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Compass Diversified Holdings Message Board

davidbdc2001 105 posts  |  Last Activity: 16 hours ago Member since: Nov 12, 2008
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  • Reply to

    Deleveraging SHO Style

    by thunderingherdny Feb 21, 2014 3:27 PM
    davidbdc2001 davidbdc2001 16 hours ago Flag

    Why would this surprise you? In 2009 they used about half the cash on the books to retire 4% notes.... when for the same amount of money they could have bought back more than half of outstanding shares.

    This group is an example of overpaid management and board looking out for each other while shareholders aren't even in the equation. If the law didn't require them to pay out a dividend they'd pay Zero - and have admitted as much!

  • Reply to

    APL looking to sell its JV interest in pipeline

    by bjfcpainc Mar 11, 2014 6:35 PM
    davidbdc2001 davidbdc2001 Mar 14, 2014 11:59 AM Flag

    Bosox - I'd just point out that unless the buyer can purchase 100% both pieces are worth less than the sum.

    No buyer is going to enter into a partnership like the current situation. CVX/APL transaction in Marcellus is how this all came about and its time for APL to move on. Lets hope we get at least the $85 million its on the books for. That's half a new plant.

  • Reply to

    2014 Guidance now 1.95 to 2.45 per unit

    by davidbdc2001 Feb 27, 2014 7:23 PM
    davidbdc2001 davidbdc2001 Mar 14, 2014 11:53 AM Flag

    Well I think we are selling the pipeline along with CVX - its a good thing IMO - I can't see how CVX could get top dollar without APL selling their share - not too many buyers want to end up with an asset that has joint decisions even though they supposedly own 80%. And with CVX exiting volumes would become more risky over time.

    I'll be thrilled if we saw $5 distributions by 2017. But I really don't see that type of growth. Keep in mind that a year ago projections were in the $4-$5 range for 2015-2016. The Cardinal assets might (hopefully not) end up being dilutive to unit holders. With $50 million already written off, we've got a lot of work to do.

    I expect $2-$3 in distributions over the next couple of years. APL has taken on a lot of organizational change - obviously there are some things not going as well as initially anticipated - that needs to get fixed and we could really use stronger NGL pricing - and obviously see some increased demand for ethane.

  • Reply to

    ATLS vs ARP

    by xocy713 Mar 4, 2014 12:27 PM
    davidbdc2001 davidbdc2001 Mar 14, 2014 11:46 AM Flag

    Growth. If you believe that both ARP and APL will see above average Distribution growth then buy ATLS. If you don't foresee that happening then ARP is a better play (as you know that your getting 10% today with potential for future increased distributions (along with the risks associated with all E&P companies).

  • Reply to

    Tax Shelter Partnerships

    by gaapdino4 Mar 12, 2014 3:58 PM
    davidbdc2001 davidbdc2001 Mar 14, 2014 11:44 AM Flag

    Simple answer is no.

    1. The drilling program has existed for years and is entirely legal. Might the IRS change the rules someday - yes, and it might even be likely that will happen in the next two-three years. Would that end the program? Depends on what the changes are.

    2. Its hardly bogus. It allows people to put their money into actual production - getting the results good or bad.

    The stock has declined as it has become apparent that neither ARP nor APL are going to see the distribution growth originally projected. Which means ATLS won't have the distribution growth some folks were projecting a year ago.

  • Reply to

    Setting up for big 1Q at ATLS

    by bosox_pats Jan 31, 2014 7:33 AM
    davidbdc2001 davidbdc2001 Feb 28, 2014 12:59 AM Flag

    Drilling partnership came in at $150. And they gave a pretty wide range for 2014 guidance.

    I'm thinking that represents more operational issues at APL than they publicly discussed. The ARP release seems pretty much as expected with the exception of the 150MM and I was surprised no further activity in Marcellus given their previous comments.

  • Reply to

    quarterly report released

    by mikerx83 Feb 27, 2014 7:04 PM
    davidbdc2001 davidbdc2001 Feb 27, 2014 7:42 PM Flag

    Its on Business Wire.

    Disappointing with only $150 million for the drilling partnerships. But not surprised given the distribution.

    Said weather impacted by about $3 million of EBITDA.

    Dividend coverage was 1.0 for the quarter.

    $38 million of asset impairments - some of it expiring leases which is part of the business - other part not too clear - assume economically unviable leases.

    Gave some more detail on GeoMet production - looks solid.

    Hopefully they will expand on the plan going forward for the drilling partnerships. We are well below the levels they spoke about only a year ago. Believe at one point in time they felt potential for over $200 million and eventually $250 million a few years out.

