cbd, lower 48 prod went from 9170k/d to 9104k/d, -66kb/d. Seems the decline should start to kick in. Inventories down 4mm+, don't know what the est was. Seems this is going to take time. Iran will be next year. Seems the rebound will take a while, but it could surprise with demand, someone rings the bell, and we avoid Goldman's quarterly call. I am almost always an optimist, my bias.
I doubt it but maybe someone like EPD would make an offer. As someone said there is substantial breakup fee. Not an arb but there should be a couple of dollars difference. If MWE trades above the offer value, then something is probably up. MWE is a great franchise, but at what price. The Marathon combo looks like a good one for both cos.
Good comments, the Delaware may end being the highest return shale but Niobrara looks like it should be top tier also. Anadarko labeled it as their top play in the world a couple of years ago.
Have been speculating that Phillips might trump ETE's offer, would do the same for them that the MWE is doing for MPC. I guess that OKE, TRGP, SEMG will be gone by next year. Looking at what's left, EPD still looks like a great bet, 5% yield, 130% coverage and a great footprint. They can't be acquired but should be able to pick up whatever they think they need for synergies.
Playing around with WPX acquisition nos today, Delaware Basin, one comment that they paid $50k per flowing barrel plus $12.5k per acre. Apply those to BCEI and assume $400mm for Arkansas, BCEI value is $36 per share. Assume 30kb/d at $50k/flowing barrel, the value is $33k. Seems to me the normalized value after we get out of this price trough, is mid $30s. Looks to me that a double is a good possibility. Not sure why they have been beaten down this far.
The sell off in MPLX yesterday was a gift, didn't make much sense from a fundamental perspective, MPLX didn't lose much in this deal. Will be hard to find cos than can grow mid 20% range for few years with 3%ish yield. This could be a juggernaut.
Agree, seems DNR is a good bet at $5+ over the longer term.
The Iran deal is done, I guess, don't know exactly what it provides for, kind of like the Greece bailout, a media event. Going to take a while for the barrels to reach the market.
I would guess that about now is the time to make e and p bets for the next couple of years.
The MWE deal, MPLX up a couple of dollars, the sell off yesterday didn't make much sense, the combined co will grow 25% per year for a few years, will be hard to find another co that can match that growth, ETE/WMB can probably do it. Will see if Phillips is going to make a run at WMB.
The $78 is based on MPLX closing price yesterday and it's down 15% or whatever today. Looks like the growth rate going forward is about the same as the rate before the deal. I would guess today that they are both undervalued. Someone mentioned the arbitrage play and that may explain it. In that case, either should be a good bet. If the deal falls through, MPLX will still have a 25% growth rate. If someone else comes in, both will appreciate. If the deal falls through, unlikely, then MPLX is the better bet. Today, I think I would just buy MPLX.
bison, you get 1.09 units of MPLX and $3.33, MPLX is $59 now, so the MWE value is $67 plus. You don't get $78 of value. Still don't understand why MPLX was down so much, before the deal analyst had a 25% growth rate for a few years out and it is still 25%, so MPLX shouldn't have taken that big a hit. I don't know MPLX that well but it could creep back up. Might have something to do with arbitrage but $10 seems too much.
chump, it's always hard to drive a stake in the sand and stand by it but $13 for Bonanza feels like a great value. But then again, e and p values are driven by the commodity price and reserve potential, the latter is a lot easier. It seems obvious to me that volumes have to start falling off but the market doesn't seem to buy it. The consolidation in the midstream sector has started, Marathon buying Markwest today, Williams by ETE. Seems we should have some deals in e and p. Unless the majors think they have all of the shale inventory they need.
Not sure MWE is up for sale, someone could top the bid, might happen. But MWE got a good deal, they are continuing to run the company, and a larger company. Problem with offer is that it was based on the currency of a smaller co with a bigger growth rate. But then you have a significant drop down inventory, $1.8 billion ebitda. MPC is up big today and MPLX is down big. Bottom line MWE is up 13% or thereabouts dividend is cut in half but growth is doubled. A $60 value growing 25% for the next five years, gets you $180 unit value plus 3% yield per year, close to $200 value/$60, 230% return. Assume $60 unit value,13% growth and 7%, unit value of $110 in five years, plus 7% yield annually, 120% total return. Numbers are rough but this is a good deal long term. If a company with mediocre growth had made an offer, it would have taken a bigger premium.
This seems a great combination, might lose 4% in yield but growth doubles from low teens to mid 20% range. Current total return 13% growth plus 7%, 20% total return and now 25% growth plus 3% yield, 28% total. MPC has as they claim $1.8 billion of ebitda to drop down. Could have been worse, a c corp buyout, and as one comentator said, could still happen at some time in futhre but now you have a $30 billion EV company that could be $50 billion in a couple of years after growth and drop downs, not many could buy it. The risk would be MPC, a la, KMI. But seems bottom line, probably helps prevent that from occurring, the size deterrent. And years of 20% plus growth. And MWE execs are still running the business and they seem to be well regarded. Plus synergies based on geographies.
Birdog, I would be very surprised if the ETE deal doesn't go through. Phillips could do it, bigger co, not much debt, synergies. Their yield is in the twos, could probably beat the ETE offer, WPZ would remain, tax free exchange. I would take a $84 Phillips offer, which would probably settle out in high $70s. And Phillips has publicly stated that they want to grow the midstream and lessen the impact of refining. Have always stayed away from refining but it could be a good business for the next few years. They have a good chemicals op, Chevron partner. Seems they could bump the ETE offer a few dollars. Don't know how it would play with DCP which is half owned by SE. It needs to be solely owned. Could merge it with WPZ. Might be a way for WMB execs to keep their jobs, they would be an improvement to DCP, imo. More I think about it, would be a good deal, but think ETE might be the better long term combo. Now with the Marathon deal, puts pressure on Phillips to do something. MWE execs got a deal to keep their jobs. I'd take one for one PSX today. $84.
That was a midstream deal. No one would want ARPs assets. A $2 value after they cut the dist, might be a good bet, but you still have Eddie and Lee. Used to think Cooperman was fairly astute but not when it comes to e and p. His SD bet was a disaster, and averaging down on this, he might have it as a private bet after they cut the dist.
The Marathon merger looks like a good deal for MWE, MPLX owners aren't too crazy about it, down signifcantly. MWE growth goes from low teens to mid 20%. Lots of drop down opps, $1.8b of ebitda that Marathon can drop down. At 10x, that's $18 billion of addl value, going to be a big co. Wonder if this puts pressure on Phillips to buy Williams. Phillips could offer one for one stock, $80 value and probably would look like a good combination. Would think this makes Williams more valuable. Also, OKE, TRGP, SEMG, PAGP should be in deals in next few months. The window should be open with low commodity prices into next year.
I would bet ARP is down to a $2 value before commodity prices rebound. Best move now would be to cut dist to zip and operate for survival. At least it's better than an ATLS bet. Cohen and Cooperman deserve each other.