Iner - Would be more impressed if M* knew what a MLP was. In the past they have put down MWE because revenues and EPS were down. Also would not say M* is optimistic as they are simply parroting back the numbers given in the press release by MWE.
I do agree that the time to buy is when there is blood in the streets. I tripled up my position in MWE lots of years ago when their CFO screwed up and they failed to file a 10Q. B&W is correct in that patiencve is the word. We all just did not know that it would take at least another 18 months for MWE to get back on track for a great DCF coverage and CAGR.
Just read the 10Q you received in the mail. It explains the approval process and where AMPE is. Add the new info since the report date and you have the raodmap.
There were 4 new reports out as of 3pm local time. All DCF estimates in line w/MWE range or a tiny bit higher. The significant question about all was the suggestion of about a 9% CAGR for distributions in 2014 with coverage ratio staying at 1.0 to 1.1X. That would suggest investment grade no longer a goal for either 2014 or 2015. MWE also stated grwoth would drop significantly in 2016 and beyond and DCF thus rise quickly thereafter. Wonder if that means MWE is going to cease finding profitable growth projects. LOL.
B&W - The difference that does effect you is this means the distributions you wlll receive will be less in the future and the unit price lower. Understand the difference for reinvesting distributions is about zero, but it effect MWE for at least 4 or 5 years. This is a significant change potentially in the focus of thec company. It also suggests that MWE will trade lower (in the 60s) over the next year or two. Remember what happened with the distribution CAGR cut? It also suggests that there are some management issues along with the normal growing pains.
Does it make sense to you for MWE to delay reporting for a week when it had to know there were issues and the week before put out several notices extolling great things they had done? They historically reported one week earlier.
PS - I too am not interested in selling, but it makes the story gfoing forward a bit more suspect.
B&W - Disagree a bit. Frank stated that DCF numbers are basically pushed back 1 year. Some of what he said did not immediately compute in my brain. Bottom line if you run the numbers today is using a .01 increase per quarter and a $650M DCF run. This give distributions of I get 142M units today + 4M EMG units + 5M to be issued this quarter + abt 15M issued for a 2014YE total of about 166M. This would require $577M so very little retained and about a 1.1X coverage. My numbers are using $70 for an issue price, but think this is going to be optimistic if CAGR stays in the 5% area. At $65 they need to issue 22M units between now and end of 2016. Am sure you and other get the problem.
Then we get a ramp up to abouty $850 in 2015 but until the capex ramps down in 2016 the DCF does not ramp up for a return to .03 or greater increases in distributions.
Read the S&P metrics and discussed them with the CFO of another NYSE traded company. you are 100% correct. Stability is needed, but these results are certainly stable, they just did not meet anyones expectations. The big issue is the interest coverage ratio which currently is well over 4X and needs to be in the area of 3.5X. Hard to do that grwoing as fast as MWE is.
If my reading was correct there are two more projects going on line in this quarter and five more in Q1. If they can get at least half of Q1 for those 5 then the May report could be good.
bj - Credit Suisse is the one that predicted $900+M in DCF for next year. They currently have NO credibility. The problem is with reduced DCF numbers - remember MWE is saying 600-690 and with low NGL prices we will be closer to 600M - they do not have the $$ to do the payout increases as MWE has already said they need to retain earnings to get investment grade. My guess is we are looking at another year of .01 per quarter. I think you need to look at what the NEW estimates for distribution growth will be.
Note - I look at this as a blip in the road and [possibly a place to buy a bunch more MWE. It simply means as I have saaid for years - until their growth rate for organic projects drops under 10% of EV they cannot get nearly as much to the bottom line. MWE keeps adding projects to their book faster than they complete the old ones. I understand the opportunity and am happy to wait, but many will not.
Wonder where our most optimistic poster - B&W - is right now. Would like his comments. The CCall will be interesting. The real problem as I see it is not the problems in the buildout - you always get those - or the NGL line break - dotto - but the NGL pricing situation. More takeaway gets the liquids to someplace else, but where. There are more liquids today than we have in demand. When do those two curves have the demand curve north of supply?
