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Energy Transfer Partners, L.P. Message Board

epholder 161 posts  |  Last Activity: 10 hours ago Member since: Dec 4, 2002
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  • Reply to

    Time to bail out and take your losses here !!

    by heatwinagain Nov 25, 2015 11:28 AM
    epholder epholder 10 hours ago Flag

    You must have that wrong. Putin wouldn't do that to ISIS. He'd attack the anti Asaid rebels. The US destroyed 100 or so tankers. They dropped leaflets first, warning the drivers to run away from the trucks. Russians wouldn't do that. And who could read Russian writing, even if they did.

  • Reply to

    There's nothing wrong with KMI's business

    by not_totally_gray Nov 20, 2015 6:12 PM
    epholder epholder 23 hours ago Flag

    The big NG pipelines from Texas to the east coast were built during WW11. Transco and Tennessee Gas.

  • Reply to

    winter is here

    by hoosierbill1234 Nov 23, 2015 2:18 PM
    epholder epholder 23 hours ago Flag

    Do a google search on what LNG conversion ready means.

    As for KMI's cost of capital. It all depends on the share price of the common, and that can change when you least expect it.

  • Reply to

    winter is here

    by hoosierbill1234 Nov 23, 2015 2:18 PM
    epholder epholder Nov 24, 2015 8:18 PM Flag

    Four LNG tankers on order and no one raised an eyebrow? When has truth, accuracy, and knowledge of KMI's business ever mattered to you?

  • Reply to

    Kinder Morgan debt vs dividend

    by lining825 Nov 23, 2015 5:43 AM
    epholder epholder Nov 24, 2015 8:08 PM Flag

    Who wants dividend growth? Shorts say that the shareholder base of KMI can put up with any amount of share price decline, but let the dividend growth rate be reduced, or the dividend rate frozen, or worst of all, reduced, and the share price will collapse as the shareholder base sells in frustration and panic. Thus, a greatly lower share price is almost inevitable, so say the shorts.

    The share price has been cut in half from April highs. I think KMI shareholders have more important concerns than worrying about a DECLINE in the growth rate of the dividend.

    RK has the bulk of his wealth in KMI stock. He doesn't depend on the dividend to support his ongoing lifestyle. I trust that he will take care of his personal fortune. Dividend income would mean nothing to him if he lost far more in wealth.

    But it may not come to that. A choice between reducing the dividend and reducing his wealth (even further). A few quarters of solid DCF and good earnings with no oil and gas reserve writedowns, and the shorts and doubters might start to become very alarmed, and start to question all that they thought they knew about KMI.

  • Reply to

    winter is here

    by hoosierbill1234 Nov 23, 2015 2:18 PM
    epholder epholder Nov 24, 2015 1:32 PM Flag

    None of the KMI ships will be able to carry LNG as a cargo. They are built to haul crude oil or refined products. LNG tankers are in another league as far as cost to build, and can only serve the one purpose of hauling LNG.

    Many or most of KMI's ships have been described as LNG conversion ready, and that means that LNG can be used as a fuel for the ship's turbine engine.

  • Reply to

    There's nothing wrong with KMI's business

    by not_totally_gray Nov 20, 2015 6:12 PM
    epholder epholder Nov 24, 2015 12:56 PM Flag

    When an oil and gas producer drills and completes a well, it has invested in an asset that will rapidly deplete in value. A pipeline put into the ground will probably last for a century. XOM cannot use L-T debt to fund a short-lived asset.

  • Reply to

    winter is here

    by hoosierbill1234 Nov 23, 2015 2:18 PM
    epholder epholder Nov 24, 2015 2:07 AM Flag

    "Jones Act ships carrying gas to the New England" ??????????????????????????????????

    Bill, certainly you know better than that. Feel free to explain if you are serious.

  • epholder epholder Nov 20, 2015 2:32 PM Flag

    That's right, only pipelines were purchased. No wells or leases on oil and gas property.