  • Reply to

    S&P Debt Rating revised to negative

    by davidbdc2001 Feb 27, 2014 7:19 PM
    davidbdc2001 davidbdc2001 Feb 27, 2014 7:20 PM Flag

    Looks like it got cut off - here is rest;

    A slower-than-anticipated
    build-out of assets, meaningful amounts of ethane rejection, and the need to
    bypass gathering volumes to third parties has contributed to compressed
    margins and lower cash flow. We view execution and volume risk associated with
    the development of Atlas' Eagle Ford-based assets as a key credit
    consideration during the next 12 months.

    The negative outlook reflects our expectation that Atlas' key credit measures
    will remain weak in the near term. We could lower the rating if low commodity
    prices, stagnant throughput levels, or operational difficulties result in
    tight liquidity and/or debt to EBITDA above 5x through mid-2015. We could
    revise the outlook to stable if Atlas successfully executes its 2014 growth
    strategy, maintains adequate liquidity, and reduces leverage below 5x for a
    sustained period.

  • The following is a press release from Standard & Poor's:

    -- We are revising the outlook on Atlas Pipeline Partners L.P. to
    negative from stable.
    -- We are affirming the 'B+' corporate credit rating and 'B+' senior
    unsecured debt rating, with a '3' recovery rating.
    -- We based the outlook revision on Atlas' lower cash flows resulting
    from low ethane prices and some construction delays, leading to our
    expectation for high financial leverage over the next 12 months.

    NEW YORK (Standard & Poor's) Feb. 27, 2014--Standard & Poor's Ratings Services
    today revised its outlook on Tulsa-based Atlas Pipeline Partners L.P. to
    negative from stable. At the same time, we affirmed our 'B+' corporate credit
    and senior unsecured debt ratings on Atlas. The recovery rating on the senior
    unsecured debt is '3', indicating our expectation for meaningful (50% to 70%)
    in the event of a payment default.

    "We based the outlook revision on Atlas' lower cash flows and higher financial
    leverage than we previously expected," said Standard & Poor's credit analyst
    Nora Pickens.

    Atlas' underperformance is primarily driven by continued weak ethane prices
    and slower-than-expected volume ramp-up in South Texas (SouthTX). Based on
    these challenging market conditions, we are forecasting 2014 EBITDA to be
    approximately $50 million to $70 million lower compared with our previous
    expectations, leading to a debt to EBITDA ratio of 5.3x at year-end.

    Still, we consider Atlas' areas of operations to have compelling drilling
    economics characterized by high utilization and strong gathering and
    processing volumes across the firm's operating footprint. The partnership
    continues to grow at a rapid pace in tandem with robust production forecasts
    and we expect 2014 gathering volumes to be nearly three times greater than
    2011. Despite favorable drilling fundamentals, large acquisitions completed in
    2012 have since stretched Atlas' balance sheet. A slower-than-anticipate

  • davidbdc2001 by davidbdc2001 Feb 26, 2014 8:31 PM Flag

    I can't post the article but here are excerpts:

    The solid earnings growth bolstered by its diversified well-positioned assets, sizeable high-return expansion projects, and accretive acquisitions coupled with the vigorous hedging program and its continued focus on derisking the operations and financials support a 5-7% distribution growth over the next few years. We, however, remain cautious over its 60% of ebitda exposed to commodities, elevated leverage ratio, and 11% cost of capital comparing to the 8% sector average.

    ------------------------

    Through renegotiation of its existing contracts and acquisitions of fee-based businesses, APL’s contract mix is likely to improve to 61% percent-of proceeds, 38% fixed fees and 1% of keep-whole in 2014. The company deploys a vigorous hedging program whereby it seeks to protect up to 80% of value for the rolling 12 months. The company intends to reduce its debt to ebitda ratio to 4.25x exiting 2014 from the current 4.9x. The $600 million credit facility along with its ATM program help finance the growth projects and acquisitions.

    ----------------------------------

    We expect the quarterly distribution to remain at $0.62 per unit in 1Q14 and increase to $0.66 per unit in 4Q14. We anticipate a 6% growth rate till 2016 and normalize it to a terminal growth rate of 2% over the next five years (our coverage group’s long term average). We use a cost of equity of 11.0% as the discount rate. The downside risks to our thesis come from a decline in drilling in the area where Atlas operates, lower commodity prices, limited access to the capital markets, and regulation and legislation risk. The upside risks include sooner than expected ethane price recovery, more accretive acquisitions and growth projects, faster volume growth, and higher commodity prices.

