if you lack time.....why are you wasting precious moments of it on a Yahoo messageboard? I post here because i enjoy it and have lots of time on my hands sitting in front of a computer screen.
and it doesn't have a 50% distribution to pay out. EVEP is being priced for a distribution elimination and later distress sales. This is why EVEP can't sell land. Because the buyers know that sometime very soon, sellers will be puking up their land. No hurry to buy in this market. The sooner EVEP comes clean and admits there will be no distribution, the sooner certainty returns to EVEP.
I admit, I flushed out all of my EVEP. I own no more. I bought a lot in the teens on the way up. Buying all of the way up to $70. I had one lot bought above $70. Sold much along the way, but had started buying again in the 6's. But this is too much pain and I have zero confidence in EVEP management.
My hunch is Mercer wanted to cut two quarters ago but Walker would not allow it. Mercer is not that dumb. Walker is. Walker was talking V shaped recovery a year ago.
For EVEP's production, yes, gas prices matter more. But for their land sales, they have a ton of Wet Gas acreage. NGliquids prices being depressed along with the price of oil. They also have a lot of black oil acreage in the Utica which had marginal value at $100 oil, seen buy buyers as wortless at $40 oil.
So, being cash flow negative, they will use up their credit line pretty quickly and be forced to either sell stock, sell productive dry gas land which will reduce cashflow, sell wet gas land which is depressed, or sell oil land which has no value.
That's why I beat the drum about conserving cash by cutting the distribution. Because the next band aid will need to be a tornequit on an amputated limb.
But a quick move to $70 oil and $3 gas won't save EVEP because of the hedges. Hedges cut both ways. They save you if prices continue to fall, but the prevent you from profiting if prices snap back, EVEP is hedged at slightly better than today's prices for the next 2 years. The recovery would only really immediately affect the value of it's land holdings. The problem is the distribution is an enormous expense that provides no value once paid. $25 million spent on production pays out over the years. $25 million spent on the distribution is simply money out the door.
This company needs to survive long enough to realize the value of the land. Paying $25 million on the distribution is an unaffordable luxury for EVEP. So they cut the distribution and the share prie tanks. Share price will tank no matter what. This is a deeply distressed company as all E&P's are. There are no healthy E&P's.
the street sees Walker as an incompetent, suicidal idiot. The street is correct in that assesment. Walker has destroyed this company. Remember Walker was buying EVEP units personally at 40, 50, and 60. The guy made 1 good call in his life and declared himself a genius. Walker is king of the idiots. Master of nothing
that's as close to a guarantee this deal will be done as you can get.
This is a good deal. It was a good deal back in June. These assets are perfect complement for each other and Kelcy will make WMB shareholders money. WPZ unitholders will benefit from dropdowns and $410 million in idr waivers.
Ken, most long term holders will take the exchange and minimize the tax hit. BTW, still have the red honda foreman here ;-) dropped a tree on it and bent the equipment rack, but otherwise good as new. was dumb to not take the trailer though
They will own units of ETE much in the same way KMR (KMP) did and LNCO(LINE) does
On the day you bought WMB at $48, is there any other midstream that you could have invested in that has performed better? throw a dart at the sector, they are all down bigtime. It will recover and your ETE/WMB investment will outperform.
No conversion to a c-corp. they will issue separate c-corp stock under the ticker ETC. Think back to KMR and KMP. LINE LNCO. separate but equal ;-)
That's about the midpoint for midstream MLP's. They aren't selling video game consoles, their pipelines and gas plants are long lived assets. They aren't built on spec either. They have committed customers before being built. That's what all of those "open season" PR's mean. They have an idea for a pipeline, they solicit customers to buy capacity on that pipeline. Once they reach a high enough threshhold, the pipeline gets built. If it doesn't they cancel. As for customers going bankrupt. The wells still exist. The wells still flow. The customer goes bankrupt and his assets, the wells, get sold to another party. They well keeps producing. Williams keeps collecting. You'll see a lot of producers go bankrupt. You'll see practically no midstreams go bankrupt. Can they lose money? Sure? But it's small incremental losses. Nothing that would endanger the company or the dividend. That kind of loss would be a world of $5 oil and 10 cent nat gas. Possible. Not probable.
