"is getting worse every month."
Wrong. There were a couple of months of declines however latest data from robry, Bentek, EIA show production starting to rise again. Which leads to suspicion the declines were due to winter weather interruptions.
You completely forgot to take into account that production was impacted by severe winter weather during Q1.
Yes, there were a couple of months of slight declines however the most recent monthly data shows production rising again. I have an open mind about production declines to come however to state that production right now is 'collapsing' is hysterical nonsense when production is still close to all time high levels and the Q1 decline was likely mostly due to winter weather related interruptions which is already in the past. Production may 'collapse', but it certainly is not doing so yet.
What makes you think I don't know that shorts pay the dividends?
You always come off as very condescending and put false words in people's mouths. Note that I did not say anything which contradicts your claim that the short ratio of dividend paying stocks is lower in general. But that is not what you said earlier in the thread when you said a high yielding security like CLMT "could never" have a high short interest. I repeat again, I have seen plenty of cases of high yielders having high short interest. Below I will give you a few current examples:
For MLPs, just to name a couple of the current most obvious:
EVEP 1,304,815 short interest 5 days to cover
LINE 10,257,782 short interest 7.5 days to cover
and I could list many high yielding royalty trusts (some with yields close to 20%), for example:
WHX 1,788,095 short interest 6 days to cover
WHX has a current 'yield' approaching 40% but that is not stopping people shorting it because they know that the gains from shorting it will exceed the cost of paying the distributions.
Here again, you are WRONG yet ridicule anyone with a different opinion.
There was one a few weeks ago (forget the purchaser) and another sale of midstream assets announced to MWE today. I think these are all assets that were expected to go to ACMP.
Is ACMP being outbid?
Yes, it has to be a taxable transaction and distributions will be recaptured.
However it's not quite as bad as the above poster suggests because PSE has always reported significant box 1 income on the K-1s.
Here's an approximation of how it works:
Your original cost basis (purchase price) is adjusted
-downwards by distributions received
-upwards by positive income in boxes 1-11 on all your K-1s (since you should have already paid tax on that income each year)
-downwards by negative/loss in boxes 1-11 on all your K-1s (don't think this applies to PSE as they generated positive income).
The end results should be roughly
-capital gains tax on difference between sale price and original cost basis
-ordinary income on (total distributions received minus box 1 and other box 1-11 income on all your K-1s since purchase).
That is an approximation and you won't know the exact amounts till you get your K-1 in 2014.
Since PSE was one of the MLPs which generated higher box 1 income and you should have paid tax on that each year, the tax impact of the sale will be less than a midstream MLP which had fully shielded distributions. The more tax you paid over the years, the less you pay on sale.
You can get a feeling by looking at the capital account section of your last K-1.
Also if you log into the PSE page of taxpackagesupport (where you got the K-1) there is a tax calculator updated through end of 2012 which will give you an estimate of your tax liability on sale of your units.
You are right that unitholders are not 'entitled' to a vote however they do sometimes get one for major events like this.
But if PXD owns 50% as you say then it's just a formality (sham) as they can do whatever they decide. The only thing they will want is to protect themselves from lawsuits and so have to offer a fair price.
That is not possible.
You cannot have a tax free exchange of MLP units for corporate stock because MLP units have deferred tax liability built in and corporate stock has no way to maintain that deferred tax.
Exchanging MLP units for corporate stock will always trigger a complete disposition as a sale (deferred tax comes due).
Cast your mind back to late 2011.
At that time we heard that Enervest reset the IDR levels.
Prior to the reset, the IDRs were as follows:
0% up to 0.46
13% above 0.46 up to 0.50
23% above 0.50
Post reset the levels are as follows:
0% up to $0.875725
13% above $0.875725 up to $0.951875
23% above $0.951875
and Enervest got a bunch of EVEP units as part of the reset deal.
I don't recall what was the status of the Utica situation at that time, but I guess they thought they would sell the Utica properties promtly and exchange them to producing properties which would push the distribution up so they would be back in the high IDR tiers again.
Instead EVEP's distribution shows no sign of increasing beyond the meaningless .001/qtr.
So my question...remembering that Enervest got a bunch of units as part of this IDR reset deal, did they do the smart thing and doesn't this mean they have additional incentive to exchange the Utica properties which are not contributing to cash flow for some other properties which would drive the distribution up beyond 0.95/qtr?
