They don't need to do any such thing. It would be dumb because it would cut them off from raising new equity capital. I can you assure the market would hate such a move. Price of MEMP would collapse.
They have a $1 bill credit line at around 3%. Use that to make accretive acquisitions at dirt cheap prices.
Didn't they say this was their intent in the press release?
I have to believe EBITDA would improve with a buyback, because cash flow would increase with a lower total distribution.
If someone like Targa wouldn't want into the upstream side of the biz, what about an EOG? Great balance sheet, smart buyers, they may well have properties adjacent to ARP's. I would think a lot of financially strong independents would like to have ARP's assets. If you look at MEMP's presentation, you'll see that ARP has among the lowest costs in the MLP world, and I'm talking totals for F&D, LOE, and G&A per mcfe. Wish ARP would point this out now and then.
Where are these investment bankers when you need them? It's deal time for MLP's!
Just a thought. Targa is buying ATLS, and if Targa ever wanted to get into the upstream biz, the timing could hardly be better. Maybe Targa would buy ARP, lock stock and barrel.
ARP has all the pieces in place to provide a great entry for Targa to step right in.
Did you see the buyback just authorized by MEMP? Hello--
Buying back ARP shares with a 20%+ yield makes all the sense in the world. Use your 3% credit line to do, and cash flow per remaining unit will increase.
I've been meeting margin calls myself but have been able to buy more on the way down. MEMP is the best hedged MLP out there, and while the yield isn't as high as ARP's, that's what I've been buying.
Good grief, they have high prices locked in on 92% of next year's production, 87% in 2016. What prices do for oil and gas mean zilch to their cash flow. They have unused borrowing capacity of $1 bill, and you can bet they are going to make some great acquisitions next year at fire sale prices.
I have to believe the upturn in the MLP's will relieve the selling due to margin calls. Tax loss selling will be over in 2 weeks, maybe sooner if we are lucky. Hang in there.
Repsol buying Talisman at a 60% premium is probably helping the whole energy sector today.
Just one buyout of an upstream MLP would be a game-changer.
Companies are regulated as to how many shares they can repurchase per time period. It's based on a % of their average trading volume for the last 30 or 90 days, I can't remember which.
There is no way RSO or any other company can repurchase that many shares all at once. They have other regs as to what time of the day the can buy--not on the opening and not on the close.
However, these regs may not apply if RSO repurchases shares in a privately negotiated transaction, say with a large institutional shareholder.
The market is NOT saying they must cut the dividend at all.
The wipeout in MLP's is a case of forced margin liquidation and tax-loss selling. Maybe some shorting by hedge funds.
You think all those insiders buying MEMP in the 16's think a dividend cut is coming? Wake up! MEMP has $1 bill available on its credit line, and I can assure you that they are licking their chops at these low oil and gas prices, because they'll be able to acquire properties at fire-sale prices.
Yes, it's hard to believe folks will put as much money into their drilling programs as they have in the past.
However, the one sure thing in the outlook for next year is that costs in the oil patch are going to come down, WAY down. This means drilling and service costs are going to plunge.
An investor might be wise to invest at such a time with the idea that long-lived production will surely experience better pricing once production starts its inevitable decline. And how secure does everyone feel that the Mideast won't blow up?
Probably still a lot of tax-loss selling going on, and it may not be over yet.
According to one analyst, these MLP's tend to be seasonally weak in Dec but strengthen in Jan. I bought a little more MEMP at $12.
Company is the most fully hedged of the MLP's and has $1 bill left on its credit line. MEMP could almost steal production from desperate sellers next year.
Is there any rule or reg that would prevent LGCY and other Mlp's from repurchasing their lp units on the open market? This might be a good use for some of LGCY's liquidity. Doing so would reduce the cash required for distributions.
MEMP has not ruled out this possibility...
I still think we have tax loss selling to contend with for the rest of the month, probably some forced selling due to margin calls.
Come 2015, rig counts are going to start plunging; I mean straight down for oil and gas. Market psychology should see a major improvement at that time.
This oil surplus won't last forever--natural decline rate is over 5% on about 90 mill bbls per day of existing production. Anyone really think China is going to use less oil next year?
From the MEMP message board. Not sure ATLS can buy ARP units, but what about Targa?
Wells Fargo Conference...
After listening to the presentation I doubled up my position ( I urge everybody to listen to it). With a huge amount of their production hedged through 2019 I think we do not have to worry about a cut in the distribution. Also they left open the door to buy back units, at this price it makes sense.