Aug 02, 2015 at 7:56 PM
The Game Is Nearing an End for MLPs… - Valuentum Securities Inc.The game is nearing an end for master limited partnerships (MLPs) in this energy cycle, in our view.We no longer feel comfortable, if we ever did, including any MLP in the Dividend Growth Newsletter portfolio. Linn Energy, of the upstream variety, may have taken on far too much debt as an E&P entity, but its free-cash-flow management during the first half of 2015 has actually been decent…stronger than better-known upstream and midstream operators.Yet, despite Linn’s positive free-cash-flow execution, even after distribution payments, the entity’s bankers appear to be circling like sharks, ready to take a further bite out of its borrowing capacity (due to lower energy resource pricing). Fairly, the company simply can’t afford to take any chances and is flat-out worried that banks will cut its borrowing base yet again; this time to $1 billion at year-end.Though we’d never in a gazillion years lever up as much as Linn had done (a big mistake in a commodity-producing industry), we can’t disagree with management’s decision to cut the distribution. Management is now running the company for survival, not to pad unitholders’ accounts with a distribution, though a strong and growing distribution had once been its goal.Linn, having already disappointed income investors in cutting the payout prior to the news last week, was not getting what we would describe to be a “Kinder Morgan effect” with the valuation of its shares. We define a “Kinder Morgan effect” as a situation where a company is valued solely on the basis of its dividend, irrespective of actual free-cash-flow fundamentals or whether the dividend is organically generated (as opposed to financially-engineered). Where Kinder Morgan is yielding ~5%, Linn Energy had been fetching a yield of 15% or higher, even as it generated positive free cash flow after paying distributions, unlike many, if not all, of its ML
allow the jokers from CXPO to be in control of MCF ? They had already run CXPO into the ground . Now , they are well on their way to doing the same thing to MCF . And they are still employed . What have these jokers ever done tobe in this position ? Nothing I can find .
Re-price the options !!! Gotta keep this value talent !!!
up about 1 million barrel of crude . US exports of refined products year over year up 1 million barrels . 1 barrel of crude yields how many barrels of refined product ?