Well written thoughts here. First, Oxford has been in business since 1985, and managing their bottom line through vacillating pricing disparities is familiar territory. After 35 years in business, I'm going to give them the benefit of the doubt that they know how to get in front of an issue, rather than trying to play catch up. Second, 95% of their coal inventory is already sold under fixed contracted pricing to utilities throughout Ohio, Kentucky, and Illinois, therefore we need not fear any unanticipated price fluctuations for 2013. Finally, CEP is an interesting chart, but I don't see the comparison to OXF. CEP, cut it's dividend back in May of 2009, and was already trading at an all time low prior to the cut (03/27/09, $1.55). The chart shows that CEP, rallied for six months (6/10/09 -01/22/10, $2.16 - $4.84 Per Share) directly after the cut, more than doubling in price. If OXF did the same, todays share price of $3.50 would rally to $7.84 rather quickly. Right now, the shorts are having their fun, but OXF will rally to the upside as quickly as she has come down. Don't panic, bet big!
"First, Oxford has been in business since 1985, and managing their bottom line through vacillating pricing disparities is familiar territory."
Fine, but that is not the right model for an MLP which pays out most of its cash flow in distributions rather than saving the cash for the next downcycle. Especially as OXF IPOd with a high distribution level at a time when coal prices were at a peak. It should have been obvious this would happen if those high coal prices were not sustained. So it was kind of a scam to take it public with that distribution level at that point in the cycle. Many articles written at the time of the IPO suggested they would not be able to maintain distributions and that the IPO was a money grab by the sponsor.