    From the recent conference call, I don't recall that KMI said they were encountering any difficulties or disappointments regarding the new Bakken assets. The Double H pipeline was performing according to plan.

    The deal with Continental and Hamm became available 8+ months ago. If KMI didn't buy the properties, some one else would have. The Bakken is, and will continue to be, a major US producing area, and it is important the KMI have a presence there.

    The Continental and Hamm acquisitions were not of a company transforming scale. At the time of KMI's purchase, investors had been speculating that KMI would be making a huge acquisition of some beleaguered production company. I never believed RK ever wanted to move heavily into O&G production. But lucky KMI never bought anything big in the last 9 months. And lucky those MLPs and their IDRs are gone.

  • epholder epholder Nov 20, 2015 11:20 AM Flag

    You wrote "processing" Continentals production. Processing is associated with Nat gas production. I thought KMI acquired oil gathering lines and larger oil transportation lines in the Bakken area from Hamm.

    I would think that producing wells stay producing, wells in the process of being drilled have their drilling completed (its cheaper than pulling out and coming back later), and planned new drilling is not undertaken unless the area is especially prolific, or the economics of drilling that well are greatly advantaged over most other prospects.

    So volume growth will slow, and total production would decline as production declines from producing wells. But unless KMI has gathering lines that are sitting empty, waiting for wells to come on line, there should be enough production in producing areas to keep the pipelines full.

  • epholder epholder Nov 20, 2015 3:06 AM Flag

    Didn't bother to check the facts, or not being truthful? The only customer mentioned in the 3rd Qtr was coal producer, Alpha Nat. Res. No one is hanging their hat on KMI's coal terminaling business, although terminaling as a group held up well. Minimum volume commitments helped KMI's coal business. Here's the quote from the 3rd Qtr earnings report:

    "Weakness in our coal business was also impacted by the bankruptcy of one of our customers, Alpha Natural Resources."

    Not all natural gas goes to storage. In the northern areas gas only comes out of storage in the winter. No gas goes into storage in the withdrawal season.

    To the limited extent that KMI owns gathering lines in the fields, there was no discussion in the latest CC that KMI was experiencing problems with small producers not being able to pay for transportation service. Point it out to me if their was.

  • epholder epholder Nov 19, 2015 9:10 PM Flag

    We are in agreement. There's nothing more I'd like to read than that KMI is deferring some Cap EX projects until the irrational fears the market has regarding midstreams dissipate. Its not the balance sheet that is causing the financing problem. Its the low stock price resulting when too many investors believe KMI's pipelines are mostly filled with crude oil shipped for small producers that have solvency problems.

    Growing the dividend is not that important. Avoiding needless damage to the company by avoiding reckless funding of expansion at all cost is important.

  • epholder epholder Nov 19, 2015 4:22 PM Flag

    And FERC is never going to step in and abrogate a contract just bail out a small, undercapitalized producer.

  • epholder epholder Nov 19, 2015 4:18 PM Flag

    doogoo1, I won't agrue for lexpilot's contention. I was just pointing out that FERC maximum rates are what any regulated pipeline is most happy to be charging its customers. Any new pipeline, and some of the older ones where there have been expansion projects, are likely to be collecting at maximum allowed rates.

    Regarding Transmountain, I didn't recall from the CC transcript that there was any decline in thruoughput on that pipe in the 3rd quarter. Maybe a technical decline due to maintenance. Elaborate if you wish.

    Lastly (and it's never lastly), what terrible things will happen if KMI cuts back on its CapEX backlog? You write that KMI needs $5 billion per year in capex financing. So what bad things happen if capex slows down. Please don't content that that would be the last straw and all the loyal KMI shareholders will bail out of the stock en mass. Cut the share price in half and it doesn't faze them, by slow the dividend and utter panic results?

  • epholder epholder Nov 19, 2015 11:49 AM Flag

    Yes, and the FERC regulated rates have a maximum allowed rate and that's what KMI will be charging. No need to discount rates on a new line. Feel free to explain more about FERC looking at rate deductions due to cheap Nat Gas. I could imagine when a pipeline compressor runs on natural gas flowing thru the line, then the cost of KMI running that compressor declines when NG is cheaper, so FERC would take account of that. What else would FERC want to cut?

