I agree. Personally I have owned MLP's for 2 decades. I use to have a portfolio of 16, half were upstream, currently 10 that includes just 3 upstream, that I think will survive in there current capital structure into 2017
And I'm watching.... VNR, MCEP, BBEP, ARP for a change in price, structure of debt etc to a possible entry point
as well i should add low production cost comes from the fact that 80% are so of reserves are pdp, which means low cap to keep oil and gas flowing, you don't have the high cost and drilling and installing an infrastructure to transport, power, treat, disposal, etc etc etc etc.
service cost are decreasing, taxes down because taxes are based on rev. Steel and sand prices are down so overall in 2014 the cash cost all in was approx 24$ per boe (Excluding debt servicing which is about $6)
So I'd guess all in including interest on debt we are looking at a $25-27 cost per boe.
unlevered cost of $19-20...
oil at 50-$60 will generate a huge amount of free cashflow. So If they can get to 2017 and oil is in the mid 55$ range they can go into the futures market and hedge into 2020 if they want ensuring flat growth and lots of reserves to grow company again.
Thankfully the maint cap in low and pdp is high so keeping production flowing isn't a problem....meaning is won't require debt etc it's internally funded. I'd like to see them buy back some debt at 50% of par
Low production cost comes from the quality of the rock they have in the Permian Basin and the production profile those wells have. To break it down further wont help unless you understand geology: porousness, Total % organic compound, thermal maturity, pressure and depth, B-factors etc. Basically when all other basins are unprofitable at $40 the Permian still is (well the core of EFS or Bakken)