OK I admit I am puzzeled about subordinate none payment
I get that the dividend based on earnings would of been 50 cents. But then they say that the subordinate payment would be .71 cents and then they paid .667 cents. The said no subordinate payment but clearly paid 167 cents above what they earned. How did they get to the figure of .667 and how did they not pay subordinate payment? I have an idea but would rather hear others opinon on this.
The math is in the release. $23mm in earnings divided by 46 million total units equals 50 cents. $23 million divided by just the common equals 667 cents. The sub threshold was a target set at inception. Missing it shows they are underperforming badly and the trend is getting worse. The stock bounced on Friday on this bad news, probably because investors are yield chasing or because the algorithms are pushing it up. Maybe some were short expecting worse performance. I added puts. On the ex-date, the stock will fall by 667 cents and probably continue to decline, at least that is what happened in the last several quarters. If you want to continue to hold, buy puts to protect your principal.
Goldman had a negative piece earlier which caused a decline from $15, so the bounce could be expected. I don't know when it will level off, but it will reverse on the ex-date. You can look it up.
When I read the 9/30/13 10-Q I understand the distributable income to be $25,867,000. The common units are stated as 35,062,500 units. The subordinated units are 11,687,500. The sum of both are 46,750,000. The quotient of $25,867,000/46,750,000 is 0.553. The $25,867,000 divided by just the common $25,867,000/35,062,500 is 0.7377. The math and numbers are correct. I do not see how they arrive at 0.667
You could also look at the earnings as showing that CHKR only had a 3.6% decrease in BOE production after stating last quarter that they were going to slow drilling and are thus are in no hurry to end the subordination period. Higher oil prices helped to offset lower volumes, but lower natural gas prices hurt. Gas prices have since rebounded and are expected to rise this winter. Overall, they nearly hit the HIGHEST subordination threshold of the trusts life and the results indicate they can meet or come close to meeting the next subordinate thresholds if commodity prices hold/rise. If CHK decides to accelerate drilling, then they will meet or exceed them easily.
The owner of all of the subordinated and maybe 50% of the common was fair to the rest of the investors in this trust IMO this quarter. CHK received capital from the issue of this trust. it made representations of performance. Performance has not exactly held up so far, but CHK has not put itself first over investors so far. Because of CHK's effective 2/3 interest in this trust , it shares risk, but the power to control dividend is always there, today it is ok.