EVEP's yield needs to rise to inline with other E&P MLPs.
For a while, EVEP's yield has been disconnected with that of the rest of the E&P MLPs which have yields ranging from ~7.5% (LINE) to 11% (QRE). The only reason EVEP has had such a low tield (high price) was due to the sale anticipation. If that is not happening, then it has to re-couple with the rest of its peers.
Put EVEP on the low end of that range with an 8% yield and we get a unit price of around $38.
That would be my target price which EVEP may drift to, so long as there is no movement on the sale.
So there is still another 25% downside. After reaching that target, price appreciation would have to be driven by distribution increases, meaning they better start doing better than .001/qtr.
The $38 target was based on a yield of 8% which is at the low end of E&P MLP yields.
It's starting to look like it may overshoot and perhaps go to the middle of the pack with a 9% yield.
That would imply a $35 price.
I wouldn't expect it to fetch a 10% yield, but if so that would put the price at less than $31.
So I'm now thinking this will bottom in the $35-$38 range, but who knows.
And then it would muddle around in that area unless or until there is some definite news regarding the sale with positive price details.
Well if oil prices stay in the 90s and natural gas gradually recovers and moves back above $5, then you are correct. The value of future cash flow from production is still in EVEP's Utica acreage. If they can't sell it at a reasonable price, they can set up a JV with a bigger E&P company and also drill some of their own wells. It's just more convenient to sell the acreage and buy developed producing acreage somewhere else. As a former M&A analyst, I know that the value is still there and it's just a question of timing of the cash flows. As a trader, however, I also understand that timing of events is really important and this MLP could be under some selling pressure for a while if they don' get this sale done fairly soon. But the LONG-TERM valuation of EVEP doesn't change if they can't sell this Utica acreage at a reasonable price. That said, the markets don't trade mainly on long-term value, so the price of EVEP could drop and then recover later on sales of Utica acreage or recover on a JV and development by EVEP.
If no sale is happening then why should they have such a lower yield than EVERY other E&P MLP?
$38 would only put them as the low end of the yield spectrum for all the other E&P MLPs.
EVEP is not the only one with good assets.
I totally agree and have mentioned that in a couple of posts. EVEP need to increase the distribution by 33% to justify a $50-$51 unit price. Those that bought in the high 60's and 70's on the hype wont end up with a great rate of return. Doubling the distribution (good luck with that) would barely justify the 52 week high. Six thumbs down on your post is silly.
I wouldn't worry about the "thumbs down" on here. There are one or two "pumpers" here with multiple avatars who think it makes a difference, or will use it on every one of an individual's post multiple times (mine usually). I don't care if I get 100 thumbs down...at least they're reading the post.