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Vanguard Natural Resources, LLC Message Board

  • lessbs lessbs Aug 4, 2014 5:09 PM Flag

    Accretive buys

    It seems that every time they add properties, it is called an accretive purchase yet they are now at a 0.9 coverage ratio with very little increase in distributions. It's almost like those selling properties to VNR are flim-flam artists and the VNR execs go into negotiations wearing bib overalls with considerable hay in their hair. How many accretive acquisitions will it take to get coverage at or above 1?

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    • Haven't run the numbers, but what might be "accretive" at time of purchase -- with closing funded by credit line -- might turn out to be less accretive when new units are issued. On the surface, hard to see how this latest deal helps -- new production is 17 MMcf vs 315 MMcf existing production, yet purchase price is 11% of current market cap. If they wind up issuing that many new units down the road to reload the credit line, how does that work, especially if net proceeds are discounted from current price. Hopefully the CC will provide some useful data.

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