Guess your short is burning huh? If I'm Dopey your Grumpy or Brokey or Bankrupty....right.
Sentiment: Strong Buy
go to seeking alpha. It's a good thesis, states both risk and reward. And simplifies the global production profile for those who did have a deep understanding of it. Good job
personally as I have said, better to wait and see, and if you need exposure to oil and gas use the MLPS which have yield and hedging support, many have already cut distributions and currently yield 10-15% that is supported by hedging 2 years out. BBEP, ARP, LINE, EVEP, MCEP, VNR are all good examples
a 1 for 50 reverse split leaving a total of 9 million shares out fully diluted an a $11 share price, then a secondary at some point to raise capital. this isn't bad splits and reverse splits means you own the same % ownership. It will help the company access capital markets.
and as far as comparing debt from one company to the next it's important to also look at rev, ebidta, production vs debt. etc etc to say company x has more debt then y isn't the same as saying x has more debt but has 3 times the editda and 4 x rev and interest coverage of 2 x that of :"Y"
Zack rec historical are over 70% wrong. Do your own research.
Plus a reverse split will raise the share price, and could under the worst case, make it possible for people to short sogd which many may if oil and NG prices stay low and their hedges roll off
I'm not saying BBEP is better or EVEP is bad, I'm saying 1) Not to count on the distribution remaining the same, and to expect it's preservation based on asset sales is not the business model, that leads to quality deterioration. 2) management is to blame for moving away from prior business mission of stable income through hedging 3-5 years out 3) oil and gas will recovery but the MLP's in general will need 2-4 years to restore the levels of cash-flow they had prior.
No one saw the drop in oil and gas coming but that's why MLP's are suppose to hedge. Personally I like EVEP owned it from IPO to $65 then bought a little here and there at $18.....I want to wait and see, realistically there is a possibility of a cut to 1.20-1.50 based of the current forward curve in oil/ng and lack of hedging
Why would it be lowered? Wallstreet has modeled this and cut price targets, oil and gas prices are down 60% and 30% respectively, no material hedges beyond 2016, the forward strip for oil and NG is well below their ability to generate the current distribution or pay something in the $2 range....BBEP does have problems with the timing of the acquiring on QRE and didn't get time to term out the revolver but their cashflow is much more sustainable due to superior hedging compared to EVEP in 2016, 2016 will be a hard year for those without meaningful hedges.
EVEP is a good value at $12 but not for income
I'd wait the s-3 filing states they will do a reverse split, i'd wait and see how the stock price adjusts after.
The hedging, plain and simple in prior years they had 3-5 years hedged out, currents just 2015, leaving great liquidity risk.
It seems you started it with openly blaming one political party and brazing another while making statements of half truths.....Regardless of which party is in office or who you (the individual board member) supports, can we all agree there has been too much demonizing of oil companies and far too many barrier put up to make US produced oil and gas globally competitive. Oil has been the fall guy for everything. Take climate change, Carbon is bad but Methane is 20-30 times worse, pound for pound heat is trapped 20-30 times greater in methane in our atmosphere and while the EPA 2014 report "Cows' methane emissions trump gas operations in latest EPA greenhouse gas inventory" goes unnoticed or referenced. Now I'm not saying kill all the cows but there is a lot of misinformation out there. If cattle industry (And there fore the fast food industry, a trillion dollar industry combined) were treated as oil were you would have a beef o-zone tax and a push the eliminate beef and replace it with soy and cattle farms forced to erect methane captive devices and to buy methane credits for each head of cattle and a limit of 10 once of beef in a pound.......sounds silly but that's what oil has... Oil has power is Washington but so do the cattle producers, Fast food corps and especially the railroads that have blocked the pipelines because they want the volumes of oil to replace the coal volumes they are losing... So lets not get political because simple blanket statements are never simple and most people are not well enough informed to make a true statement of fact. Physics doesn't lie. Politicians do.
Sentiment: Strong Buy
If you want "magic market" then lift the ban in exporting of Natural Gas Liquids and Oil. Or repeal the mandate of ethanol additives to gasoline which are inferior in their energy output under the laws of physics and more harmful to the environment the drilling for oil. And allow pipelines to pipe the US produced oil vs. rail car which is much more costly and unfriendly to the environment.
Allow the markets to truly function freely.
The margins on oil companies are nothing compared to banking, software, etc. respectfully those industries are more deserving of a tax then gasoline. If you really want to create a tax, tax bottled water, one of the most wasteful products on the market.
A gas tax is a bad idea, it hurts the most the lower and middle class and based on global depletion rates and the law of diminishing returns oil prices will rise back to $100 a barrel in the next few years and gas along with it.
Government regardless of party, is wasteful with capital. They create no profits to fund our America standard of living. Giving them yet another source to plunder (a gas tax) and borrow against like Social security fund, medicare, would be a mistake, just like crediting or discrediting a president for event that happened under there watch whose sends were sown decades before.
Explain to me why a tax on gasoline is better then say a tax on imported oil?
I view this no different then when cheap steel or lumber or sugar was dumped on our shores and threatened to destabilize a key industry the government stepped up and stopped it with a tariff and taxes.
You may think lower energy prices are great for America, they are if we are producing the stuff, but as is, 10 of thousands of jobs are being lost, truckers, drillers, hotel workers, engineers, steel workers, as well as it threatens national security. How many carrier groups will have to stay in the middle east if we go back to importing 70% of our energy, what will that cost in lives and taxes.
Sentiment: Strong Buy
A better question is can they be cashflow positive, service debt and stay within debt covenants at 70$ a barrel?
The debt current trades as if restructuring must happen at 40 cent on the dollar and PF at a 70% discount to par. At this point who cares where the stock trades you should be asking will this company survive
preferred isn't a sure bet in worse case scenario, buy the debt, it trades about 75-80 cents on the dollar and senior to PF,
At this point it's a value play and a call on oil being much higher 3 years from now, I think a cut to 0 in distributions is factored into the price now. Cutting it saves 200 million a year. Do that, pay down debt with it, sell 2016 2017 2018 hedges on oil, pay down more debt then use costless collars on re-hedging oil 70% 2016 2017 production to ensure positive cashflow and upside to oil price on the 30% unhedged for a reinstatement of a distribution.
Sorry but MEMP and EVEP are very different and valued different dues to hedging memp is secure through 2018, where as EVEP in this forward strip pricing will lose money in 2016, 2017 2018 because management drop the ball on hedging
under the circumstances, I have decide to wait and see and exit basically flat...The hedges are good through 2015 but I am concerned about 2016 oil and NG price now where FSTO doesn't have much hedged...I think there will plenty of bargains out there to be had in the next year. If i miss the first .10-.20 up I'm okay with that, until oil stabilizes I've gone into the MLP's solely for the long dated, high volume of multiple years hedged and income... I'll still be on the board but passively.
All the best.
The problem is finding a buyer of assets in an illiquid market. NO one is buying land at any fair prices,
The TMS is a great future assets 5-10 years out, but the cost are too high in this environment, HK is abandoning all capital spending in the TMS in 2015 as an example.
Even the Eagleford in this virtually unprofitable at these prices...so I don't believe anyone will lend them money unsecured and risk the risk of a restructuring.