  • Reply to

    $250 MM Secondary

    by bosox_pats Feb 23, 2014 7:43 PM
    davidbdc2001 davidbdc2001 Feb 24, 2014 3:24 PM Flag

    I would agree. I was surprised that they want to buy the rest of the pipeline. My preference (if the price is good) would be to sell off our 20% to the acquirer and use the proceeds for a new plant.

    If they buy it I really hope its at a decent discount. With CVX no longer involved its a riskier asset IMO.

  • davidbdc2001 davidbdc2001 Feb 19, 2014 2:48 PM Flag

    The cash has already been paid!

    Basically, they are saying that in 2012 this part of the business was worth 47 Million. Today its worthless.

    Its just simply not acceptable. Either the purchase price should have been lower, or the unit should have not been part of the purchase, or they should have lined up someone else to purchase it.

    They are basically letting unit holders know they burned 47 Million of their dollars in a year. Sorry.

  • Reply to

    Tubocharged distribution discussion from CC

    by moneyonomics Feb 18, 2014 5:39 PM
    davidbdc2001 davidbdc2001 Feb 18, 2014 11:42 PM Flag

    Its the boy that cried wolf. We are now in 2014. We have continuously been promised more than what has been delivered. Throw SD risk on top of that and you have the makings of a sell-off.

    We waited for the expansion projects - they came on-line a little late - growth is coming - Big acquisition - have to sacrifice for a short period of time and then we'll see additional DCF/unit - Then some unexpected things happen - now we are writing off some of the Cardinal acquisition (if you read between the lines because we can't provide the needed capital to the business unit - as we are already heavily in debt - which was the mantra for about a year about how low our leverage was!) - and WINTER came!! And that's the latest reason for not hitting projections.

    A coverage ratio of .92 is bad. Depending on SD for volume growth (and lets face it just for ongoing business) is risky. It appears we'll be at this level of DCF for the next two years - and yes I'm sure they will raise the payout by a penny or two a couple of times. Throw in the history of APL and you've got a lot of reasons for concern.

    If you like the current yield and can stomach the risk then that's great - but realize that were we are is not where many unit holders believe they were told we'd be.

  • Reply to

    Earnings

    by jberns2421 Feb 17, 2014 8:08 PM
    davidbdc2001 davidbdc2001 Feb 18, 2014 11:44 AM Flag

    I agree Dubay is a winner. But he's not the one doing deals. Its really bad that we've already written down 5% of an acquisition that is one year old.

    Keep in mind that Dubay is now 63?? How much longer do you continue when your handed overpriced assets? It appears that we would have had higher DCF if we didn't do the last large acquisition - that's not a good situation. Continued reliance on SD is a major risk in terms of expected volumes.

  • Reply to

    Setting up for big 1Q at ATLS

    by bosox_pats Jan 31, 2014 7:33 AM
    davidbdc2001 davidbdc2001 Feb 18, 2014 12:28 AM Flag

    Well hate to say I'm right. APL growth is basically done. Don't know the particulars that are not meeting expectations but all the expansions are fully on-line and we are not close to what they indicated the results would be.

    APL coverage ratio this quarter - .92

    And that folks, is dangerous territory to be in.

  • Reply to

    Earnings

    by jberns2421 Feb 17, 2014 8:08 PM
    davidbdc2001 davidbdc2001 Feb 18, 2014 12:23 AM Flag

    Something is just not right.

    All the expansions are on-line. Big acquisition.

    And we have DCF coverage of .92? And we are short of where they promised a year ago. And now they promise less for this year.

    Is anyone surprised that winter came?

    Lot of risk with SD. This may simply be about as good as it gets.

  • Reply to

    Very Good Barron's Article on MLP's, mentions Atlas

    by oscoutspa Feb 15, 2014 11:51 AM
    davidbdc2001 davidbdc2001 Feb 17, 2014 2:19 AM Flag

    Note the key thing they talk about through the article? Execution.

  • Reply to

    A screaming short?

    by farfbits Feb 4, 2014 8:20 PM
    davidbdc2001 davidbdc2001 Feb 15, 2014 2:05 AM Flag

    As long as you have 20 cents every quarter to cover the dividend go right ahead.

  • Reply to

    ARP acquisition accretive

    by bosox_pats Feb 14, 2014 2:53 PM
    davidbdc2001 davidbdc2001 Feb 15, 2014 1:52 AM Flag

    My guestimate was about .06 in the next year.

    But I don't want to purchase the CVX pipeline unless its a firesale. Without CVX being involved supply might become less stable. It they get a decent price I'd rather divest.

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