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Kinder Morgan Energy Partners, L.P. Message Board

moneyonomics 160 posts  |  Last Activity: Dec 19, 2014 6:02 PM Member since: Jan 16, 2010
  • Reply to

    Last week's presentation

    by jrad52 Dec 18, 2014 10:09 AM
    moneyonomics moneyonomics Dec 19, 2014 6:02 PM Flag

    jrad you captured the essence. one key point is the owners (operator and non operators) as a whole do not generally need to approve a well ballot unless that is specifically inserted/checked in their JV agreement; so what that means is the operator can ballot each non operator and if none consent to the ballot the operator can drill the well on their own and force everyone non consent. operator does not generally like to do that but it can be done

    1-these wells have step declines so you capture the majority of the NPV in the first 2 year,s but have a non consent penalty that will last for years so by default they plan to never get any significant value/npv for the acreage under these wells but you are still managing the paperwork, etc

    2- the operator would not be balloting to drill a new well (particularity earlier in the year) if it was not economical or was a mandatory well to hold a lease. These wells would definitely be within nrps business size scope as that is why they bought these leases in the first place and more importantly when they ran their acquisition economics these wells would have been partially in their base case economics which is what they paid for the proprieties and partially in their upside case ie the added value to the unit holder to pay increased distributions, etc they would earn over and above the acquisition price; so the message it conveys to me is they are not going to meet the economic base case they paid and definitely are/did forgo the upside value.. One could conclude they either overpaid or are just plain willing to loose on the deal

  • Reply to

    Last week's presentation

    by jrad52 Dec 18, 2014 10:09 AM
    moneyonomics moneyonomics Dec 19, 2014 2:35 PM Flag

    jrad your additional information validated my supposition.
    First the economic mischief they have caused. When an operator proposes a new well they "ballot" the non operators for participation. If the non operator does not consent to participate they go non consent and are then burdened with a sizable carried interest penalty usually 200% to 300% of the costs of their proportional non consent the other participants had to fund. So for a company the size of NRP they have foregone sizable NPV (for the comparable size of their company vs the size of their net interest) in early production from these fast declining wells with 62 non consent plus they have racked up sizable carried interest penalties (not recorded on books) before they even can come back into the revenue stream or these non consent wells.

    Now the administrative mischief. First their engineers are still getting the drilling reports from these non consents and their accountants are still seeing the JV billings for these non consents so they still have a lot of paperwork flowing into them. If they are being stewards of their assets they must be doing something with all of this paperwork as the still are supposed to be monitoring their non consents to make sure if and when they payout including the carried interest penalty converts they start getting the revenues, etc so they still have administrative burdens again if they are stewarding their ownerships. Also they still have the environmental liabilities associated with these leases so if they have any environmental issues that arise impacting the overall lease they still have a potential risk so they should be environmentally monitoring these leases whether non consent or not.

    If you are Exxon or Chevron there would be a reason not to participate in these smaller project but that is why the Exxon's and Chevrons sell these kind of assets and why the NRsP buy them because proportional to their size these smaller projects add up. Not a good signal/sign

  • moneyonomics moneyonomics Dec 19, 2014 9:36 AM Flag

    we believe BBEP will finance its growth projects in a balanced manner. The issuance of roughly $250 million in net equity proceeds in October 2014 was in line with our expectation that Breitburn would access the equity capital markets to partially fund the QRE acquisition.

    Breitburn's senior notes are rated two notches below Breitburn's B1 CFR under Moody's Loss Given Default Methodology because of the priority claim of its relatively large secured revolving credit facility, which currently has a borrowing base of $2.5 billion with approximately $2.132 billion drawn under the revolver as of November 20, 2014.

    The outlook could return to stable if Breitburn is able to adjust its capital expenditures and unit distributions relative to its expected cash flow and BBEP's leverage level reasonably allows the partnership to weather this cyclical downturn. Also, any acquisitions and growth capital expenditures will need to be adequately funded with equity.

    We could downgrade the ratings if leverage on production is sustained above $60,000 boe per day, if distributions are not adjusted lower to reflect expected cash flow and maintenance capital expenditures or if liquidity tightens further. It is unlikely that Breitburn's ratings would be upgraded in the near-term. We could upgrade the ratings if Breitburn is able to grow its production base to over 60,000 boe per day while achieving appropriate leverage (debt to average daily production of less than $40,000 Boe per day and debt to PD reserves of less than $8.00).

