Nobody in Europe is as ignorant and stupid like the Democrat politicians and yourself to even think about banning fracked gas from the USA. The alternative is being totally dependent on Russia for 50% of the natural gas used in Europr, a doubling plus of natural gas prices there,and a destruction of the European plastics industry. Fracking in America is unleashing oceans of natural gas liquids like ethane,propane,and butane which are already being exported to Europe for plastics feedstock from MARCUS Hook on the DELAWARE River, Hampton Roads, and the Houston Ship Channel. Berne Sanders has banning fracking in his platform, Hillary is rabidly against it , and Obama has banned fracking from public lands...and without fracking these days natural gas prices in the USA would triple at a minimum, and gas for vehicles would be over $4/gal nationwide. Europe has already saved over a $trillion in the past five years because of Fracking's Impact just like the USA has. Any European politician dumb enough to run on a platform of banning fracked products in Europe today would be crushed at the ballot box. There. Is already 400,000 barrels/day of fracked propane going to Asia, too,and the Panama Canal expects 20% of its future traffic to be fracked LNG heading to Asia. It wasn't long ago we were shoveling out $1Billion/day for imported energy..thanks to fracking the USA is moving to a plus $ position in energy imports/exports...and neither solar nor wind power can produce plastics like fracked natural gas liquids can. Go back to your cave.
You are absolutely correct. The lead Merrill Lynch MLP analyst, Gabe Moreen, is,think I , afraid to put anymore leading opinions out there because he has screwed up a lot of predictions he made and missed other big moves completely. I told my Merryl advisor that Merrill should fire him for incompetence. He has also tried to cover up some of his more blatant errors. I have zero confidence in his opinions.
You are asking an excellent Q IMO.with the prospects rising for both the natural gas SXE collects and the natural gas liquids SXE produces from fractionation there is no good reason IMO for the unit price falling except through manipulation...I do wonder whether we are going to see a takeover bid in the next few months priced at $3/unit or so with thee press release blaring that , "Unit Holders are being offered a 50% premium !" At that price buyers would IMO be getting a steal just in time for the big business coming in 2017-2018.
The bottom line this that any gas producer in the Eagle Ford Shale gets a lot of extra money from selling natural gas liquids like ethane,propane,butane etc extracted from the "wet" gas by fractionators like SXE. So, with a lot of natural gas going to Cheniere for export and even more going into pipelines to Mexico SXE has the opportunity to fill its fractionators to the brim. And it gets better. The USA's biggest ethane,propane, and butane exporters are EPD and Targa in nearby Houston and Gulf Coast "crackers" producing ethylene are ramping up the use of SXE produced ethane as a raw material. Sure, SXE is smaller than most of its competitors. However, there is so much action shaping up that even minnows should score,too.
I recognize that a) all sorts of financial maneuvering so are going on involving Holdings and SXE and b) there is a massive, really massive market opportunity coming near term that should benefit SXE in a very big way....that said, SXE does have a Board of Directors that has a fiduciary duty to do the best possible performance it can do on behalf of the unit holders it represents. And IMO this includes keeping dilution to the bare minimum, insuring that any "cures" are solidly financially beneficial to unit holders, and expenses and staff minimized going forward.. I believe that SXE has the potential to be a $10+/unit MLP in 2018, and I submit the SXE's BOD should be focused on that as well.
Nice information! Let's add that last fall Cheniere signed a five year contract with Engie of France covering 12 shiploads of LNG/year starting in 2018 from the Cheniere LNG terminal being constructed in Corpus Christi. Cheniere has also signed a contract with EDF of France for 50 shiploads/year of LNG to be shipped from Sabine Pass. negotiations area underway with Baltic countries,too. Let's add that with the expansion of the Panama Canal opening this week the Panama Canal is now able to take the large LNG carriers and expects 20% of its future business to be LNG carriers going from the USA to Asia. Bottom line: SXE should be maxed out two years from now.
a more important factor than number of drilling rigs is the actual price of oil and natural gas. The low price of natural gas in the last year was just under $2/1mmBTUs at $1.94. Today it is at $2.62. Henry Hub futures are now around $3.20 for this coming winter...and this week four additional drilling rigs started up in the Eagle Ford Shale. Better technology simply means less costly wells..however you still need more the $3.50!natural gas to get the CAPEX flowing.in a big way.
You called it right IMO..but starting in Q3 things are going to get real interesting. Over in Houston EPD will be bringing on line its 200,000 barrel/day ethane export terminal...and the EPD Aegis ethane collection pipeline to Corpus is in place. And if you have been following the EIA Propane section you will see that propane demand is up this year thanks to EPDS/Targa exports from Houston,too. Since both ethane and propane are SXE fractionation products the SXE prospects should be brightening. In 2017 the ethane crackers being built along the Gulf Coast should come on line along with an ethane demand totaling 500,000 barrels/day...and this will be followed by more natural gas going to Mexico and two years from now the beginning export of LNG from Cheniere's Corpus Christi terminal...SXE should be running flat out by then...and, of course, the Panama Canal expansion is almost complete which means much bigger ships carrying more propane,butane etc will be heading to Asia....by this time next year we should all be singing at our local sports bars.
when you get the current High Heat/High Humidity conditions in the Mississippi Valley the power plants there will burn everything they can...and today it is natural gas that increasingly is used for peak demands..easy to turn natural gas generation on and off. Also important to note that Echelon is shutting down two massive nuclear plants in Illinois North of St Louis because they are no longer competitive with natural gas..there are 15 nuclear plants nationwide that are in danger economically because of natural gas...it will be interesting to see whether the Democrats/Environmentalists abandon their longstanding anti-nuclear position because burning natural gas does give off CO2 compared to nuclear's zero. Natural gas today is now number one in USAF power generation at about 33%...coal is about 30%, and nuclear about 20%. The TVA system around MEMPHIS about 40% nuclear. St Louis burns a lot of coal because next door to Illinois coal fields...but hard to increase rapidly power from coal fired plants. I went to Washington University in St Louis and suffered a lot in the summer when power outages hit.
