That was expected and discussed in the conference call. They have less cash flow and less productive assets after the sale. (for now) they also paid down the revolver. So though the credit facility went down proportionately, I believe available undrawn credit is up. Regardless, this is not new news for shareholders or analysts. It was always baked into the numbers. With an acquisition of new production, assuming commodity prices remain stable, it is possible to be raised again. If prices go down, everybody will be hit again.
Because EVEP is not a midstream company. They are E&P guys. They sold an asset with much value that isn't at all part of their core business. The only reason they got in in the first place is to insure infrastructure was built in their operating areas and that they got anchor shipper rates on the pipe. This was done when they expected to be much more flush from land sales. The land sales didn't work out, but the got midstream built and doubled their investment. I'm not going to stand up and cheer too much for them, they have F'd up enough as it is, but having the midstream was luck and selling it was necessary. The Alternative would be several secondaries or a sale of a vast chunk of their land.
I'm not a Walker fan. but I agree with UEO being sold.
If they were cutting the dividend, the last thing they would be doing is buying back warrants. Right now the warrants are trading below the level they have historically bought them at. Midstream is weak right now. Yield stocks are weak right now. Energy is weak right now. A lot of forces working against KMI. Coverage will be pressured in the later years. But that assumes no aquisitions or divestitures. It assumes KMI 2 years from now is configured exactly the way it is today. When in KMI's history has that ever been true? there will be deals. there won't be a dividend cut anytime soon. The markets and KMI will have changed long before getting to that decision point.
I don't see the BOD approving a warrant buyback prior to cutting the dividend. they aren't that green.
GPOR just took 35,000 acres off of Aubrey McClendon's hands for $11,000 per acre in the Utica. Liquidity buys them time. As for projecting to '17 with no aquisitions, well that's not going to happen. They know they've gone too long without buying production. With the UEO liquidity, they have cash in the wallet. Either dropdowns from enervest or distressed properties. Don't get me wrong, I don't think things are great now. But projecting today out 2 years is as wrong as projecting out 2 years from the giddy goldrush days of the Utica runup.
Prices will be priced for accretion, particularly for those that are forced to sell. The UEO liquidity will afford them the opportunity to buy accretive deals.
Short interest jumped at the end of April from 700k units short to 1.6 million shares short. That's a lot for a 2 week period. Don't know what they wer betting on, but I see 15-18 as being our new range for the time being. Perhaps they were expecting a dropdown/secondary.
Biggest jump on my screen this month
That hedging question by the asian chick was idiotic. It's as if she believes they can just name their own hedge price. Why aren't you hedged for $5 gas in 2017??? duh
The nettles well will not help sell the oil land. So a negative there. The positive is they got 8 other companies to share that expense.
$1 + of the "loss" was the writedown on the reserves. The oil and gas is still there. it's a paper writedown.
It all comes down to how they spend the $$ fro the midstream sale. While it warms my heart that they aren't in a rush to buy bad deals, they always seem to be 6 months late to every party. Upside is we didn't hear walker say he's spending all his time on M&A.
Neutral call. I doubt anyone expected "surprisingly" good results. there was no negative surprise. Waiting on a deal as usual (but this time at least we have cash)
"Getting rid" of the GP will involve paying the shareholders of the GP a substantial premium over the current share price for the growth they are giving up. May not make financial sense now as that will involve substantial dilution to NGLS. Right now, there is a lot of pipe and midstream being sold by the oil companies. those companies need to sell. The $$ is better spent growing the business rather than financial engineering. right now with the assets that are on the market right now.
TRGP owns no assets other than NGLS units and the IDR's for NGLS. TRGP will almost always appreciate faster than NGLS because the IDR's are paid out first from NGLS distributable cash flow, the remainder is then distributed as NGLS distributions. That's why TRGP dividends are projected to grow by 25% next year while NGLS distributions are predicted to grow in the low single digits. You are being compensated for the lesser growth with a higher distribution.
Consider LINE and LNCO (I know LNCO is not a GP like TRGP, but humor me here) LINE and LNCO both yield close to the same amount because they have identical growth trajectories. They are essentially identical securities other than the corporate structure. MLP vs C-corp. They will grow, more or less the same. Their distributions will grow the same.
TRGP, if it only owned NGLS units, would be in the same boat. But it's the IDR's that change the calculus here.
You can look at ATLS and ARP to see how the leverage provided by the IDR's work in reverse when you have a sick LP.
but in a downturn, that leveraged relationship TRGP has works in the other direction too. Though I prefer TRGP for it's faster growth, one must acknowledge that the faster growth does have risk attached. We saw some of that this winter
I'm with you. If I only looked at how much I'm up on EVEP in the last 4 or 5 months or so, hey, life is good. But looking at my experience over the last 4 or 5 years, not so pretty. I was fortunate to swallow my anger at Walker and buy when sentiment got real bad. $12.12 was my recent entry. Don't know whose decision it was, Mercer, possibly, but whoever approved the distribution cut deserves some praise. It was a demonstration that, hopefully, the gunslinger days of just say no walker were behind us. EVEP was getting no benefit for a 24% distribution.so eliminate that expense. a no brainer for most. Long time coming for EVEP. EVEP isn't out of the woods, but as they say, when you and your buddies are being chased by a bear, you don't have to be faster than the bear, only faster than your slowest buddy.
I hesitate to defend EVEP managment and I do fear what they might do with $500 million but 2 issues with $500 million yielding just $60 million.
1) EVEP claims their benchmark for projects is 20% IRR. (I agree, easier said than done) but they said it, I expect they would land somewhere closer to that number
2) You forget leverage. (though I do hope they lighten up on the debt) $500 million cash as they currently are operating would put $2B of assets on the balance sheet.