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Vanguard Natural Resources, LLC Message Board

  • moneyonomics moneyonomics Jun 12, 2013 10:39 AM Flag

    What are they loading up on liqudity for? A sizable deal? Preparing for interest rate increases which makes equity and debt more expensive?

    A combination of the two so they can make a deal in the near term and one in the long term? or just to pay off/down debt?

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    • It's a combination of mostly two factors. Money is cheap now and likely to get more expensive as time goes forward. Second, they see cheap properties out there an an opportunity to snap them up. You are likely to see purchases of producing Oil and Gas properties in the near future. This will increase total revenues but, the real problem here is the dilution of ownership by creating a preferred class of stock. The preferred will pay a lower rate compared to the yield we're getting on our common stock. But they are guaranteed - that's why it's preferred. The total debt is what has me worried. Higher revenues will create a better ability to service debt but now you'll have more investors feeding at the trough and distracting management.

    • They lost 630 million last year and are burning cash like crazy. Got it?

    • Maybe they are buying LINE.

    • I would think it is a deal.
      rates are moving up a little, but will be stable shortly.
      Paying down debt at a lower rates, does not make since when issuing common at a higher rate.

    • Hi Money:
      I am building a position in VNR because I like the oversize distributions especially when they are paid monthly I am investing here because I believe management knows what they are doing and wants to increase the value of the outstanding units. for the unitholders..
      We currently don't know what the raising of all the liquidity is for, but at this time we have to believe that management knows what they are doing and use this opportunity for adding to our positions at these depressed levels. If we don't believe the current management moves are in our best interest than we should close our positions. At this point in time I am in favor of management's position, and I have been adding units at these prices.

      good luck

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