IMO besides paying down debt, SXE and Holdings need to simplify theirvcorporate structure/relationship and like GEL,MMP,EPD, et al eliminate the IDRs. The problem MLPs get into is that setting up a GP-LP relationship is kind of incestuous. Holders of the GP equity are normally concentrated and through their control of the LP side kind of make decisions that benefit the GP more than the LP. In the case of SXE the unit price is still down significantly compared to other MLPs because IMO of the debt loaded up to acquire a lot assets just before the oil crash..That Holdings went Chapter 11 suggests that there was a lot of maneuvering that might not have been in the best interests of the LP unit holders...so, as the market expands in the next 3 years SXE needs to present a solid balance sheet, upgraded debt ratings, and good financial dealings with existing customers to attract the new customers and expanded volumes needed to max facilities and profits, and restore distributions.
Thank you for posting this excellent clip. What's important to us SXE holders is that the LNG going out of Corpus Christi has to be fractionated to extract natural gas liquids first...and that's a tremendous opportunity even for a smaller fractionator like SXE! If SXE mgmt can get its financial act together the market will take care of all of us. Thanks again.
If you believe the Seeking Alpha write up on SXE and I do the gain on SXE should be 400% in two years..that author projects a distribution of $0.20/q or $0.80/yr...even at a yield of 8%, high for a MLP, SXE would have a unit price of $10/unit..is this possible? I think so. Consider: by 2016 Guld Coast demand for ethane will jump 700,000 barrels/DAY because of new ethane crackers going on line to produce ethylene(500,000 'barrels/day) and exports(200,000 barrels/day) through EPD's new ethane export terminal going online at the Houston Ship Channel in the nextQ. Propane demand will jump 200,000 barrels/day because of EPD/Targa exports and EPD's new PDH plant going online next spring..and between Chenniere's LNG exports from Corpus Christi and the new pipelines to Mexico 3Billion cu ft /day of natural gas will head to Mexico from the Corpus Christi area. ...all of their will happen. Contracts have been signed, and construction is underway. So, the 2018 markets will be there for SXE's fractionated products....and I like to think that even SXE's mgmt won't screw up an opportunity like this...anyway, I keep adding SXE on the basis that retirement could be very pleasant,
In that index funds are built as a cross section of a marketplace you should have both winners and losers included...otherwise the "index" is an actively managed fund instead of being an index...if you ended up with a loser or two so what? Just try to get a better selection...in my opinion the selection of SXE for AMSI is simply another small vote of confidence that SXE is likely to survive.
This is a BIG DEAL...any fund using Alerian Indices has to buy SXE units to fit the AMSI composition. And a lot more institutional buying will occur after SXE goes above $5/unit.
Midstream MLPs are soaring but my upstream investments like MEMP are in the tank...despite hedging etc etc these firms were all in with borrowing to hilt to buy what is now realized as insane purchases of more reserves and operating acreage based on $100+ oil lasting forever. I fault MEMP for its disastrous management practices and failure to cut costs dramatically like it did our distribution.. Sure, oil and gas are volatile but MEMP sat there fat,dumb,and happy as the roof fell in.
In today,'s financial environment flattening MLP structures, eliminating IDRs, and reducing leverage aren't options...they HAVE to be done for survival...think of the old saying, "The approach of the hangman absolutelyconcentrates one's mind." Think of EPD, GEL,CEQP, and MMP all of which have done these steps...and Targa went one step further by dumping its MLP structure becoming a C Corporation instead. There are all sorts of rumors that PAA is about to do the same. SXE and Holdings will soon follow suit IMO. The one danger as I see it is that Holdings, "Will get the Uranium Mine and SXE unit holders will get the shaft".
You are absolutely right. SXE mainly makes its $s by collecting "wet" natural gas and fractionating it to remove natural gas liquids like ethane ,propane,and butane etc which are sold for various uses. The remaining, cleaned gas is methane which we burn in our home systems and is burned to generate electrical power. The higher the natural gas price the more wells are drilled and the more volume SXE gets. In looking at natural gas prices you want to see them in the $3.50 and higher range. This will juice SXE earnings and stock unit price. A really hot summer, ramped up natural gas exports to Mexico, and a really cold winter will be terrific for SXE!
Just one caveat here is that SXE is more dependent on DUCs involving natural gas and natural gas liquids that it fractionates than the straight oil DUCs. Collecting crude or condensate to put into a pipeline to a refinery or splitter doesn't bring in the $s that count. What we really want is natural gas at $3.50+, ethane at 40 cents/gallon and propane at a $1+. Oil at $80+ benefits SXE mainly in that the naptha from oil used to produce ethylene is more easily substituted by less expensive ethane produced by SXE's fractionators.
You raise a great issue...my sense is that the pricing of recovered ethane and propane will be the critical factors...both are going up significantly...with EPD's 200,000 barrel/day ethane export facity going on line within the next year along with 2017's 500,000 barrel/day of ethane demand for gulf coast ethane crackers SXE should be in fine shape...Both Targa and EPD are ramping up propane exports, and EPD is bringing online a 30,000 barrel/day PDH plant to produce propylene from propane... I continue to buy SXE thinking that in a year good things will be happening!