You got it all wrong again, the div per share of WMB will be greater next year under the deal, and much more growth the years after that, wrong again. We actually diluted ETE's growth, ours under the deal is much greater, ETE's is longer growth, so wrong again. The investment community loves the deal, hedge funds do, two are on the WMB board. Great deal for WMB more growth for longer and ETE maintains high growth for longer. Win, win, the way mergers should work. And ETE is not through with acquisitions that should boost growth more, TRGP, OKE... By the time it close the street will be effusive about the combination. And energy prices will have recovered or on the road to recovery. Again, next year the div is greater than it would have been and in the meantime WMB holders are getting the dividend $2.56 that was promised after WMB merged WPZ, so current holders winning there also, your wrong on all counts. The sector took a beating, not WMB. This may be the best bet in the energy sector and the market, 7% yield plus 25% growth for a few years, what's not to like.
A 1.9% 10 T note doesn't hurt either. The sector should still grow, maybe less so, but decently over next couple of years.
You will get a K 1 since it's a partnership and is complicated but not impossible. And when you sell, the handling of gains is complicated.
ETE just traded at $23.24, that's a $43.50 value at the exchange ratio. Guess it's a good deal again. WMB will be pushing $60 when this deal closes.
You shouldn't be investing in this company, the 90% payout requirement is for real estate investment trusts, a completely different animal. And the MLP form causes lots of issues at tax return time.
Listen to what he has to say, he has longer exposure to Eddie than me.
And don't confuse a move up in the whole sector with a validation of the investment potential of ARP. Do think oil may have bottomed and $75 by end of next years. Run the nos with that price and $3 gas and see what you get.
From the deal announcement, you can't always believe the press. I've seen others say the original offer was $64 per share, it wasn't it was 1.8716 shares of ETE, wrong currency. The final offer added cash as part of the payment but the value will be the value of 1.8716 shares of ETE at the deal closing.
Under the terms of the transaction, Energy Transfer Corp LP (“ETC”), an affiliate of ETE, will acquire Williams at an implied current price of $43.50 per Williams share. Williams’ stockholders will have the right to elect to receive as merger consideration either ETC common shares, which would be publicly traded on the NYSE under the symbol “ETC”, and / or cash. Elections to receive ETC common shares and cash will be subject to proration. Cash elections will be prorated to the extent they exceed $6.05 billion in the aggregate and stock elections will be prorated to the extent the full $6.05 billion cash pool is not utilized. Williams stockholders electing to receive stock consideration will receive a fixed exchange ratio of 1.8716 ETC common shares for each share of WMB common stock, before giving effect to proration. If all Williams’ stockholders elect to receive all cash or all stock, then each share of Williams common stock would receive $8.00 in cash and 1.5274 ETC common shares. In addition, WMB stockholders will be entitled to a special one-time dividend of $0.10 per WMB share to be paid immediately prior to the closing of the transaction. The special one-time dividend is inaddition to the regularly scheduled WMB dividends to be paid before closing.
I gave up long ago trying to guess market gyrations on a daily, weekly, monthly basis. Typically try to look three years out and still that's a #$%$ shoot, the further you go out, the more right you will be. Oil will be higher in 5 years, that kind of forecast. I'm not a salesman, but have owned WMB for well over a decade and ETE/ETP since the 08/09 collapse. Also own WPZ so I have a reason to have an opinion. Not real happy either about the recent stock action, but my income will increase with this deal, substantially for WMB, WPZ, ETP and ETC's will grow longer with the deal. Saw a report that said MLPs values are 3 standard deviations lower than the average MLP values over time. Only lower value was the 08,09 collapse. And the believe the return over the next year could be 40%. They also see the sector increasing dist's by 7% annually through '17. That's still a growth sector, although we need commodity prices to recover.
I don't have a clue why stocks go up or down daily and frankly I don't want to see more people lose money on this travesty but I have listened to Cohen for too long and know you can't rely on anything he says. Seems to me the only way this survives is if gas strengthens substantially in the next couple of years. It could buy I don't see it and most others don't either until we get substantial LNG exports. If they didn't have the hedges, the stock would be 50 cents per share or whatever, imo. The prudent thing to do would have been to cut the dist and hunker down. Paying it imo doesn't increase the value, it diminishes it. Just saw a report that Marcellus Utica drillers need $3 minimum and will keep drilling. If you have a bullish call on nat gas, you will need it, and good luck to you. If you are convicted in your position, my negative comments shouldn't be an issue, just another perspective, the purpose of these boards.
