In 2010 (the Space Odyssey year), XTXI will pay between $9 and $10 per share in dividends. You heard it here first. And then, with interest rates higher than they are today, XTXI and the other GPs will be priced at a 4.5% yield giving a share price of $200.
I hope you are correct.
We know that they have projected a $3.60/share annualized dividend by 3Q 2007. That means they increase the dividend by $1.20 over the next 6 Q's. That means an increase, on average, of .05/Q on the XTXI dividend. They mentioned that the Chief deal would add $2.00 to the dividend starting 2 years after the close, over 1 years time. So if the deal closes on June 29, 2006, then the increase would start in the 3Q of 2008 and continue till the 3Q 2009. That is the way I understood it explained on the conference call (i.e. the $2.00 increase would be spread out over 4 Q's). That puts us at $5.60/share. Now, that doesn't take into account any growth from 3Q 07 till 3Q 08 (when the Chief cash starts coming in). It also does not take into account any further growth in Chief assets which they expect will be tremendous.
$9-10/share would be quite a jump. Even if their cashflow from Barnett Shale doubles, it would add another $2, which means a jump to $7-8. Nobody can predict the interest rates and what would be assumed as a good multiple in a few years.
geo, good point on the distribution of shares to investors not selling of shares. i didn't mean to imply that.
however, 2.8m shares? that's ridiculous. they don't even have that many and do you really think they'd just drop about 19% of the company on their investors to dump? of course not, that's why they've distributed around 725k/qtr. they only have 2.3m left, so unless they are big buyers in the equity offering, they wouldn't have 2.8m to sell. if they are big buyers, they'll surely extend the distributions over more qtrs at 700k/qtr.
there will be adjustments to the 480m, but since they are issuing more than 50% to cover the equity, they can probably fund the differences with debt and still be in-line.
10-20% drop? You think this could fall to somewhere between $66 and $74? No way post-deal. The deal call option is what makes owning the gp so great.
The 2.8M is translated as 2M for the new issue + 770K that happens with each Yorktown distribution.
I didn't say that all 2.8M shares or all 770K shares will go on the block. I specifically said the opposite. But a portion will go on the block and this is still a thinly traded stock.
Looking at the past history, every Yorktown distribution was followed by 10-20% drops in price. Will it happen again or will it be different? I don't know, but I cannot see why it would be all that different. The stock always had good prospects anyway. There are many reasons people are selling, some having nothing to do with investment.
Will it drop to $66-74 when the Yorktown distribution happens? If they go to $90 pre-distribution, that would be unlikely, but if they are stuck at $80 and the 2M shares were sold at $75, that won't be much of a stretch. The price of the new issue will give us a first clue. It shouldn't be long, I expect that to be announced in the next 10 days.
BTW, I am against issuing new XTXI shares. I can't find a good enough reason to dilute right now.
I am short-term holding and medium-term buying. All I'm saying is that there will be turbulence in price short-term; too many events going on at once.
Sorry, I misunderstood you. My Mistake. I see that you mean there are 2.8m shares being sold to the public in total, not by Yorktown. Even so, the 2m shares are being placed, partly with mgmt that probably would not sell in the next 12 months the rest with institutions that should have at least a 12 mo outlook. I don't see this as a typical secondary offering bc the deal changes the dynamics/valuation so much.
The distribution might have some impact, but the deal is not priced in to xtxi yet, so I think we're headed up to $90 or better (the stock has especially good prospects at this point) and then a slow down of around $5-8 as the distribution occurs. I think part of the timing will be how analysts portray the deal in the next couple of weeks.
I'm against their issuing equity too, but there's no way around it at this point, so I think we just have to accept it and move on.
Not sure how much in terms of increased volumes this will add to the NTPL. Those volumes were going to have to get out of the Barnett Shale somehow, so I suspect they would have eventually gone through the NTPL, or through ETP's line? However, the real value is in the fact that Devon is essentially accelerating the drilling program, meaning wells that might have been slated for say 2008 or 2009, might now be slated for 2007 or 2008. This means volumes ramping up faster than projected than when the NTPL was originally built. The pipeline will be increased with additional compressors, however, I suspect that they will ultimately add looping, or look at building another line elsewhere in the Barnett Shale to alleviate the bottlenecks.
No need to go hunting for old postings. It's all posted with the SEC. Here it is:
The last few dates:
Not extremely consistent, but good enough to give us a clue that we may be seeing a distribution towards the end of May. And you are also right that these partnerships have a limited life time and they start distributing a little earlier so that the investors do not have to wait until the very end to cash in some of their profits.
BTW, htbrown and anybody else: by all means, go ahead and buy more now. I don't mind the higher price before they announce. Nope, I like that. Please, buy some XTEX, too!