CHK is a huge WPZ customer after they sold their ACMP midstream to Williams. CHK bankruptcy risk was a huge WPZ risk factor. Last quarter WPZ renegotiated some of it's rates for a larger acreage commitment from CHK. Today CHK had it's revolver renewed and borrowing base redetermination postponed for 1 year. The bankers took bankruptcy off of the table. Huge risk removed for WPZ. Puts the WMB merger in a whole new light too.
CHK is a huge WPZ customer after they sold their midstream to Williams. CHK bankruptcy risk was a huge WPZ risk factor. Today CHK had it's revolver renewed and borrowing base redetermination postponed for 1 year. The bankers took bankruptcy off of the table. Huge risk removed for WPZ
CHK is a huge WMB customer and CHK bankruptcy risk was a huge WMB risk factor. Today CHK had it's revolver renewed and borrowing base redetermination postponed for 1 year. Basically the bankers took bankruptcy off of the table. Huge risk removed for WMB.
Yesterday Moodys made ratings moves on debt it has been reviewing since the merger. A mixed bag. Some downgrades to NGLS and an upgrade and stable on TRGP's (they are still segregated for ratings purposes). the comments were encouraging for the environment we are in. adequate liquidity and coverage + or - for the next year.
Targa's SGL-3 rating reflects adequate liquidity through at least early 2017. As of December 31, 2015, TRC had $140.2 million of cash, including $135.4 million of cash at TRP, as well as $1.3 billion available ($280 million of borrowings outstanding and $12.9 million of letters of credit) under the $1.6 billion TRP senior secured revolving credit facility, and $230 million available ($440 million of borrowings outstanding) under the $670 million TRC senior secured revolver. We expect TRC to be breakeven to slightly negative in covering dividends and maintenance spending with operating cash flows because of the expected weaker EBITDA in 2016. TRP will need to use its revolver in order to fund its growth capital projects, which are all expected to start providing cash flow in 2016. However, TRC's $1 billion of combined proceeds from the preferred equity issuance in March 2016 will offset the increased usage of the TRP revolver, as overall consolidated debt levels are likely to be reduced with the proceeds.
Both TRP and TRC were in compliance with the covenants governing their respective revolving credit facilities. Despite the expected increase in consolidated leverage in 2016 and 2017 from 2015 levels, we expect both Partners and TRC to remain in compliance with covenants into early 2017, although TRP's covenant cushion will decrease while TRC will continue having ample headroom. The TRP revolver requires maintenance of EBITDA to interest expense of at least 2.25x, debt to EBITDA no greater than 5.5x, and senior debt to EBITDA of no greater than 4x (excluding the TRP unsecured notes). TRP's leverage covenant calculations exclude the secured debt at TRC. TRC relies on general partner distributions, and limited partner distributions to service its debt obligations. The TRC revolver requires maintenance of a consolidated debt to EBITDA ratio of no greater than 4.75x, which excludes both TRP debt and EBITDA in calculations for compliance. Secondary liquidity is limited as the majority of the partnership's assets are pledged to the senior secured creditors. The nearest maturity is that of the Partners' revolver, which matures in October 2017. The TRC revolver matures in February 2020.
The preferred raise was onerous. that's for sure. I think it's a prudent move though in this environment that some companies are raising funds no matter how much it costs because the future may hold even more onerous terms or no terms at all. Think of E&P's that raised when their stock was down 50%. Probably happy they did because it has only gotten worse for them. Generally I am in the "cut the dividend" cam to save the company. Unless they are seeing clear signs of potential stress out their with their customers, I think they hold here,
Sabine, though is a red herring. Midstreams that are renegotiating are doing so with an eye toward commitments elsewhere for additional acreage. Most E&P's don't have an option to ship elsewhere and a BK doesn't shut in the well, simply changes the name on the check. Shutting in a well makes for a mostly unsaleable asset in a BK. Lenders unable to recoup.
Why would they cut? Both NGLS and TRGP covered last quarter and are projected to in the most recent presentation. Ethane and Propane prices have risen significantly in the past month.
I'm going out on a limb on this one, but I believe LNG tankers run on LNG as the LNG expands during the cruise and either needs to be burned or vented. Use it or lose it. Don't quote me on that though.
Methane is "regular" natural gas. Ethane has one more atom. Propane has one more atom than ethane. Then comes Butane. Then comes Natural Gasoline. These are all technically "natural gas liquids" It's what "wetgas" gets separated into. Some Ethane can be "rejected" and burned as "regular" natural gas when ethane prices are low. Limited amounts though. The rest are "heavier" liquids. Ethane and propane can be shipped together in a pipe. This is called "Y grade" Ethane and propane are used in plastics manufacture and that's where export is going. From Marcus Hook and from Mt Belvieu. Butane and Natural gasoline get mixed into things such as motor fuels. Butane used in winter gasoline. Natural gasoline a low octane grade of ....gasoline ;-)
NGL's have been crushed in the past year. crude oil and natural gas prices low. NGL's lower. All 3 are improving in the past month or so.
They should have been managing for survival 3 quarters ago. The moment they sold UEO, that cash should have been protected like it was lifeblood. Instead they #$%$ away on distributions