Management gave guidance long ago and the numbers from the analysts were simply above those numbers to above it BIG TIME (read CS). Agree the announcement timing was unfortunate but things going into service and agreements need to be announced in a timely fashion.
I do note that MWE management has put for an estimate of DCF and has all but two quarters in recent memory greatly achieved above those projections.
The SA article is by an author that criticized EPD for retaining too much cash, but said nothing about MWE at the same coverage ratio a bit over a year ago. Is absolutely clueless IMO about MLPs and the simple fact when you need to raise cash you go a]out and raise it!
The author's premise shows he does not get it. I posted a reply there. The author is suggesting that MWE is growing the DCF at a rate slower than the unit growth. Simply does not understand that there are costs to be paid before a new unit goes into service and then a significant ramp up. I thought MWE got a bit pricy at above $70 but with a tax basis of zero am sort of stuck. MWE has some 14 units that will begin producing $$ from October 1st thru 2014. Thus the run rate on DCF (despite a continued terrible frac spread) should be about $750M for Q4 of next year or more. Absolutely crazy to suggest when MWEE is putting about $3B worth of new assets into service that their DCF will grow at a lesser percentage.
The premise that a company only sells new units when they think their stock is overvalued is crazy. MLPs like MWE sell when their accountant says they need cash. Comparing MWE with the way Carl Ichan runs a business is insulting.
I do have a bit of info on Alaska gas going to British Columbia and the State of Alaska pulled its support. Current gas prices made the line not viable. Last I heard they were at $20-30B. Lots of environmental issues here too. Lots of changes and hard to imagine the final results on all of them. It is truly amazing.
They agreed with the court some time ago on Patriot. The real issue there was that Peabody spun off a company with too many retiree obligations. Patriot comes out of BK tomorrow. The losers are the retired workers and Peabody.
With 46M units outstanding RNO covers about 1/2 of the distribution. They have been taking about $10M of cash flow to buy both new properties and develop their new mine where they have contracts. Lets forget any arrearages, the question is what are Wexler's intents. They talk a good line, but who knows. Bottom line is until they get Pennyrile on line they will not have a DCF enough to pay on all units. The new mine will provide some 5-7M in DCF.
The GP said it was totally supportive of RNO. and I would expect no change and Wexler is a huge outfit and RNO is an investment where they can afford to wait. Look around - many of the other coal companies have almost no DCF and RNO has a good amount of oil $$ coming in now and those $$ will only go up as GROP gets wells connected.
Suggest you read the 10K summary on SA.
We are now in December and the Hess deal was closed. Interesting opportunities for BPL. Even more interesting is that Hess reported poor earnings and BPL went down. Did the idea that the assets BPL bought from Hess suggest that BPL bought a bad set of assets? No other news in our quiet December time for news. BPL is getting to the place where it is again attractive for a buy, but certainly has no momentum moving it up to the 70s in the medium term.
Marv - I know dang well with the limits are for donations. You have completely missed the point that gifting MLPs is completely different than gifting appreciated stock because of the recapture issue. Please do not tell me I have said anything about paying taxes at a 55% rate. That is a figment of YOUR imagination. All I have said is minors get stuck paying taxes mostly at the ordinary income rate. That could be anything from ZERO on up. Was not aware income was taxed at 55% EVER! Your comment is wrong.
The simple facts are that RNO declares its distributions toward the end of the month in January, April, July and October. They pay approximately on the 15th day of the following month. There are about 28M units outstanding - BUT there are no distributions being paid on the 12M subordinated units. There will be no distributions paid on those units until RNO makes the minimum required distribution and ALL arrearages up on the limited partner units. Thus it costs RNO about $7M a quarter to pay the distribution of $28M a year. They have plenty of money to cover that. ARB
Liz - tapering will probably mean very little at first. MLPs definitely have a sensitivity to interest rates and if long term rates rise to say 3.5% then MLPs will have another flat year. MLPs were the hottest investing category for 7 or the 10 years from 2000-2009. I will take that any day. 2014 should bring returns in the high single to low double digit range.
If you are using Yahoo for anything other than a guide I am disappointed. Remember Yahoo quotes and volume are DELAYED. Yahoo gets them from the exchange and a broker like Schwab. Disagree about the quality of their desktop display. The message boards are in turmoil because of lots of changes regarding spam.
Refinement is my guess. The additional legs simply either support additional volume or lock out competitors depending on your view.
Which ones? I have been having huge issues with the boards lately with some disappearing for a couple days and then reappearing. Do know Yahoo is trying something new in regards to SPAM and trying to limit the number of posting names based on so many per IP address and so many depending on how many years and psots you have made to limit SPAM
Got to always remember that in the USA Zertane is a product that AMPE really doesn't care uch about. The money there is more overseas. Thus they have put little effort into it. Spinning it off makes an agreement easier for other countries. The real $$ is Ampion. The spinoff simply means (if they can do it) a partner can take a % ownership in Zertane and AMPE does not need to fund it. AMPE $$ should go into Optina and Ampion.
Marv - We agree. The problem putting numbers down is if I give 200 units of EPD that I own with a basis of zero to a grandchild and they sell it the next day they have ORDINARY income on the total amount of the sale. They get stuck with my recapture. I understand that few people do it correctly, but this is what the law says. Just do not want people to think they are avoiding taxes and yes I understand that their rate might well be lower than mine.
I have a revocable trust. Anyone having assets over about 100K is crazy not to. A trust makes things easier and the lawyers do not get their cut which here is about 5% plus court costs.
I had a conversion with an IRS supervisor last evening. Gifting a MLP to a minor or other person means that your basis transfers to the other person. There is no stepup. They get an average cost basis for units you hold - I note that this does not seem correct to me. This means they have recapture on any sale.
Gifting to a charity is more complicated and lots of noise about the amount of the deduction either full market value or the adjusted value. Pallasathena on the IV board is the expert here. I do know people who have taken full market value as the deduction successfully.
B&W - I got my answer. I am always nervous until I find the answers to questions. What MWE did was continue the current amendment allowing leverage of up to 5 times. That is not good because it means that DCF is not coming in as fast as we all would like and investment grade is off to probably 2015 late in the year now. Being nervous does not imply any indication or interest in selling, but rather possibly an opportunity to BUY more.
As to the giving plan - Giving MLP units is not the same as regular stock. There are very different laws and your suggestion would create a partial sale if simply gifted. As I posted separately - anyone looking to gift MLPs needs to contact an attorney as the capital account basis create numerous legal issues.
Gifting a MLP involves a lot more than a regular stock. Will definitely require an attorney to correctly deal with the recapture. Pallasathena on the IV board recently did it successfully. Send her aPM. ARB
That you do some DD. For some the E&P plays are good, others too risky. Midstream great for others. Some do not like MLPs and other love them. Nothing fits everyone so do your own exploring a bit and read some broker research.
MWE amended its line of credit to permit a leverage ratio of up to 5.5 to 1. Does this suggest something or am I just a bit nervous right now? I believe the old limit was 5 to 1