You did miss part of my premise - EPD gets by with .01 because of high coverage, MWE got by with the premise of much higher CAGR going forward. Now wehat?
Marv - Think you misread his post. He called for DCF amounts not distribution. The other thing is that there could easily be lots more units out there. A $2.2B cap ex requires $1.1B worth of retained earnings or units. Using a continued .01 payout increase gets us a YE rate of about $3.56 or maybe up to $3.65. If retained earnings are only about .30-.40 that is only about $100M at most. That requires about 13M units + the 4M EMG units to cover the capital needs and they MUST get the EBITDA down under 4.0 to get investment grade.
Could actually take a bit longer than that because so much stuff goes into service in Q1. What I do not remember is exactly when the next 4M units vest. Is it in Q2 or at the beginning of Q3. After market is ugly and going to get worse. IMO. ARB
CS was very high but the others are all well above the $600-680M number except BofA. MS numbers were about $780 , BofA $686, Citi $766, WF $763. All the numbers are going to take a significant trim. Also still hoping for clarification on the number of units outstanding. They sold 10.4M units in Q3 and had 4M vest, but outstanding units was down compared to average from the 9 months????!!!!!
I posted a question inside my post. Help appreciated. Also CS estimate for DCF for 2014 was $956M and MWE estimate only $600-690M. Know CS estimate was very high compared to others but this will be ugly tomorrow IMO.
At first glance with DCF flat from the prior two quarters and a forecast for another $120M in DCF next quarter the market will probably not be very excited. The DCF forecast for 2014 was 600-690M.
Most important - I have a question for somebody - The report lists a weighted average 142M units outstanding for the quarter ending in Sept and 153 for the 9 months. How is this possible? Also how could their be no option outstanding for the 3 months but exist for the 9 months? Did MWE mess up or did I?
What? NS does not cover its distribution and is a MLP in a turnaround situation. It has interesting assets, but need a few more quarters to show it can do it right. The price action today is simply suggesting that NS can continue paying its distribution that is now at almost exactly 10%. Prior to this quarter the debate was about a distribution cut. Could someone buy NS - absolutely but you would not see any buying before the offer.
Got to remember here that Gary Evans speaks before he thinks. He fiorst says that MHR sold MWE the plant - True. Then he says that MWE cost MHR a bunch of money because of a permit problem related to Mobley - True. Then why it the plant location and permits MWEs fault?
Next - He says why would MHR take dry gas to a cryo plant for Utica gas and then goes on to say MHR is looking at building their own Utica cryo plant.
This from a company that did not file its 10Q on time because Gary Evens refused to hire sufficient accounting staff. GE is a great oil guy, but not so good in running the financial end. Eureka Hunter laid about 50 miles of main line pipe lathis year so far. MHR is getting finances together but has a long way to go. The idea of MHR building its own cryo plant IMHO is pure folly. They need to retire their 10.25% bonds first!
FWIW - I own MHR in a small position and lots of MWE.
Guess we will not find out until the end of the open season unless i can learn something in Denver. Interesting run up today with almost no volume again. interesting with the VERY high institutional ownership there are few shares offered.
This from the NS release of this morning: NuStar has begun work on a project for its 12-inch pipeline between Mont Belvieu and Corpus Christi that will reactivate the line, reverse its flow, and convert the line to NGL service. The project, which is scheduled to be in service in the second quarter of 2015, will be supported by a long-term anchor shipper that plans to utilize the majority of the pipeline capacity.
“We are very excited to place this idled pipeline back into service,” said Anastasio. “This line has the capacity to move approximately 110,000 barrels per day so we expect to ship additional NGL volumes over and above the long-term anchor shipment commitment we are announcing today.”
yup. Iran simply trades oil with its neighbors. The Iranian oil stays in the other country. The other country sells the oil (thiers, not Irans) and takes a cut of the $$.