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EV Energy Partners LP Message Board

  • jrad52 jrad52 May 6, 2013 9:05 AM Flag

    New Credit Suisse report out this AM

    CS maintains its Outperform rating. It values EVEP's core business at $ 46/unit, plus it values the acreage to be sold at a minimum of $ 11/unit for a total value of $ 57/unit. It tempted me to buy some EVEP for a short swing gamble until I read the report. Included in the $ 46 value for the core business is $ 20/unit for acquisitions to be made in the next 5 years. CS says that EVEP has a track record of such acquisitions, largely involving the company's sponsor, and CS is comfortable that it will continue to make good accretive acquisitions. So almost half of their valuation is for assets that EVEP doesn't own yet. I think I'll pass. It will be interesting to see if the report has any effect on EVEP's price today, though. The headline looked nice.

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    • One of the most bizarre reports I have ever read!! The guy that wrote it must have OD'ed on something. Toss the report in the trash.

    • the real problem is that CHK needs to sell at least 100,000 acres to raise the cash they so desperately need. It doesn't help that Devon is also looking to dump a pretty nice piece of property. Have to give EVEP management credit for staying out of the mix of real fire sales.

      A bit out of the box but perhaps EVEP will find some outside money to actually develop some of the more promising acreage.

    • akorber May 6, 2013 11:26 AM Flag


      THAT"S THE PROBLEM there is not going to be any new aqusitions untill management turns around the fortunes of this company by selling some of the assets.They took the word growth out of growth stock and now no body wants the stock. Had they made the 84,000 acre deal then this stock would be in the seventies and that would have increased the unit holders value. They by walking away have protected the investments (leases) held by Enervest. The buyer has gone some were else could it be CHK or may be evan Enervest ??


    • artist_formerly_known_as_pooch artist_formerly_known_as_pooch May 6, 2013 9:33 AM Flag

      What would be nice, and was alluded to by the SA author, is if there were a surprise headline sale of some of EVEP's acreage. The highwater mark is $15k and acre and everybody is thrilled at Gulfport's $10k per acre from one of their partners. CS sees $20 k per acre in Guernsey and Noble. Smaller EVEP holdings to be sure-- but headlines matter .

    • artist_formerly_known_as_pooch artist_formerly_known_as_pooch May 6, 2013 9:29 AM Flag

      Doesn't yet own is kind of a technicality. Currently producing properties owned by it's parent, yet to be dropped down. Everything hinges on getting some of Utica sold sometime. First order of business is to pay for capex and midstream, then pay for dropdowns from enervest. I agree, there is risk in the assumption, but the risk is the same risk we've been staring at all along--that Utica gets sold. The producing properties are already in the family and ready to go.

      That's why the delay in sale has been so damaging. Because management made everything else at EVEP contingent upon it. Big mistake IMO. But some of the land will be sold at some point. It won be developed by EVEP. At that point everything else will start moving forward again.

      the $64 question is WHEN???

      • 2 Replies to artist_formerly_known_as_pooch
      • CS is correct, because a substantial percentage of the value of any E&P MLP is created by acquisitions which are driven by the tax advantages of MLPs. The same oil-producing properties held by a corporation paying about a 35% tax rate are worth more to an MLP than they're worth to the corporation, because of the much lower effective tax rate paid by MLP owners. This is the tax-accounting magic of MLPs, and that's how they convert mature developed assets that are unexciting to corporations into valuable MLP-owned properties taxed at much lower rates than corporations pay. So Credit Suisse is correct when they say that a big percentage of EVEPs value is in future acquisitions.

        MLPs are one of the few tax-advantaged investments available to middle class people, and I intend to use them fully in the years ahead. I was taxed so heavily when I was a software developer and did not own a home. Today and in the future, I'm never going to let myself get ripped off by the government the way I was back then when I was losing 35% of my income to income taxes.

      • artist--As always, I appreciate your posts. The $40 low Friday was pure manipulation. Looks like we have some deflation not only in our stock price, but in the $64,000 question (readers must be 60 or older to remember) becoming the $64 question! The horrible price action in the stock makes it very difficult to buy more even at fire sale prices, unless you're a hedge fund pushing the stock lower to pick up on the cheap. It would not surprise me at all to see a run back to $50 in the short term.

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