  • Msg 44898 of 44904 at 12/19/2014 8:33:13 AM by passandshoot
    Rating Action:
    Global Credit Research - 18 Dec 2014
    Approximately $1,150 million of debt affected
    New York, December 18, 2014 -- Moody's Investors Service (Moody's) affirmed Breitburn Energy Partners LP's (Breitburn or BBEP) B1 Corporate Family Rating (CFR) and SGL-3 Speculative Grade Liquidity Rating, and changed the outlook to negative from stable. The B3 rating on its existing senior notes is affirmed. Moody's additionally withdrew the assigned rating on BBEP's proposed senior notes offering, which was withdrawn by Breitburn due to market conditions after being announced in October 2014.
    Ratings Affirmed:

    ..Corporate Family Rating at B1
    ..Probability of Default Rating at B1-PD
    ..Speculative Grade Liquidity Rating at SGL-3
    ..$305 million senior notes due 2020 at B3 (LGD 5)
    ..$400 million senior notes due 2022 at B3 (LGD 5)
    ..$450 million senior notes due 2022 at B3 (LGD 5)
    Ratings Withdrawn:
    ..$400 million senior notes due 2023 at B3 (LGD 5)
    RATINGS RATIONALE
    Breitburn's B1 CFR reflects its increased size on both a production and reserves basis, improved diversification, and higher liquids mix achieved through the QR Energy, LP (QRE) acquisition. The B1 CFR is restrained by Breitburn's high leverage profile, and the structural risks inherent in the master limited partnership (MLP) business model which entails continuous cash distributions and external funding requirements in order to fund growth. If the current weak commodity price environment continues, Moody's expects the company to significantly reduce capital expenditures and strive to roughly maintain current production through 2016. Pro forma for the QRE acquisition, Breitburn's debt to average daily production and debt to proved developed reserves are roughly $57 -- $59,000 per barrel of oil equivalent (boe) and about $12 -- 13 per boe, respectively, both high for a B1 CFR. If commodity prices do improve, end part 1

  • Reply to

    Last week's presentation

    by jrad52 Dec 18, 2014 10:09 AM
    moneyonomics moneyonomics Dec 18, 2014 10:52 PM Flag

    "Another questioner pointed out that NRP has been declining offers to participate in a lot of new wells (this was part of the 2013 oil & gas purchase, not the recent Sanish filed properties). NRP said part of this was due to low expected IRRs on the new wells, but most was simply due to the fact that NRP’s interests in the new wells was really small, and the administrative costs of keeping track of the new wells wasn’t worth the dollars involved."

    Is this disinformation?.

    At the major I worked for in my younger years I was Manager of the entire Americas revenue/royalty group which had over 100 people. We did not monitor the small working interests on a routine basis. You do not have to daily monitor the new wells unless you want to. You can pay the bills and record the revenue without monitoring as operator send a single JV bill and will sale your share of production if you want. You have a 3 years right to audit post billing/sales from the operator. We also used computer programs to check for reasonableness against state records, etc. Also NRP is providing the well/field data to someone to estimate their year end reserves and run the annual impairment tests so someone internally is going to a lot of work/trouble to separate out the nonparticipating - participating -carried interest well information already, so the statement in my experience leaves many questions.

  • moneyonomics moneyonomics Dec 18, 2014 10:29 PM Flag

    do not doubt rlbeard

  • Reply to

    Now until rest of year

    by nymarv10956 Dec 16, 2014 1:22 PM
    moneyonomics moneyonomics Dec 17, 2014 1:07 PM Flag

    Is Saudi Arabia replicating the 1985 oil price crises?
    posting on iv mlp and bry boards you will have to go their to see graphs
    Is Saudi Arabia replicating the 1985 oil price crises?
    In my response to arb on the IV MLP board.
    We are in very similar situation as around Nov. 1985 when Saudi Arabia decided to defend production rather than price. Response of US oil prices was immediate in Nov./Dec. 1985, but US oil production decline response was around 3-4 months (remember majors controlled more of the US production at that time than today and fields being produced were larger and many still in primary oil). I am demonstrating response in graphic form with polynomial trend lines. First graph data starts Aug. 1985 thru July 1989 (4 years) and second graph data starts Aug. 1985 thru Aug 2014. What you will see volatile prices started responding in an upward trend around 9 months after Nov/Dec 1985 start to price crises and to production around 6 months after start of production trend decline (point on what I have been making about price returning to average moving trend lines), and US oil production had just recovered from around mid-1985 levels by mid-2014 when Saudi Arabia started making waves; in fact one could speculate Saudi Arabia saw this full production recovery scenario and price trend recovery scenario and may be trying to replicate 1985, 30 years later, but I do not see how it will work in U.S. with fracing which is more of a manufacturing process, but may work with rest of world who still reply on big projects. Also Included here is a write up on 1985 oil crises. One other thing to notice on the graphs I developed and presented is it took around 1 year to steadily recover 50% of the lost price and nearly 14 years to steadily recover 100% of the lost price, but in that time period you did not have a growing Asia,etc. so if it took 14 years to recover 100% of the lost price this time I would be very surprised.

