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Northern Border Partners (NBP) Message Board

  • mlpnewby59 mlpnewby59 Jan 15, 2005 11:13 AM Flag

    Great thread

    Kudos to the authors of the posts over the last few days. Both arguements, pro and con about MLP prospects going forward, from experienced posters in the MLP universe, which for the most part has not been corrupted by losers.
    My own view of NBP is in line with cactusjacker. I believe the key will rest in the hand of ONEOK (OKE)the GP. Look at the recent slide presentation they gave at a investment seminar. You will notice that they emphasize that NBP in in the lower split of 25%. I don't think they, the GP, would mention that unless they were implying to THEIR investors an intention to increase that split. This could only be accomplished if they dropped down some assets, something I'm sure they thought of before they bought the GP. ONEOK also has a formidable track record of increasing the dividends on their common stock. This also bodes well for NBP, as I believe they understand the attractiveness of dividends to investors. All in all I believe it is a waiting game before OKE drops down some assets, allowing Cordes the opportunity to increase the distribution to NBP unitholders and increases the split to them, the GP. As Cactus points out, why else would they have bought NBP in the first place?
    Every downgrade in this sector over the past 2 years has been a temporary slide followed by continued appreciation. The only decline occured when interest rates increased last March. This, in my opinion, is the only catalyst which would errode the MLP unit prices.
    Should rrb1981 not post over the weekend in response to your question, I would suggest the following two GP's trading as stocks, XTXI, and MWP. Also look at KSL which will give you some idea of why I'm sure rrb1981 finds them so attractive.

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    • Exactly. I had both my PLX and my KSL taken out in either going private bids or by merger/acquisition.

      The GP is a very attractive asset. The downside to most of them is that while they produce out-of-this word returns in terms of percentages, often times, the actual amount of cash it produces is very small. That is why I find that it is important to focus on the small-cap GP's that have either small, or no side-businesses (such as KSL, PLX, MWP and XTXI). With other companines such as UGI or DUK, the GP cashflow contribution gets lost in the mix and in many cases, is merely a rounding error. In other words, in doesn't matter to such and such company if their GP is growing at 35% a year, if the GP makes up only 10% of their assets and the rest of the assets are only growing at say 7% a year. The GP growth gets de-weighted. That isn't the case with GP's like PLX, MWP, XTXI and KSL. They all have/had either no other operations, or very minimal operations(KSL has a fuel marketing biz, MPW has a NGL marketing biz, PLX had a small oilfield in Florida, XTXI has no c-corp held assets that I know of).

    • mlpnewby & rr1981:

      Great minds think alike I see, I'll have a look at these.