in a
tax-free trade for world-class development
fields with a bunch of existing production,
but investors who are assigning a large
discount now to the share price.
I expect that we will see much higher prices,
somewhere north of 80 when the deal is announced and an analysis is completed as
to where the distribution will be headed to
What do you think?
I believe what my eyes see. I'm not familiar with every area..but am very much aware of Central and South Texas and how the landscape has changed there (here) in less that two years.Go to the EVEP web sight and you'll see they are very much involved with this area of the state. It's astounding! Billboards everywhere advertising $5,000 signing bonuses, farmers charging $2,200 just to traverse their acreage to get to the well. This is only a 140 mile strip in Central/South Texas where EVEP is quite active.
I've always been of the opinion that it's best to Already Be On Board when a stock takes off than to chase it like a mutt. I've been accused of being a pumper and don't mind in the least!! I've witnessed the evolution first hand as have thousands of others...and it's a change unlike any I've ever seen. A side bar, and very attractive feature, is the dividend you receive while waiting: $.76 a share per quarter. It might get better, but I've yet to see it. Get in while the price is low, set your alerts and sleep well. Don't take my word for it, go to the EVEP sight and call up a quarterly report. See for yourself.
I had posted this earlier but below is the Raymond James take on the distribution possibilities assuming an exchange:
Scenario number 2: Flip undeveloped acreage into producing properties. Over the next six to nine months, we believe that it is highly likely that management will monetize its remaining 155,000 net acres in the play while keeping its 240,000 net royalty acres (7.5% royalty). The reason for maintaining the royalty interest is simple: no capital burden associated with the acreage. While it will be a tougher transaction to negotiate, the most tax-efficient way to monetize this transaction is through a like-kind exchange of producing properties. If EV Energy Partners could monetize its Utica Shale acreage for $15,000 per acre, and acquire new producing properties for a 6.5x multiple of EBITDA, we forecast that such a transaction would boost EV Energy Partners’ distributable cash flow (net to LP unitholder) by $6.37/unit, or a 209% increase to our 2011 DCF forecast. Assuming management pays out 80% of the incremental DCF in distributions, that would achieve an annual distribution rate of $8.16/ unit ($3.06+$5.10). Why so accretive? Simply because there would be no financing cost associated with this transaction since the producing properties would be paid for with cash. If EV Energy Partners is able to monetize its acreage at $12,500 per acre, and acquire properties at 6.5x EBITDA, this would still increase distributable cash flow by an astounding 174%. The numbers get significantly higher if we start adding leverage to the mix.
The distribution numbers get much larger assuming a higher acreage price and adding some leverage to the mix. The institutions will move back in to this play when the clarity on any deal is practically staring them in the face. Unfortunately, trying to time that scenario is near impossible and by then the stock will be trading significantly higher.
The stock is up 65-70% since the beginning of the year not including the distributions. Compared with the broad market and most other energy stocks its done exceptionally well. We're in a low volume market during the holidays and the stock needs time to consolidate after all the hoopla over Utica. If you want more excitement go where the daily trading volume is massive like in the single digit names like BAC or SD. I much prefer the behavior here. Don't look for a big story reason for every day's ups and downs. That's the game of the media and day traders. Volume here was light and there were just more sellers than buyers today. Most people just stood pat. Happy New Year.
to most energy stocks.....Can get 9-10 yields on many other stock with much lower prices.....equals less downside risk and higher yields on the others....
Eventually going back to $55 wait and see.....by mid simmer is quite likely...
I have some reits that pay in the neighborhood of 20%. But, eventually I will make more in EVEP. IMO. If you have no faith in this stock, have you ever thought about selling 0ut and moving on to the 8 %, 9% dividend stocks?
Me too Willi. This is currently my biggest stock investment. Just my not so humble opinion, but I think the share price is going to double at some point in the next two years or so.
You just never seem to know when a particular stock will move. It can be stagnant for a long time and then suddenly start moving. This was originally a stock I bought for income and I never anticipated the price gain. Since then I've been slowly adding to my position. It will probably start going up again one of these days. One day I'm hoping to wake up and discover we are all richer than Warren Buffet. (Not the guy with the parrot and the pina coladas, the other one.)