some of the important info missing from the presentation is 2014 guidance and dist coverage both present and guidance some of the guidance info is a fluid since they are attempting to sell quite a bit of property but they would have mentioned it if the had a good spin on the numbers.
Guidance is not fluid per asset reposition as the contribution from the Permian assets was excluded from dcf.
I suspect management has been under guiding and it has backfired. In the short term.
Drilling Surge in Permian Drives U.S. Oil Rigs to Record
By Lynn Doan and Richard Stubbe Mar 7, 2014 4:11 PM PT
U.S. oil rigs jumped by 13 to 1,443, the highest level since Baker Hughes Inc. (BHI) separated its oil and gas rig counts in 1987, the Houston-based company said in a weekly report posted on its website today. Rigs drilling horizontally in the Texas-New Mexico formation rose by 10 to 265, the highest level since at least February 2011, while vertical rigs there gained three and the directional count added one.
“One could argue that all of the increase in the oil rig count this week was because of the Permian,”
Pioneer, which holds one of the largest positions in the Permian, is spending “the vast majority” of its 2014 drilling capital in northern areas of the basin such as Spraberry and Wolfcamp, Timothy Dove, the Irving, Texas-based company’s chief operating officer, said during a presentation March 4.
Perhaps not so great for ng and ngl pricing.
Long past time to follow the RFS law and end the Corn ethanol mandates. If it keeps corn prices high it will only make the coming correction to rationality that much worse in dealth and duration.
Thanks! I do see valuable new info. For example,
1. "Potential to further reduce 2014 capital budget through the Permian divestiture" ~$275MM
2. "Screened 48 opportunities" "Bid on 6 transactions for ~$5.5 billion"
That's pretty interesting. An article on SA calculated a 30-60 cent DCF bump from switching Wolfcamp with a "normal" MLP type producing property, but didn't take reduced capex into account. $275M is 80 cents a unit. I'm not saying that's maintenance capex of course, but it's a significant chunk of money. Still, it's not going to help in the near term, and the market clearly is not inclined to be forward thinking here. Q1 is probably not going to be great, with weather and the really bad Permian differentials, so we're likely stuck in the $20's for some time. But if they managed this Wolfcamp thing effectively, you really want to buy the dips.
BTW, I'm very concerned about Linn's practice of widely advertising when it wants to buy something (e.g., "have bid on 6 transactions for ~ $5.5 billion" ) and when it wants to sell something (e.g., Midland assets). In my experience, this definitely makes the price go up for what you want to buy and the price go down for what you're selling.