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Eagle Rock Energy Partners, L.P. Message Board

  • coochy.cooty coochy.cooty Apr 25, 2014 2:43 PM Flag

    So, one day and half the fun is already over

    Okay, there's time left today, but is this going to plunge into the $3's? Doesn't seem likely. The question is, suppose it stabilizes somewhere in the $4.20-4.60 range over the course of the next week or two. Could you still take a position and make out?

    I'm not sure. Yes, 50% of the pre-announcement damage remains, but it seems to me the question is, what amount of distribution will be restored once the deal closes? At that point I'm guessing the 60 cents will not be supported by the properties remaining, after all, presumably the EBITDA on the midstream segment was greater than the interest costs, wasn't it? Now, of course at that point the company will be under-levered, and presumably will use the borrowing power of the reserves (the bank's willing) to acquire additional DCF to support that distribution or higher, the whole point of this deal. Assuming 60 cents ends up being the Q4 annualized rate, and you could imagine this threatening the high $5's on a good run. You might want to stick around for that.

    But you could also imagine them reinstating at a lower amount pending events. Suppose they said the distribution would start off at a dime, where would that price the units? More like $4, right? You wouldn't want to be around when that happened. It's a problem, if you've already wetted your beak, maybe it's time to leave the carcass and take flight. I mean, there's nothing wrong with a 10% 24 hour profit. Decisions, decisions.

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