After seeing below that ML/BAC. has a one year PO of $60/unit for MWE(Thank you,n2m88 for posting it!) I began to wonder what MWE's unit price might be in 2016 after NYMARV'S "2014-2015 Golden Age " for G&P MLPs like MWE? If in one year MWE is above $60/unit I have to believe that in 2015 MWE will be at $70/unit easy followed by a boost to $80+/unit a year later...then we should have a split and a further rise....it's kind of amazing to think that it wasn't long ago that our Buy and Win was pushing MWE at less than $10/unit...I listened, and my wife thanks B&W,too: The Lexus in her Christmas stocking this year will be funded by MWE aND iTs' Marcellus elves!!!
Don't forget to buy one for yourself also. And don't forget at $60 per unit you only have to gift about 430 units to each of your children (If you don't have too many I'm sure they'll figure out how to spend them. You will also find out who is a saver and who is a spender.
Actually we are almost at $60 now so I'm guessing that you are being very conservative. I believe like Nymarv that MWE's golden years are ahead are ahead of them and I believe at current prices, MWE is dirt cheap and a compelling buy.
. My premis about the golden years is because of the following. EPD has approx 6-8E B of projects being completed next 2-3 years. WPZ WMB ACMP finishing their footprint of NG pipelines of the eastern coast to Canada and another 6-10B projects add KMP KMI CPNO EPB , PAA, OKE OKS, ETP ETE SXL RGP, all having similar massive projects totaling the billions of the majors. A major shift to fee based companies as oil prices fall and NG rise. A major shift to export of propane, export of LNG, butanes and gasoline, closing in on 80% of our domestic needs from Bakken,Permian,Eagleford,Gulf and Utica along with Canada. all in next 2-3 years. L:astly, almost every day news of cars and trucks switching to NG Propane with stations accross the nation and the private sector leading the inept obtrusive politically charged present administration in changing a useless bankrupt energy policy.
To calculate the price in three years you have three major factors and only one of them is within the control of MWE.
#1 - Is the demand going to rsie to make the price of NGLs rise in the future. For 2013 this looks doubtful according to everything I have read and what I have been told by company execs including MWE. By mid year 2014 this looks more promising and by 2016 things look good as exports increase as well as fractionation capacity.
#2 - Is interest rates - I have preached about this for some 15 years, but the correlation is still there. If you can get a 6% CD then the yield for MLPs will need to increase to cover the added risk. The good part is that the correlation is down to about .30. This means the yield on MLPs would need to rise 1% to cover a 3% rise in the 10yr TBill rate. We could definately have this happen by 2016 or 2017, but rising distributions should cover any potential downside barring runaway inflation.
#3 - Company growth. Statistically company growth over about 10% a year based on enterprise value has slowed DCF growth. The reasoning here is simple in that you incurr expenses both during the planning and construction phases as well as a ramp up period. EPD is the best example of this when they went from acquisition to organic projects. This one should take care of itself over time but IMO probably not until 2018 at the earliest as MWE should be expected to continue on its current plan.
Personally, I have argued MWE as a buy and my difference with B&W is that MWE is not perfect and has made mistakes. They have good management and an agressive plan they have stuck to. Those of us that have a significant stake in MWE have and should continued to be rewarded into the future. As to $80 at the end of 2016? Given moderate improvement in #1 and interest rates that do not go crazy the possibiliy is in the 60% plus area using my calculations.