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Crosstex Energy, AŞ Message Board

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  • rrb1981 rrb1981 Nov 18, 2005 1:22 PM Flag

    Crosstex revisited part 1

    It will be hard to decipher what acquistion or project is actually driving the distribution growth, as the Barnett Shale play will not be finished until mid 1st Q 2006. That means that the distribution increases from it will most likely not begin until the 2nd Q 2006. The El Paso acquisition recently closed, which leads me to believe that we will see a modest increase in the distribution from it in the 4th Q 2005 distribution (paid in February of 2006). I suspect that they will want a full Q of operating the assets to allow them to integrate them, finalize hedges, make any changes etc before being aggressive with the increases. Furthermore, I suspect that while the El Paso deal holds a lot of potential for increases in the distribution, they will be very paced in increasing the payout, methodically parceling it out over 4 or 5 Q's.

    So, now to crunch some of the numbers. The El Paso deal ended up costing around 486 million, and the projected cashflow is around 55 million. We know that they already sold 2.85 units at $36.84 in another private placement raising around 105 million dollars. They are now attemting to sell another 3.5 million units at $33.25, which will raise around 116 million. That is a total of 6.35 million units at an average price of around $34.85/unit. Obviously they need to raise around $243 million to finance it 50/50. I am just going to assume that the other 20 million will get picked up in the permanenet debt portion and that it will get carried over until a leter offering (assume that the additional .5 million units that XTEX has made available in the over allotment are not sold). That means that the equity cost comes out to around 22 million (that would be the 6.35 million units sold multiplied by the now $2.18 distribution + the now .82 per unit GP take) all multiplied by 1.15 (again for coverage). The debt portion should cost around $18.7 million (again 7% borrowing cost). So collectively, that leaves around 14 million available. Again, i expect XTEX to holdback 15% for coverage, leaving 12.1 million to be paid out. That means that the GP will collect around 6 million, while the LP's will share the other 6 million. The MLP now have around 25.8 million LP units out outstanding thus the accretion becomes around .24/unit. Crosstex has actually project .30/unit so my numbers are a bit off, perhaps they expect a little higher cash flow, or at the time, did not project a drop in the unit price (higher financing cost). For the GP side, we assume the 6 million for the GP take and IDR's, plus they collect another 2.4 million for the 10 million LP units that they own plus they get the GP take on the newly issued units which comes to a grand total of around 15 million. After tax, is around 11.5 million. That comes to around .88/share, which is very close to the .90/share that they have projected. That would push the distribution at XTEx to around $2.42/unit and the dividend at XTXI to $3.10 per share. That also chimes with the $3.00 y end of 2006 projection that they have mentioned several times on several of the conference calls.