Of all the MLP's I own, this one has the most potential for distribution increases. Depreciation exceeds the annual income, so they should be pretty close to $4 a share in potential cashflow. I hope they kick some more out soon!
If theu can buy back debt for 80 cents on the dollar, do it They can't say they are, as it would increase debt price, but if you were to borrow to do it, and it made sense, then the time to do it would be right after a 10q, as it would give you the most time between quarters. Next 10q, we will actually see two things, ithink, that they have reduced debt by over a billion, they will cut payouts in half for a year to pay for it. Should increase ratings on debt for 2010, and that should give them ability to refinance if credit markets improve, so the crises, if you have the cash flow, and your rating is below a, is a huge plus. Not many companies besides mlps have this kind of cash flow and debt ratings so low.
Distribution increases going forward will slow for all MLPs for two reasons - as stated by the MLPs at recent conferences.
#1 - The increases have simply not resulted in higher unit prices. No positive from paying out cash means less reason to do so.
#2 - With the current problems in the credit market there is more incentive to reduce the need for outside funding and additional equity sales. Companies will retain more of their cash flow going forward.
How long with this last - who knows. Am sure no one imagined EPD would be selling for under $20 and the Dow would be heading toward 7000!
#2 reason was my take from the conference call. EPD is retaining cash right now and will cut back on cap ex. As long as EPD's share price is where it is new equity capital is just too dilutive for most expansion to make sense. Cap ex is limited to internal sources of cash (plus distribution reinvestment?-dilution?). This is not an EPD specific issue.
What I can't understand is Nat Gas makes too much sense to me as a power source in this country. There is a lot of it and it is secure and relative to coal, not as polluting. If infrastructure doesn't get built there is no gas. Won't there eventually be an increase in the rate return on Cap Ex.
Which I guess means nothing in the face of this relentless liquidation in the stock market.