Actually, the well net back was around $1.30 so $2.80 less $1.30, $1.50 cash per mcf and the dist is $1.20/mcf. The 30 cents left wont' even keep the lights on. This disaster is afloat only because Eddie needs the cash at ATLS and when there's no more to milk, it's toast.
May be correlative but it's not causative, nat gas is in the mid $2s. Wait until the reserve calcs come out, nat gas price last year was $4+ and oil was near a $100 per barrel. Nat gas on the futures gets to a whopping $2.8 in Jan, the heating season. ARP pays out the equivalent of $1.20/mcf just to maintain the dist, that leaves $1.60 and operating costs are more than that, not to mention g and a and interest on $1.5 billion in debt and throw in the millions they pay the Cohens for their visionary guidance. The tide goes out, the hedges, and guess who's swimming naked, and mired in the mud.
The value of the gas reserves after the hedges run off don't come close to even covering the $1.5 billion in debt. This is a worthless co ex the hedges. And the silly comments about oil correlation, this is a nat gas co. Today is a gift. Enjoy the dime. It's not going to look like much when Eddie's run comes to an end. Eliminating the dist would be the best thing of the company but Eddie needs the cash at ATLS, and ARP will pay the price eventually. Just a matter of time. How's that for a warning.
May never see the $30s again for WMB. Buy today, make 7% yield for the six months waiting on the deal closure. ETC/ETC will grow 20% plus annually for the rest of the decade. Best franchise in the country. ETE/ETC $80 stock in five years. Consolidation isn't over, will probably fill out the network with a couple of more acquisitions. $80 ETC value equates to $$150 for each share of WMB. And the dist in 20 will yield 15% on today's price. Best buying opp in the MLP sector since 08/09. And the 10 yr T note is 1.9% today. You can make total return of 25% plus annually for five years or 1.9% on the treasury note, easy decision.
CEQP, leave aside the dist, whether they should buy back share vs pay it, this is a cheap co, $550mm ebtida, enterprise value of $5 billion, CS said MLPs are trading at 3 standard deviations below the historical avg, at around 10x. CEQP is trading at 9x and the IDRs are embedded. At avg of 12x, unit price should be $5 and you could argue that the GP/IDR embedded, the multiple should be greater. Use dist cash flow value, guessing $400mm next year, 20x multiple, $7 unit price. Anyway you slice it, CEQP looks like a good higher return bet. A double with a great yield while you wait.
Enjoy the dime, it near the end. End of the quarter, good time for the Board to end the non sense of paying out a dist that can't last. Most other MLPs have already stepped up. Prudent thing would be to elim and buy back debt but Eddie needs the cash for ATLS.
Look at maribera's posts, he has a much better fix on ARP and Cohen, would be best to consider his comments. But most won't, they are blinded by the 50% dist and when it vanishes will be angry with someone over the loss. This is a pennies on the dollar stock if nat gas doesn't firm in the next couple of years, and the futures don't see it happening.
One other issue you don't short a stock that has a 50% yield, and you pay the dist every month, costs you 4% a month to hold. Obviously you don't short.
The exchange ratio is set, the WMB shareholders will vote on it, should close in the first half of next year. Price should track ETE less the risk discount and time value, I would bet it's first quarter 16. I can't see it not being approved. The ETE has all of Wall St as advisers on the deal so their won't be any negative comments. The macro is probably more important, if oil goes to $20 and and gas sub $2. I am a lousy trader, but would think a further swoon in commodity prices would destroy a long position in the short term. Will it happen, don't have a clue, and have the equities already responded? Also the Fed, raising rates, the MLPs are sensitive and could get hit if there is a surprise, I don't think it happens, but who knows. My feeling is it takes to Jan 1 to get through the st risks, then you have Iran dumping a million bs on the market, will the shale vols have rolled over enough for price to withstand that. Too many variables short term for me but if you get to year end 16, seems the long term positives will have played out. I plan to hold ETC for the next five to 10 years. In five years, we should be back to $100 oil. And $10 nat gas.