It's much more than $358M, don't forget the $405M gained through lowered self-bonding and reduced liabilities. In addition to the cash $358M infusion, Peabody benefits from shedding the $105 million in related liabilities, as well as being able to reduce its self-bonding by over $300 million (over 20% of its total self-bonding).
Give it 3-days to settle out. I don't see the distribution being raised before the next credit review in May 2016, so there's time to buy.
Please go to the company's article announcing the credit amendment, it states: "As part of the amendment of the credit facility, the Partnership has agreed to adjust the Partnership's common unit distribution to $0.15 per annum, which the Partnership expects to pay on a monthly basis. "
It may have been un-American when we needed to import oil but not any longer. I'd prefer to see $80 within a couple years, but not highter than that level.
I'm well aware of that ARP/ATLS situation, when management pushed out that first promised distribution. Keep in mind though that they have been receiving the $.1083 distribution from ARP the entire time and will likely distribute in the first quarter 2016. By then ARP will either cut their distribution or suspend and ATLS will have a better idea going forward how much to distribute. Cooperman won't let them not give him some money back.
It's the same story with any MLP company though that suspended their distribution. That's why I said we'd trade down to the lower $2 range like LINE, LNCO, MCEP and any others that I may have missed that suspended their distributions. We are in better shape hedge-wise than many or all of those company's and that's why our distribution could be used to both buy down debt and buy back shares.
BTW, I didn't expect us to drop almost down to $3.50 in 1-day. There's really no relief in sight though until the 12/4 OPEC meeting and who knows that outcome may drive prices down even further, unless it's a sell the rumor, buy the news scenario.
We all know what's coming, so let's get it over with and go 2 quarters without the distribution. With this week's credit downgrade and oil likely going under $40 and staying there for a while, we know it's coming. That's why we are currently trading under $4 and likely heading down to the $3.50 range very soon.
LGCY and EVEP are hovering just at or below the $3.50 level and we are likely heading there too. It's not a matter of if, simply when. BTW, I would expect the two aforementioned stocks to head down close to the $3 range, when we trade at or below $3.50 because of our hedge book.
I own 10k MEMP shares and it will hurt, but if done properly, we can suspend the distribution for two quarters and be a much stronger company. I say done properly because it's bound to happen unless oil heads back to $50 and that's not going to happen before Spring 2016. So let's go ahead now, suspend the distribution, take our lumps down into the low $2 range and get it done with.
I can go 2 quarters without a distribution, if the company uses those two quarters of income to pay down debt and repurchase plenty of shares, while trading down in that lower $2 range. It would strengthen the company's balance sheet and allow a $.30 distribution or higher two quarters from now, with eventual increases as gas and oil prices correct.
Maybe the company even starts paying monthly distributions, instead of quarterly, once the distribution is reinstated. If done properly, it will be worth it in the long run.
JMHO, thoughts welcomed!
it appeared there was plenty of day-traders buying and selling throughout the day, so it's hard to tell what the true numbers are. Once we broke through support at $4.50, it appeared there was a lot a guessing by those traders at a bottom for the day's close. It's the very reason we closed at or near the day's lows.
If the charts are correct, there's more downside, even without a distribution suspension announcement. Then again, all my research was done prior to the attacks in Paris and impending strikes on ISIS oil.
It may or may not throw a monkey wrench into the price targets set once support was flushed.
If you believe in charts, they are saying this stock goes down to just above the $3.75 level. The support level at $4.50 was broken and we closed at $4.19, so the above target is very likely. Of course it could easily go down and test the $3.50 level.
This of course is provided that management doesn't come out and state they need to suspend the distribution to strengthen the balance sheet during these unprecedented times. If that occurs, then take at least another dollar off and use $2.50 as a target for a bottom.
I'm preparing for both scenarios, with any distribution suspension news coming in January 2016. I would think most here feel like they purchased way too early. Good Luck!
Didn't it seem odd that there were only two analyst asking questions at the ER? Seems like a very low number of call/interest compared to past calls. Either there were phone issues or others got tired of the naked puts and how they are considered hedges issue and left.
It is a bit usual that we didn't spike up huge after hitting below $6 and then $5.81. We are up to over $6 now but you'd expect a much higher spike. Maybe today's close is going to be ugly, but we will never see $4.50 unless there's a dividend suspension and that isn't happening.
I agree with your assessment and bought at $6. Oil surplus isn't likely to decrease until next year when the current 2015 oil hedges expire. Until then companies will pump as much as they can at those hedged prices. I've seen too many MLPs reporting huge losses but record oil output. It's one of the reason I purchased more of this stock today because I don't see as many issues in VNR.
That plus even with a rate hike, you'd still get under 1/2% interest in a bank.
I know it was 2 quarters ago and the transactions occurred. I also stated, show me something in writing to dispute the above statement and you give me absolutely nothing but a knucklehead short target. Thanks for nothing!