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Energy Transfer Partners, L.P. Message Board

  • dont_like_losses_sport dont_like_losses_sport Jun 14, 2006 9:38 AM Flag

    Stay Long If Possible

    I realize that recent pricing pressure can force one to liquidate their position, but stay long on ETP/ETE if possible. I fear we haven't reached the bottom of the market yet - a global panic is beginning to spread. However, declining crude and rising interest rates are going to have a minimal effect on ETP/ETE earnings. As mentioned before, Natgas prices have stabilized at a very attractive level. In fact, I believe ebitda will be raised to nearly $800 million for FY 2006 in the next few weeks.

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    • dont_like_losses_sport wrote: "I believe ebitda will be raised to nearly $800 million for FY 2006 in the next few weeks."

      In 2005, ETP announced Q2 earnings [well, it was ETP's Q3 - but you know what I mean] on 7-11.

      More important to some of us ETP holders, it was 6-16-05 that ETP announced its planned distribution increase for the quarter. So that means that we probably do not have to wait much longer for that announcement. With the current distribution at $.588/quarter, I am anticipating an increase to . . . a low of 60 cents and a high of 62 cents.

      dont_like_losses_sport noted that he fears that 'we haven't reached the bottom of the market yet'. I am a bit more optimistic - and that is due to the midtream to 10 year treasury spread. That spread ended May at 164, and as of 6-13, the spread was 197. A thirty basis point move in the spread is on the large side. And any spread over 190 has been a pretty good buy signal. But I should also note that we started the year with a spread of 252 - which is the largest it has been in the 18 months that I have tracked that metric. There is a good theory for why the spread became so large back then. But it is a theory I picked up from analysis - and I know how some of you hate when I quote them - or alledge that they are experts [grin]. But, their theory is - the increase in the spread was caused by the large amount of secondary stock offerings late in 2005. Given the lack of current offerings, I would be very surprised if the spread became as large of 210 - and we are pretty close to that already.

      dont_like_Losses_sport and I would probably agree that it is a much better time to buy than it is to sell.

      As to ETP raising its EBITDA estimate, I am not so optimistic there - and that is due to the fact that much of the EBITDA gain so far this year has been due to mark-to-market gains in ETP's hedges - and ETP is past due on a quarter where hedges cause a loss. But dang - I am just guessing on that. I would welcome further explanation from dont_like_loesses_sport on the math behind his prediction.

      • 1 Reply to factoids2002
      • 'factoids2002' ... you are the smartest person on this board. You have a lot of technicals to support your predictions and I have immense respect for that (I'm still working on my technicals - and sometimes instinct gets the better of me). But I may have you on the hedges! mark2market hedges are a tricky thing. a gain in one quarter may not always imply a loss to be incurred in the future. for example, ETP has numerous storage facilities, and as they've stated in prior conference calls, they hedge all gas at these facilities. but where was the summer 2006 trading at 6 months ago? and where is it trading now? did ETP go short summer 2006? going short for the summer 2006 was a good call if hedges were executed 6 months ago. is ETP obligated to execute their underlying physical now that the summer of 2006 has arrived? this we don't know. but if they're not obligated then they can liquidate the summer at a nice gain and short next winter - all the while keeping their underlying physical at these facilities. The traders call this a contango market. perhaps a bit of wishful thinking on my part. I will follow-up in later posts regarding my technicals and my support for stronger growth. by the way, wasn't the ETP distribution announced at $0.6375?

 
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