My figuring as note before, is the projected distribution growth projections could not be realized, perhaps even putting the current distribution at risk as operating cash flows deteriorate, for one due to wet gas drilling is getting much less attention versus dry gas. My premises is confirmed as noted by RRC recent presentation and conference call. To the point, increase volumes could not make up the difference as E&P increasingly moves to better dry gas economics. Ohio Utica rig counts down 66% and Marcellus down 55%, and further reductions likely will provide some supply relief, but that will be likely 2 - 3 years out as SXL struggles with ME-2, and ATEX is still under restriction to date without any recent news. To boot, RRC signs a 250 million dollar dry gas takeaway and compression with EQM. Semple noted I recall last year about doing some dry gas projects. Not doing so perhaps added fuel to diminishing returns of wet processing/fractionation only during this distressed timeframe.
Anyway, I sold half my position in January, I intend to hold the remaining units and go through with the MPLX merger. It will be interesting to see what projects the combined businesses will come up with in the future as supply and demand come in line. Though the initial multi-year loss in yield and loss of MWE being standalone, I think we will still have good future rates of return as a combined business. Crossing my fingers kid brother RRC does not have the same fate though. I’ll post [Yahoo or IV Board] on the MPLX/MWE business as applicable as this board fades with the sunset.
Best wishes to all that go through with the merger or decide to move on.
Based on operating cash flows/cash from operations, my analysis suggests a target price for this year is about 43 - 47, downside from here at or about 29. The pipeline infrastructure projects are just too far out to make any material difference this year and likely minimal if any material impact into 2016.
If your time frame is 3+ years, I would hold the stock, perhaps accumulate south of 35. I'll hold my core position for now. Sold my trading position several months ago.
As I noted in past posts, pipeline takeaway is key. This gives investors time to build a position into the stock. We should be thankful that we are not in the position CNX is in for example.
Patients rules for now. My buy sentiment assumes accumulate.
My intuition is telling me the same. Feeling RRC way ahead of most regarding hedging and the replacement of debt to EBITAX with interest back in Q-4 2014. 29 banks approved this using forward one year cash flow, thus the 3 billion approved for borrowing. The opposite approach one can see the results of CNX. RRC has proved that they can continue to build, yet at reduced costs.
On the Sabic side, I believe they are not looking at an E&P, but on the petrochemical side as NGL feedstocks should be low priced. They noted this last year about building or buying businesses in the Appalachia region.
We'll see the results after the close, and conference call tomorrow.
That's going to be a hard nut to crack. Typically buyouts are 30-35 % premium. For me that would fall far short of what RRC is worth in the longer term.
We can be thankful though that RRC did not get itself in the position that CNX did.
Yea I saw the proppant use for the well; not sure how much of an impact that made. I sold half my HCLP position back in Q-1. May add also, but I'll take a wait and see approach for now. The overall market could push everything lower.
Though a reasonable chance, I am not putting any bet that RRC gets picked off. COG has done well, but the new EQT well in SW Pa, in addition to RRC's, is a shot into the hull of any NE Pa. or Ohio Utica well to date at least for now initial production flow and pressure assuming ~3,200 Ft lateral.
Too bad for CNX and how they mismanaged the gas side of the business. Where the Utica appears to be the most promising, and where they hold/own tons of acreage in Greene/Washington/Wva. west and south, they opted to focus on wet gas which isn't the most economical. I suppose NBL JV partner could pick up the dry side of the business, but EQT would be an excellent buyer assuming their all about the same area as CNX.
This time, EQT just south of RRC's Washington Co. Utica well.
July 23 2015:
The well, located in Greene County, PA, underwent a 24-hour deliverability test to sales on Wednesday night. What happened, President of Exploration and Production Steven Schlotterbeck said, "far exceeded our expectations." The well averaged 72.9 MMcf/d with an average flowing casing pressure of 8,641 psi. That equates to a 24-hour initial production (IP) rate, per 1,000 feet of lateral, of 22.6 MMcf/d.
"To the best of our knowledge, this is the highest reported IP of any Utica well to date," Schlotterbeck said.
The next publicly announced Utica well that even comes close was Range Resources Corp.'s in nearby Washington County, PA, which had an average 24-hour peak production rate of 59 MMcf/d in December.
