I sold a few days ago after the announcement that indexes were going to remove BDCs hoping to buy back in at lower prices which has happened as a result of yesterday's very poor earnings announcement.
Now, I will not buy back in. I think management has a lot of explaining to do in terms of the last large capital raise. Clearly, it was unjustified by returns and that raise was over a quarter ago. Investors can usually expect a capital raise to immediately deploy and be accretive to earnings. I have no idea what is going on when you come up 7 cents short on a base dividend of 34 cents.
There is something very wrong here. Management failed to deploy capital raised in a meaningful way therefore capital should not have been raised.
It appears ARP intends to pay the entire $107M purchase price with proceeds from secondary. They said it would be accretive. Hopefully, they still have fire in their credit lines for a future acquisition at a lower cost than their present cost of equity.
Do you have any idea the corruption of the Brazilian government that destroyed shareholder value here?
Let's put it this way... PBR had to get a loan guarantee from Obama..... do you want to invest in an oil company that needs a US government loan guarantee?... Think Solyndra.
The problem is the same accretion and thoughts were said about that Geismer processing facility sold to WPZ by WMB over a year ago that suffered the explosion last year. The accretion should go to close the negative dcf coverage outlook (WPZ still projecting negative dcf coverage for 2014) but still doesn't get WPZ where it should be compared to the peer group.
You just need to watch this one real close now. It has been dead money on a capital basis with the only return being income distributions since 12/12. Now the two hedge funds want action and be weary of their demands because that may result in WMB doing things for itself that is at WPZ's expense. I hope you are right about these Canadian assets and hopefully this dropdown does not result in the need to file Canadian tax returns. WPZ can avoid if they are willing to pay a flat tax to the Canadian government in lieu of all partners having to file returns. PAA decided to do that because the Canadians were rather aggressive in pursuing US investors back in the days when PAA's owners had to file those returns.
I sold WPZ DEC 2012 when it became clear that WMB was forcing WPZ into ownership of assets that are inconsistent with MLP operations. Now the hedge funds are forcing WMB's hands with another dropdown of inferior assets. I used to think highly of WPZ but the market is now reflecting these realities that WPZ is taking on business segments inconsistent with all other MLPs.
Kinder can end this the moment he merges KMI into KMP. Aligning the interests of the two the same way EPD, BPL, GEL, MMP, and a few other MLPs will end this once and for all. Kinder's ownership in his GP compared to the MLP is startling and is a message to investors. Even the Cohens who are not highly thought of in the MLP arena because of RAS have a better ownership ratio between GP/MLP with respect for ATLS and APL.
Cooperman lowered his stake in ATLS and APL which looks like very deft moves on his part. I owned APL from high single digits to $36 but sold because I thought they overpaid for Cardinal assets and would turn out to be disappointing. ARP ownership requires the patience of a saint because I cannot figure out why we are just stuck for the longest time.
I don't think to 2014 guidance was well received today. However, the distribution of $1.47 is one penny better than Credit Suisse expected. I have to think XTEX was running ahead of itself but I am convinced this is going to be a huge MLP 2-3 years from now as the combination of growth capex and the remaining dropdowns from Devon take hold.
The upside surprise thesis may be possible. NGLS knocked the cover off the ball and they are a major G&P. MWE also up big today too.
The last time I saw two days of action like this was a prelude to CMLP being added to an MLP index.
In this case it may be more about a reality that the Devon/XTEX formation of a new, powerful MLP represents the next generation style MLP/E&P joint venture. I believe there is more earning power for XTEX holders going into the new MLP than say WES earns from its Anardarko dropdowns because Anadarko must charge full fair market value for each dropdown. Now, Devon having done a substantial dropdown with some more to go can drop down for less than full FMV because they are a JV owner whereas Anadarko is not. Then you get to the future and the new MLP will do as much of Devon's future midstream needs thru this MLP. Devon gets the advantage of not having to do its own midstream development leaving more in its pocket to do its own E&P without as much borrowing.
I suspect this year another E&P will do the exact same thing with an MLP. My hope is later this year it is CMLP that gets the call but CMLP has work to do in regard to its own major acquisition of NRGY and related capex.
disabled, the deal isn't structured that way. Devon will use its own capital for E&P. What Devon has done for itself is set the stage for having the new MLP do as much of its future midstream development through an MLP rather than Devon have to pay for it and then sometime down the road when Devon would need or want more capital have to sell the midstream asset to an MLP as a dropdown. Anadarko and WES have this relationship and up until the Devon/XTEX that has been how E&Ps and MLPs have functioned together.
This Devon/XTEX transaction is IMO the next step forward. I expect to see another E&P join with another MLP in a similar arrangement this year. I don't know who but I am hoping later in 2014 it is CMLP which has many of the same characteristics going on that XTEX had going on prior to the Devon transaction. CMLP's CEO was a former division CEO at EPD so he knows how important it is to get to investment grade status which is exactly what XTEX was pushing toward and it has now been realized as part of the Devon deal.
airlease probably has it right.... BWP heads lower and certainly after falling out of various MLP-weighted indexes for sure. CMLP has pushed up nicely after its recent inclusion so the opposite must occur especially under these circumstances where various funds are prohibited from owning investments removed from indexes OR not included in indexes.
For the last five years everyone on this and other shipping message boards have been pontificating themselves into negative capital returns. These shipping companies have lost more wealth for shareholders. NAT is the worst of the lot having raised millions in capital to buy ships that are worth a lot less today than on the day they were bought because NAT's CEO sees day rate prosperity every single day and it doesn't happen.
This is not the time to play hero. BWP MUST put forth a catalyst.... selling their GP interest to a reputable GP like WMB which has a related interest with BWP makes sense. It is time for Loews to go. They have destroyed shareholder value because they were behaving like amateurs in what has become "the next big thing".
BWP does not have prime assets nor have they invested in the right places. Their GP is a conglomerate that hasn't taken the energy revolution seriously and hasn't stepped up to play in the big game. In this business if your assets are in older properties that are less and less productive... this is what you get.
What is so great about an MLP losing 30% of its value. That means anyone who has been in this stock for four years has basically zero return with all prior distributions having no meaning now as they simply offset one day's huge capital loss.
Here is the deal. If you don't own best of breed MLPs then this is the risk people took for what...? 200 basis points of yield? Is it worth it? While there may be an opportunity later on in BWP there is no catalyst to stay in it currently. Better off buying into another MLP with 20% upside and a lower yield than get into BWP which officially starts its dead money period for who knows how long.
If the WMB/BWP JV does not work out there will be trouble. WMB got into a deal with APL a few years ago in Marcellus and APL couldn't honor its commitments in a timely manner. Chevron bought out APL's interest for a pretty penny that turned out to be too much paid for it.
What catalyst am I looking for? I want Loews out of the MLP business. Better for BWP to be run by a GP that is completely devoted to energy infrastructure rather than Loews for which BWP is incidental to the whole of Loews conglomerate.
Loews needs to get out of BWP. Its time for a new GP to get involved that spends all of its time focused on the energy infrastructure business. Look for a catalyst is all you can do if you decide to stay in. I never owned BWP because I felt Loews has never been in the business of running this MLP with a solid long term growth path. The recent drop as a prelude and today's drop is proof perfect that an MLP cannot stand in place forever.
BWP hasn't developed a decent growth strategy for several years. Now things get interesting if BWP can initiate growth after the distribution cut. APL and XTEX were two MLPs that had to do the distribution cut thing and both have emerged from that mess to reward shareholders who either stuck it out or got in after the cut. I was never in BWP but I will be looking for an entry point which IMO should be some announcement that would translate into future growth and in time a restoration of a more normalized dcf/distribution level.