They aren't 100% hedged against oil and the hedge percentage is an estimate based on expected production. If therir costs go down and they produce more than they estimated, their earnings could exceed the hedge book with oil lower than the average hedge price. It's much more complicated then the simplified statement you are making. Also Nat gas prices matter as much if not more than oil prices long term.
Where do you think the electricity comes from for those electric vehicles (windmills)? It is much more efficient to burn nat gas direclty to power autos than burn it to make electricity that can then be distributed to charge batteries to power electric cars. Unless this country is willing to move towards nuclear energy, nat gas will stay a major source of energy in the US.
You have to wonder why so much gasoline is being refined. Is demand for gas picking up with lower prices. This market is going to start looking forward pretty soon..
It was an interesting oil report. Oil imports are rising. What does this say about US production (starting to shrink)? You have to wonder if the refiners are trying to get their hands on a much cheap oil as they can store right now.
If oil stays below $60 for an extended period of time, the long term consequences are it will sky rocket back to $120 because too much supply will come out of the system. It's not a light switch that can just be turned back on once it comes off line.
The whole fricken country is in a deep freeze.
I hope they can take advantage of opportunities like this. I'm just not sure what flexibility they have to buy back debt on the open market as an MLP.
Right. I assume all the remaining 2014 hedges are cashed out and will show up on this quarter's income statement. I believe that can't be included in the DCF number based on the whole HedgeEye SEC fiasco, but have to be called something else, even though it has been historically distrbuted (I can't remember what LINE management agreed to with the SEC)..
Thanks. I actually read the same when I searched on how hedges are handled in general accepted accounting procedures. How do you know how to estimate the hedge book value. Do you take the current distribution times the number of outstanding shares times the reported hedge ratios to figure this out? Thanks.
Does any know if the value of the hedges shows up as other current assets on the balance sheet? They are currently listed as worth $275M, so this seem like about the right number.
Mixed EIA report this morning. Crude inventories fell, total petro products up a little. If I was a short, I might be getting a little nervous that the supply /demand situation is starting to show signs of a correction. Gas demand up. These stocks will turn before the price of oil turns in anticipation.
You should read the press release and not the headline. I believe they declared 4 different dividends/distributions to be paid in the month of Jan (not distributions for the next four months).
Oil can print $20 and it makes no difference to BBEP's earnings with the hedges, unless it stays down. So who cares. A fast hard spike down in the price of oil followed by a quick recovery would be a good thing..
That pretty much sums it up for all the shale plays. The market is currently betting that the hedges don't go out far enough. It's not clear and the market punishes uncertainty. Rigs shutting down left and right. Hard to understand how the supply/demand won't balance out pretty quickly. The other uncertainty is how well the shale plays will do if oil only recovers to around $70 a barrel long term.
Last month was announced early. They usually announce at end of month. They announced on 29 Oct 2 months ago. Should be any day.
Totally agree there. Buy back debt while it is on sale in the open market.