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Crosstex Energy, AŞ Message Board

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  • rrb1981 rrb1981 Dec 21, 2005 2:29 PM Flag

    Equity Cost of Capital

    The cost of capital indeed goes up, but one need only look at KMP to see that it is possible to continue well into the 50/50 splits. Besides, XTXI has several mega size organic projects that will come online at ultra low multiples. The Barnett Shale pipeline will come online in January or February, the El Paso deal will bring a host of expansion, interconnect projects, they have the North LIG deal and potentially the South Louisiana deal. The Barnett Shale expansion is earmarked at 15 million, with a cashflow number of 17 million for a multiple of less than 1. Keep in mind that the original project was a 100 million dollar deal with a cash flow run rate number of 17.5 million for a multiple of 5.71. Together, that would be a multiple of about 3.4x. Crosstex has the advantage of still being small and in the 50/50 splits, that small deals can still move the distribution. It all depends on the multiple paid.

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