ETE offer value is now $50 so everything is going down. If it falls through, probably goes down another 10%. i suspect that something will be announced, ETE really wants the assets, maybe 2 for one gets you $54. Not sure they can do anything else internally. The div should have been announced around 8/21 so something has been considered. Will be interesting to see if they go through with WPZ buyout, ETE might still oppose with their original offer but would guess they walk away. The SE announcement, the market believes they are out of the bidding, not sure that is the case. Will see who ETE targets next if they don't get WMB, could be SE. PSX could do $64 now as their stock is higher than when ETE made the offer. I just want an annoucement and move on. A little irritated with management if a better value is not forthcoming. The do have a couple of activists on the Board, seems that would have kept the process honest unless they got too greedy.
Been trying to figure out how this SE, PSX move affects WMB potential deal. Maybe sets it up for SE buy of WMB. Gas pipes stay with SE, SEP and g and p assets to DCP. Seems we should have seen something by now, dividend announcement is almost three weeks late. Something has to be in the mill, not sure what.
SE and PSX add assets, cash to DCP. Wonder if this means a deal with WMB is more or less likely. Seems they have had enough time to evaluate offers, plans. And no mention of the div which is usually announced in late Aug. Still ongoing.
EOG, PXD, FANG, CXO, XEC, CLR, NBL, DVN, OXY, APA, MRO.... some are more pure than others. They all have shale prospects that are lower cost than EOR. Seems OXY would be a better shale/EOR bet with good div, low debt, does have the ME asset but great Permian position. At $65 for next several years, cost had better be coming down. Not sure I buy that scenario but probably good if it becomes accepted in market, means will be good recovery and decent returns. Still think $75 end of next year. In that scenario, DNR probably does well. $54 next year is not going to get them out of the single digits, $75 would. The challenge of investing in e and ps, the macro is much harder than the micro.
CS projected less than $65 for next four years for oil. And gas will hard pressed to get much above $3. Not sure you want to be in a highly leveraged, poorly run co in that scenario.
CS lowered DNR target to $1 based on price deck of $54, $60, $65 and $65 next four years. I think the forecast is too low, but shows that DNR needs a high price scenario to do well, some of the shale will do alright with that price deck, but I don't think the world can be supplied at less than $65 for the next four years. Interesting times. Also, they should cut the div now, their debt to ebitda gets to highest levels in sector. Wouldn't be surprised to see it trend to $2s if oil stays in $40s through end of year. Still think the core shales are a much better bet. And the infra cos even better.
Jerry, Kilduff projects $1.70 gasoline soon. PSX should buy something with their margins probably going lower. Oil rigs down 13 this week, and based on EIA, seems oil volumes are going down steadily. One analyst had 8mmb/d end of next year. Not sure how this plays out but that numbers doesn't seem to work for global supply. And it looks like cos are responding quarterly to commodity price, rigs added or pulled. Wonder if they eventually keep rigs on pads and turn off and on depending on price cues. This is a new playbook, no OPEC and short cycle reserves.
I think your sale is not a good one, a deal will be done, the ETE offer is $51 now. And a deal should go higher. Only way you win is if WMB says we are merging WPZ as originally proposed. You could buy the option back.
Last year, it was announced on 8/21 with record around a week from now. Still reading into it that the div is delayed because of the deal. Could be that they have a deal and announce at same time or they will increase div with some type of restructuring that doesn't include another company. Not sure which way it goes at the moment but seems that ETE really wanted the company and probably SE, KMI could do it but would have to sell some assets. I hope ETE ups bid and does the deal although SE could do something with SEP to add value. Should hear something soon. There are a couple of activist directors on the Board so I think they will keep it honest but you never know.
Calculate the dist at $3.25 Henry Hub, less $1.20, $2.05mcf well head. The distribution equates to $1.25 per mcf. A $3.70 unit price is gift. No value beyond the hedges. Not sure LNG will do much except keep gas in the $3's instead of $2s. Blinded by the dist. Eddie will milk it to no benefit.
The slow process of leveling off the supply fundamentals is increasingly stretching further into the future. In a
note on August 31, 2015, Raymond James & Associates clipped its long-term Henry Hub forecast to $3.25/Mcf, down from its previous bet of $3.75/Mcf. “Put simply, there is plenty of U.S. natural gas to meet rising demand at prices of $3.25 (or possibly lower) for the next five years,” the firm said. Factors like lower drilling costs and an unexpectedly weak outlook for industrial demand growth have pulled down future estimates.
Nat gas at $2.64 today. Last quarter, ARP realized price was $1.20 less than that. Run the numbers on $1.40+ realized nat gas, doesn't even cover prod costs. Doesn't take a spread sheet. And they continue the distribution.
A spin on ETE's offer could be value for WPZ as well as WMB. Or SEP merging WPZ to SEP. PSX could easily do $60 value with stock, they are about the same price as when ETE made their offer. ETE's offer is $50ish.
Seems if the ETE bid was insufficient and nothing topped that, the announcement would be easy. Want to believe that they have competing offers and therefore the lengthy process. I'm still reading it as positive. Worst is they continue with their WPZ buyout, don't like that, own a bunch of it, and they believe the value will be higher than the ETE proposal a couple of years out. That's ok but they will need to show owners the numbers and assumptions, just saying trust me doesn't work, ETE laid out their numbers and it was accretive to WMB's WPZ scenario. I do think they will end up with someone else. The NE assets are prime real estate.
Jerry, I really felt yesterday that with US prod down from 9.7mmb/d to 9.3mmb/d, saw one projection that at the rate we're at, could be sub 8mmb/d end of next year. I am convinced we will get to a new equilibrium next year. Still kinda think $75 is as good a number as any. Doesn't seem the globe can supply demand with the US falling that much. The short term, that's a #$%$ shoot in my mind, could easily go back to $30s again but as we've seen, probably wouldn't stay there very long. Bigger issue for me now is China and who knows about that, not much transparency and lots of economic manipulation. It is what they say it is until its not. Today, I think energy is an easy bullish bet for a couple of years out. As for Williams, would be surprised is a deal is not struck. ETE, PSX, SE. I'd take anyone.
FWIW, I bought ATLS in the $5s, sold at $32, 500% gain, got shares of ARP spun off at $20 and sold them around $10. I can't complain about the ATLS gains, ARP shares were small piece of the investment, but Cohen had nothing to do with it, he just got lucky. The ATLS shares were in the $50s and he decided to sell at much lower prices. You'll have another chance to buy in the $2s. And you'll get to know his methods while you lose what you invested. He'll merge ATLS and ARP, cut the dist and the stock will be stuck at $2 forever, with no distribution, if your lucky.
PSX probably has the best currency to buy Williams, they are selling for around the same price when ETE made their offer. Would be a good combination.
Conoco Phillips cuts 10% of workforce and yet ARP pays out a third of it's equity value in distributions annually. Forget what Eddie says, look at the reality.