Asset sales are different for midstreams. Right now no one wants to buy E&P assets. Land assets have little value in this environment. Look at the pipes that have sold. Not bubble prices. But not far off prices from a few years ago.
WMB debt right now is not at all problematic. If things get wors, sure, it could be. But you need to see massive defaults and bk's in the E&P world first. Then moving on to the smaller and weaker midstreams. WMB is much further down the road from that kind of carnage
So I just called them, Brett in IR. They have NOT voted to declare the dividend yet. They DO anticipate NO CHANGE to the guidance they gave earlier (.64). It sounds 100% like the ETE deal is the delay and he danced every which way to reaffirm previous guidance without making any prediction on WHEN or WHY. Just that they haven't voted to declare the div yet. It isn't a lot of information, but they aren't hiding either.
You are correct, on 7/29 they announced plans to increase to .64. I do, however, have two notices of .59 x/d for tomorrow. Will be interesting to see what happens. I checked the Nasdaq site and it it not on the calendar
WMB goes x-dividend tomorrow. 59 cents. I got the notice in two separate brokerage accounts
They are disciplined enough to say nothing about the bid at the conference. I would have expected it to be done today, but that said, it won't be long. It wont last until October. The CHK deal is very helpful in giving certainty of pricing in 2 basins. Wasn't critical to the deal, but it is very helpful. I'd be surprised if this goes until the next 3 day weekend.
Nov 30 is when WMB owes $410 million to WPZ if it does not go through with the WPZ merger. Need a vote of WMB shareholders for that to happen. To get the proxies out takes 45 days I believe. So basically, No more than 1 month before WMB would need to commence taking over WPZ.
ETE is at the Barclays conference the first half of this week. Williams supposedly is not
Williams isn't "aligning" itself with CHK. Williams bought all of CHK's midstream a few years ago. CHK was choking on their producer commitments under the deal and that was seen as a risk to WMB/WPZ. CHK was seen as "drowning rat" partially because of what it owed in production to WMB/WPZ. Ensuring CHK's survival and increasing the size of the deal is pretty close to a win/win. Also makes it much easier to value for ETE or some other bidder for WMB.
BTW, if the deal were in trouble, you would hear Kelcy howling. Him and the CFO, at the beginning, said they would go hostile and would seek to influence publicly the WMB/WPZ vote. They then signed the standstill agreement. If the deal were in trouble, they'd be resuing it in the public forum the way they did at the beginning. We have had complete silence for weeks.
WMB has traded at between $3-7 below the deal value the entire time since the deal. That it trades below is normal. there is always risk the deal wont close. If WMB traded at exactly the deal amount, there is no reason to make the trade at all. The spread sometimes gets abnormal and that's what arbitrage is all about. You make money on the inefficiencies of pricing. That ETE and WMB are indeed trading in lockstep, albeit at the $3-7 offset, suggests the deal is alive and well. Otherwise, it would be WMB and WPZ trading in lockstep as they have the backup deal that has 100% chance of closing if ETE does not happen. WMB and WPZ have not traded together at all since ETE went public.
yahoo doesn't allow links. go to the WPZ 8k on May 13. it is in section 7.6 of exhibit 2.1 . Deadline is Nov 30
SECTION 7.6 Parent Termination Fee.
(a) In the event this Agreement is terminated (i) by WPZ pursuant to Section 7.3(a) (Parent Adverse Recommendation Change) or (ii) by WPZ or Parent pursuant to Section 7.2(c) (Parent Stockholder Approval), and in the case of each of clause (i) and (ii) where prior to such termination a Parent Adverse Recommendation Change has occurred in connection with a Parent Designated Proposal, then Parent shall pay to WPZ, within two (2) Business Days after the date of termination, $410,000,000.00 (the “Parent Termination Fee”).