    If New England local gas distributor utilities, new gas fired electric generating plants, and petrochemical plants eagerly want additional, or new NG supplies, they are going to be the one's contracting for transportation service on the pipelines. Not some beleaguered small producer.

    How many months have you been here doogoo1? You should, and probably do, know this already. But you need to make that refuting comment, regardless of its veracity.

  • epholder epholder Nov 18, 2015 12:45 PM Flag

    mjdux, the Seeking Alpha article on this topic was met with disbelief and heavy resistance, and that was just a few years ago. So even though the code had been in place since 1995, it wasn't widely understood, or certain as to how the IRS was going to interpret the law.

    People here are more up to speed on this subject because so many have just gone thru it. Still there is much misinformation on this thread. So the Journal article was much needed for the general investing public. The IRS helped to make their position known by clarifying the 990 instructions, and the WSJ did their job of spreading the news.

  • epholder epholder Nov 18, 2015 12:55 AM Flag

    You ought to read last Friday's WSJ article. The investor in question was notified by Pershing, the IRA custodian, that Pershing had sold shares in the investor's account sufficient to fund the UBTI tax liability. The funds have to come from the IRA, not from the IRA owner's personal funds. If the tax was paid with outside funds, it would be deemed to be a non-allowable contribution to an IRA and be subject to sizable penalty.

    But if you are asking if the payment of the UBTI from the IRA is deemed to be a distribution to the individual, it is not. The IRA is a separate taxable entity from the individual IRA owner. The UBTI tax is a liability of the IRA, not the IRA owner.

  • epholder epholder Nov 17, 2015 8:02 PM Flag

    I'm sure that we are talking about two different things. The 11/14/15 Journal says "thousands of investors holding MLPs in IRAs at other firms may owe similar taxes that they aren't aware of, experts say."

    Ok, you knew. But in the eyes of the Journal, according to experts, thousands of investors will be surprised. Let the readers here decide whether or not this tax liability is a surprise.

    If you are short, like thewzrdaz, then you have to twist your reasoning, as expressed in your posts, so that KMI is to blame for this. The Journal sheds no blame on KMI. This applies to all MLP held in IRAs.

    The investor is going to pay the tax, either directly (wrongly), or have it taken out of his/her IRA thru stock sales. The custodian isn't going to pay it out of its own funds. They'd go bankrupt very quickly. So focusing on who has to prepare and file the return is misplaced. The individual investor is paying the cash.

  • epholder epholder Nov 17, 2015 2:44 PM Flag

    When did it become known that depreciation recapture on the assets of an MLP held in an IRA will be treated as UBTI? Its the depreciation recapture that is causing the huge tax liability. Certainly, investors have been selling MLPs held in IRAs for years. Why wasn't this tax hit widely known by investors, brokers, and IRA custodians? Who has to file the 990 is a minor matter. The fact that a huge liability is created is what's important. Were there always huge liabilities? It wouldn't seem that way. That's why its a surprise.

  • epholder epholder Nov 17, 2015 12:15 PM Flag

    Oh, is this a problem specific to KMI only? Read the 11/14/15 Wall Street Journal article. The IRS clarified the instructions to Form 990-T in 2014 clarifying that the sale of an MLP in an IRA triggers UBTI on the depreciation recapture, and that the IRA custodian must file the tax form. This was not known with certainty prior to the IRS clarification. Not known with certainty by anyone.

    There are dozens of MLPs in existence and this tax hit will surprise investors in every one of those MLPs if they were held in IRAs. Prior to the IRS clarification, the only thing an MLP could do was advise their investors that MLPs may not be suitable for tax deferred accounts, and to consult their tax adviser. This is what KMP had done. Check the K-1 tax package for each year.

    The Journal says that the Targa MLP investors will have the same issue. Its not the IRS going after RK.

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