    http://www.investorvillage.com/smbd.asp?mb=4288&mn=157203&pt=msg&mid=14477602

  • moneyonomics moneyonomics Dec 17, 2014 9:44 AM Flag

    i posted the list provided

  • posting on iv mlp and bry boards you will have to go their to see graphs
    Is Saudi Arabia replicating the 1985 oil price crises?
    In my response to arb on the IV MLP board.
    We are in very similar situation as around Nov. 1985 when Saudi Arabia decided to defend production rather than price. Response of US oil prices was immediate in Nov./Dec. 1985, but US oil production decline response was around 3-4 months (remember majors controlled more of the US production at that time than today and fields being produced were larger and many still in primary oil). I am demonstrating response in graphic form with polynomial trend lines. First graph data starts Aug. 1985 thru July 1989 (4 years) and second graph data starts Aug. 1985 thru Aug 2014. What you will see volatile prices started responding in an upward trend around 9 months after Nov/Dec 1985 start to price crises and to production around 6 months after start of production trend decline (point on what I have been making about price returning to average moving trend lines), and US oil production had just recovered from around mid-1985 levels by mid-2014 when Saudi Arabia started making waves; in fact one could speculate Saudi Arabia saw this full production recovery scenario and price trend recovery scenario and may be trying to replicate 1985, 30 years later, but I do not see how it will work in U.S. with fracing which is more of a manufacturing process, but may work with rest of world who still reply on big projects. Also Included here is a write up on 1985 oil crises. One other thing to notice on the graphs I developed and presented is it took around 1 year to steadily recover 50% of the lost price and nearly 14 years to steadily recover 100% of the lost price, but in that time period you did not have a growing Asia,etc. so if it took 14 years to recover 100% of the lost price this time I would be very surprised.

    http://www.investorvillage.com/smbd.asp?mb=4288&mn=157203&pt=msg&mid=14477602

  • Whitecap provides revised outlook for 2015, maintains sustainability and financial strength

    CALGARY, Dec. 16, 2014 /CNW/ - In response to the dramatic drop in crude oil prices over the past six weeks, Whitecap's Board of Directors and Management felt it prudent and necessary to revise our budget outlook for 2015. Our capital program for 2015 will be reduced by 32% to $245 million from $360 million in order to maintain our financial flexibility and to provide continuous long term sustainability for our shareholders. The capital reduction will allow Whitecap to still grow production per share by 5% in 2015 and maintain the monthly dividend at $0.0625/share all within a total payout ratio of less than 100%.
    2015 REVISED CAPITAL SPENDING The proactive re-alignment of our disciplined 2015 capital program to adjust for the current commodity price environment allows us to focus on the most profitable projects with the highest rate of return within our extensive inventory of drilling locations. The revised capital program balances the need for quick well payouts along with strategic initiatives that are important to our long term sustainability..
    MAINTAIN DIVIDEND Our current monthly dividend of $0.0625/share remains intact and sustainable despite the recent collapse in oil prices and we anticipate maintaining our current dividend through these difficult times. Whitecap does not have a dividend reinvestment program and anticipates the dividend to be fully funded within internally generated cash flows. Based on our current share price, the dividend yield is approximately 7%. Given our disciplined approach to the dividend policy, our Board of Directors and Management have chosen to defer our previously announced monthly dividend increase to $0.07/share in January 2015 until such time as commodity prices recover.
    HEDGING Our ongoing risk management program provides us with the ability to withstand the current weakness in commodity prices and provides stability in our funds..

  • iv mlp Msg 44703 of 44710 at 12/16/2014 10:28:42 AM by

    massivad

    Baird dumps on the upstream MLPs

    Baird downgrades six upstream MLPs this morning. Baird slashed estimates, targets, ratings, and suitability ratings in the upstream MLP sector to reflect their outlook to collapsing oil prices. They’ve downgraded EVEP, LGCY, LINE, LNCO, MCEP, and VNOM to Neutral from Outperform. They state that upstream MLPs will have no choice but to cut their distributions if oil prices to not recover in order to realign their balance sheets with the new oil paradigm which, they see as remaining structurally lower for the foreseeable future. Best positioned is VNOM. Worst positioned is BBEP, EVEP, LGCY and VNR. They are assuming these MLPs will be forced to cut their dividends based on when debt covenants are tripped in their models.
    BBEP – 2Q’16
    EVEP – 4Q’16
    LGCY – 4Q’15
    LINE – 1Q’17
    MCEP – 2Q’17
    VNR – 3Q’15
    VNOM does not have a debt-forced DPU cut risk due to their variable rate distribution policy.

    Despite the horrendous drop, it is too early to bottom fish these names IMO. Crude oil needs to return to the $65 level and hold it for a few weeks before considering jumping into the fire. The bottom in crude oil will not be seen until 1Q’15 at the earliest. