They're not going to cut the divy. Their coverage ratio is 1.3 at the current divy and they still have a 1.0 coverage at $40 oil and $2.25 natgas AVERAGES. Insane 20% yield now.
See Bezinga site. Adding
just playing catch up. Adding
and their hedges and so that's over a 17% yield. Someone will wake up and figure that out and we'll be back at $10 sooner than you think.
Notice this quote - "The firm also says defensive names with low commodity exposure make the most sense going forward" If you think about the hedges MEMP has in place for 2015-2017, they are hedged about 85%. So MEMP has very low commodity exposure.
Aug 11 2015, 10:25 ET | By: Carl Surran, SA News Editor Contact this editor with comments or a news tip
Credit Suisse upgrades the MLP sector to Overweight following the recent sharp selloff, saying reversion to mean yield ranges suggest a total return outlook of more than 40%.The firm notes that the overwhelming majority of distributions have been made, and MLPs are tracking to 7.8% Y/Y growth (excluding upstream and coal), above last year and at the high end of its 5%-8% forecast range for this year.Credit Suisse says its top picks in the group are Genesis Energy (NYSE:GEL), Tallgrass Energy Partners (NYSE:TEP) and Energy Transfer Equity (NYSE:ETE).The firm also says defensive names with low commodity exposure make the most sense going forward and have held up best in the current bear market, including pipeline-oriented MLPs such as Spectra Energy (NYSE:SE) and Kinder Morgan (NYSE:KMI), and the just-upgraded ONEOK Partners (NYSE:OKS) and Magellan Midstream (NYSE:MMP).Small cap Midcoast Energy Partners (NYSE:MEP) is vastly oversold, the firm says, noting it has garnered parental support for 2.5 years.
with company). That means you have 1.5 years of all but guaranteed distributions. They in fact said they would have a 1.0 ratio even way down at $40 and $2.25 AVERAGE. At $7, that's a 18.5% just about guaranteed return. Add to that MLPs in general getting overly beaten up. Just seems like good value to me.
a little. Long term hold now...
which is 30% higher than the more typical 1.0. And they said on the cc that crude and natgas could AVERAGE down at $40 and $2.25 and they would still have a 1.0 ratio. I think crude and natgas are $44 and $2.8. So the $1.20 distribution is very safe, about guaranteed, given the hedges in place thru 2019. So 4.5 years of $1.20 gets you $5.40 in just about guaranteed returns. At $7.50, the market is only giving MEMP about $2 of upside of 4.5 years. I have to think that crude and natgas will do better, at least over some periods in the next 4-5 years. I just like the risk/reward. I saw this same analysis done by SA a few weeks ago before the lowered distribution and they came up with the same conclusion that MEMP was undervalued, but now it's even more attractive imo.
From the CC. Seems like some one-time events were a big reason.
Also second quarter expenses included an additional cost for 2014 and the first quarter of 2015, with our internal calculations when adjusted for the effects prior period cost second quarter operating cost would have been $1.79 per mcfe which represents reduction of an 11% from adjusted fourth quarter 2014 operating cost. Our operating teams remains intensly focused on continuing our cost cutting efforts and we expect reductions to exceed 15% by year-end.
Well maybe I'm wrong then. I do know this though, they now have a coverage ratio of 1.3 which is at least 30% higher than needed and gives them a lot of room to grow.
CFO - And we have significant liquidity today. Ultimately that is going to drive a lot of asset sales in the C-Corp space significantly less hedged in 2016 and beyond which is going to drive opportunity for us which is going to allow us to keep supporting increased borrowing base levels or high borrowing base levels and offset any downward revisions coming from commodity prices.
we anticipate seeing strong coverage in 2016 and beyond. Based on the same preliminary 2016 CapEx development plan assumptions, we believe we have the ability to maintain coverage over one times at $40 crude and $2.25 natural gas price deck for the full-year.
we are the best hedged E&P company in the E&P space that gives us a lot of our borrowing base protection as well as protection in other measures.
No, you are wrong. Look at the footnotes in the guidance table:
1) Guidance based on NYMEX strip pricing as of July 24, 2015; Average prices of $51.51/Bbl for crude oil and $2.82/Mcf for natural gas for 2015
Commodity Price Differential / Realizations (Unhedged)