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Denbury Resources Inc. Message Board

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  • one thing to remember is that GEL has such a small market cap that its universe of potential deals is tremendous. Example: they can make purchases of small gathering assets for 5-10 million dollars and the LP unit holders will see a tremndous amount of increase in the distribution (maybe .04 a year per unit). If a big MLP like KMP made that deal, it wouldn't even raise the distribution(although it may be accretive...) as far as the chickens hatching, well GEL has had the capacity to raisethe dist. prior to the CO2 acquistion but they were playing conservative. In my opinion, I would put good money down the GEL will riase its distr. by about 15% a year for the next 2 or 3 years and afterwards expect low double digits or high single digit growth rates....

    As far as being in Houston, well not in the city ...but can get there pretty quick...

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    • rrb,

      Those are interesting comments. Thank you again.

      One of the things you said that is particularly interesting has to do with size. In terms of growth potential in many areas of the oil patch we seem to have been seeing in the last couple of years that it has been difficult for many major o & g companies and major downstream companies to make much growth headway while smaller, more nimble and, dare I say, less risk averse companies seem to be stepping into the void.

      I must admit, however, that I don't much like the idea of investing in an entity which is functionally equivalent to an equity that has a going in prospective cash return of say 8% which might get (over a reasonable investment horizon) to 10%.

      My assumption is that these guys will dividend every penny that they can safely do (They need to retain the rest to do whatever.) and that the cash return is, therefore, what you get. 8% going to 11% on an equity return basis is a little shy of where I would like to be if I'm running the risk of getting wiped out.

      Regards,

      Peter

 
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