Good point...plus one more 52c (not 51c) distribution.
Based on current price of PXD that equates to $31.19 (including the 52c distribution) and PSE now trading only 30c above that amount.
So it's only marginally above the offer now, however typically you see a discount to the offer price until it gets closer to closing.
You are likely correct, however my question remains: why do they even need to consider the offer when it is their own offer (management of PSE and PXD are essentially the same)? It's not like they need to study the details of the offer as they wrote it themselves.
'Is the offer real, or an attempt at price manipulation?'
That's what I'm really getting at.
Otherwise, since it is their own offer, why would they just say they received an offer rather than accepted an offer? How can they be unsure of the merits of their own proposal?
This was announced as PSE received an offer (ie. unsolicited buyout proposal) rather than PSE agreed to be acquired. However since bosses at PSE are also executives at PXD, it's a bit like saying 'we received an offer from ourselves but haven't yet decided whether to accept our own offer'.
based on current price, I'd suggest anyone who doesn't have a bunch of deferred taxes to take the money and run (ie. sell now).
based on current price of PXD. Are people expecting an increased offer?
For my part, I'm wondering why this was announced as PSE received an offer, rather than PSE agreed to be acquired by. It makes it sound like this was an unsolicited buyout offer which has not yet been considered by PSE. On the other hand since executives at PSE are executives at PXD, it's a bit like saying 'we received an offer from ourselves but haven't yet decided whether to accept our own offer'.
How much of PSE does PXD already own, does anyone know? If it comes down to a vote by unitholders, how much is already in the yes camp by virtue of being owned by PXD?
by the way, the wording is interesting...PSE 'received a buyout proposal' from PXD. It didn't say PSE had agreed to be acquired by PXD, which is what is usually said where there is a buyout.
So I wonder is this really a done deal after all.
Could be a nifty way to raise the valuation of PSE without actually consumating a deal.
As mentioned, I will hold for a while and see what happens.
But I wouldn't blame anyone for selling tomorrow.
Quite a flurry of MLP takeouts though. I wonder if there's something behind it.
This is the third of my MLPs I'm losing this year.
First CPNO, then CMLP, now this.
The other two were MLP to MLP buyouts though so don't trigger the tax issue.
It's certainly a reasonable decision if you want to sell now.
In fact, if you believe the sale will go through (likely) and there will be no increase in the offer then it probably makes sense to sell now as you will get a pop tomorrow and little further appreciation after that, although there will still be one more distribution to collect in August.
Personally, I will probably wait to collect the final distribution and be sure the deal is going through. As mentioned, I will have to pay a chunk of taxes so want to be sure the deal is happening before I go ahead and trigger those.
So I'll probably wait till after the final (August) distribution, but will sell before closing. Since I don't want to own PXD, it's simpler to sell before close rather than be exchanged for PXD shares and then sell those.
But there is a strong argument to selling on tomorrow's pop if you think you can put the proceeds to work elsewhere as there will be minimal appreciation after tomorrow other than the final distribution.
I was not commenting on the price.
When an MLP is bought by a c-corp (whether you choose to keep the shares in the acquiring company or not) it is a full disposition (sale) of your units in the MLP. Thus all the deferred tax you have accumulated from previous distributions has to be recaptured. So not only do you have capital gains but ordinary income recapture too. It can be a significant tax hit.
Since you have to pay taxes out of your proceeds, the after-tax proceeds are reduced. That means when you reinvest those after tax proceeds you would need a higher yield to generate the same amount of portfolio income. As a result, if this sale goes through (and I would sell before closing as I have no interest in holding PXD) then even if I reinvest the proceeds in something with a similar yield (another MLP), my portfolio income will be reduced due to the tax hit I would take.
Granted, PSE was not highly tax deferred like most of the pipes or midstreams (there was always significant box 1 income on the K-1), so the tax impact will not be so terrible. Nevertheless there will be tax to pay.
I an quite happy when my MLPs are acquired by other MLPs (ENP by VNR, CPNO by KMP, etc) because there is no tax impact. But I don't like my MLPs to be acquired by C-corps because4 it forces me to sell my entire position and take the tax hit. That is not a reflection on whether it is a good deal or not and I would have the same opinion even if they raise the offer (which I do not expect to happen).