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Memorial Production Partners LP Message Board

  • ruby.thedyke ruby.thedyke Nov 18, 2013 9:03 AM Flag

    Only negative I see here is NGP

    Not that I didn't benefit from their EROC mess, but the ability to lick blood off the floor is not exactly a ringing endorsement. Otherwise, 19 year reserve life, great forward guidance, debt is in check, under 3.0X forward EBITDA, hedging is adequately conservative. Yes, coverage slipped last quarter, not the headline .67 number of course, but the actual .99 (why MLP's don't use weighted average units in disclosing coverage is beyond me). I don't like missing coverage, but the explanation was good, and even sainted VNR missed once last year, due to piling up a lot of capex into one quarter.

    Then's there NGP, with IDR's. How much blame for EROC resides with them, and does that translate here? Certainly they are at fault for the initial structure of EROC, subordinated units and distribution arrangements turned out to be a disaster, and the whole thing had to be unwound after the financial crisis left the MLP hugely over-leveraged. A lot of that can be blamed on management, but they're still there for the most part, and surely NGP must have been aware of the leverage piling up, which still burdens the MLP, 5.0X EBITDA the last I looked. Does one burned pot infect another on the same stove?

    I've decided to ignore that history given the conservative metrics and business practices I've seen here. I've read all the transcripts, and I think I have a feel for management. Therefore, I've taking a position this morning for my long-term cash flow portfolio . . . unless there any naysayers here who have good reason for putting up a stop sign?

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    • From Merrill Lynch
      "A full quarter of results from the acquired assets should help DCF coverage to recover to ~1.36x in 4Q13 and set MEMP up for a strong F2014. Management reiterated its 2014 guidance of $298-306mm adjusted EBITDA and 1.15x-1.25x DCF coverage. We model no distribution growth through 2Q14 and expect distributions per unit to increase ~5% in 2014 (YoY), even taking into account IDRs."

      • 1 Reply to b_zerkley
      • I'm not asking an upstream to increase distributions dramatically, just to at least keep up with inflation. The most important thing is that management does not F up and do something that diverts from mission one. An example in point would be NSLP's decision to become a mini-Exxon, which they announced this quarter. I was in NSLP, and that money is now here. Hopefully this will re-price upward like that MLP did, this one is more deserving of market recognition imo.

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