In relation, $250 million for the construction of 32 miles of pipeline and installation of approximately 32,000 horsepower of compression. The natural gas header pipeline will support Range Resources’ dry Marcellus and Utica development in southwestern Pennsylvania.
Understand that, owned CNX for years, bought into NBL after the JVs. Sold both last year due to lack of CNX performance. Ramifications of NBL's Mediterranean assets just ticked me off. It is reasonable to assume a NBL CNX merger or buyout is likely, for one, they have been in JV for years. Should there be issues between the two and NBL backs out, then yes CNX is toast, as they really could not effectively control both the wet and dry gas assets.
Real easy, the majority shareholders suggest a turn down of the vote and negotiate a better offer or seek a all cash deal. In the first place I don't like stock swaps, cash is king! Assuming all cash, one bids 75 per unit. Include the 4.2 billion in debt and the break up penalty and your at about 20 billion, about the same value as the current deal.
I rarely make an investment based on tax issues, and I don't fall in love with a company or investment; it's performance. Something goes to taxes regardless. MWE management has done well on build-out, but I can assure you they are not concerned about you tax implications. What's an issue in the 4.2 billion in debt, accumulated to drive volume in an increasing falling commodity price environment. I believe it came back to haunt MWE as they could not make the projected 10% distribution CARG. Should they have to confess that wrong, an even worse, cut the distro., the unit price would tank.
Note to all, an Investors Village board has been create "Cannabis Economy". An MCIG board is in place, but a new one was create for general industry news, events, and investment discussions. Hope folks come over to for one, to escape the foolish and rhetoric postings [that will not be tolerated on a paid board] to discuss and share ideas about where the business is headed as well as individual companies prospects.
You realize that for one, this commercial was an awareness pump for MSRT. O'Leary rarely passes on a online program and has noted the the cannabis business has huge profit margins; ambiguity and lack of clarity in the state and federal law is the current problem. Should note this video came out just after MSRT reported that users has surpassed 375k users and over 110 million interactions. The number of users in the video is 250K at that time.
Second, as an investor, O'Leary would assume the role and accountability as an "active investor" not a passive one as are shareholders. That's a big difference and thus his concern over the legal aspects is warranted.
Early January, I began a re-organization of my portfolio. That included selling 1/2 position in MWE, 1/4 of SXL, and a couple of E&Ps.
The remaining half of MWE I will hold through the transition. When I consider the the long-term reward of the largest processor and fractionator in best low cost plays such as the Marcellus and Utica it's irrefutable that MPLX unit holders, via MWE assets, will not benefit over time. I will likely start a new position in MPLX. Yield is one thing, yield and unit appreciation is how the combination should provide rate of return.
Regarding the transaction, I suppose the "consideration" is nominal, and if enough investor [MWE unit holders] frustration becomes self evident, the consideration of 3.37 could be bumped up. As I understand the agreement, the 3.37 consideration is an attempt to off-set the distribution loss MWE unit holders face with this deal. But it really does not address MWEs 10% distribution CAGR. I would have liked to seen perhaps something at or about $4.75 - 5.00 per unit versus 3.37. That would sweeten the deal to about 1 billion in cash. The "consideration" then perhaps would address the 10% growth rate MWE projected over the next 4 years.
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Unconfirmed report out this morning that CNX to finish up current well completions, then halt drilling for 18 months. A CNX/NBL merger is possible. That would make sense to me as they have been working together over the past few years.
For RRC, who knows. However expect a 32-35% premium to current price only gives you a 60's price target. Knowing the asset base RRC has in the Marcellus and SW Virginia and western assets in addition to pipeline takeaway contracts, it hard to say on anyone could try to argue that value. Management should have that down.
So my guess if it should come to pass, perhaps a better premium than the typical 32-ish. One possibility is a hostile takeover between multiple bidders. It could get real messy.
Hoping we stay independent, I thought the same for MWE, as we see what happened there. But I think the MPLX/MWE is a good synergy. If a merger happens to RRC, I hope it is similar.
Oh the one-time article from the lefty-fool the other day, forget it, there are many more that assume similar ratios.
Additional positive blind-sided precursor today with the MPLX/MWE merger. Conference suggests that impact should be a positive for all Marcellus and Utica E&Ps. Perhaps for the slight move upward.
Should also note Morningstar now has a 5-star rating for RRC and AR.