That isn't a very good sign to me. If they issued the shares after a nice run-up, that's one thing, but after dropping more than 10% over the past week alone, it makes no sense. I was hoping to add more if it got to $16, but now I'm not sure I have as much faith in these guys...
How is this now accretive with the issuance of new units? I assume this secondary is related to the East Texas acquistion and realize that at the time the acquisition was announced the company said it was going to be accretive. Subsequently, they have now increased the number of unit holders by about 25% with the additional 12 million secondary units. However, the additional East Texas 1,400 Boed production is less than a 10% increase to their current 14,620 Boed production volumes. How does the revenue that will be generated by 1,400 Boed offset the 25% increase in the number of units? Just asking, trying to learn how to value these acquisitions and subsequent secondary’s.
the reason they're doing the offering now is because the deal to purchase the oil fields just closed. they're not going to try and time the market and wait who knows how long for price to go up, when it might just as well go down. stock prices unfortunately often go down when an offering is imminent, there's nothing they can do about it.
I appreciate what you're saying but when they tell us they have 405 million of available liquidity per their last presentation, we are quickly finding out that there's a hook in that number. They still are having to do an offering despite all of that "liquidity" and my bet is that when they get their next dropdown from the sponsor, there will be an another offering for that too. What is to prevent them from doing offerings when the stock is 21? Whether they are trying to finance a dropdown or not shouldn't matter. They know they're coming so sell units when the price is higher. 'least what I think...
there will be no distribution dilution, MLPs dont work that way. They only do that if they are totally broke. so along with dist cash flow you have to watch if the biz is profitable over time and for that you need to be able to see through the hedge accounting haze etc.
52 week low is around 15.25 area that pushes current distribution to 12.75% area... the SO is huge in size and will take a while to digest, but i think after weeks of weakness the distribution will hold and in time qre will return northward towards pps levels of past. i'm a buyer at the 52 week low but not above. GL longs and enjoy the coming days shorts
I am almost glad to hear this with a caveat. At least the offering explains the drop over and above others in this space today, caveat - they never mentioned this in the Wells Fargo Symposium, but what MLP does. Anyway I am hoping they can maintain the 1.2 distribution coverage they discussed at that event.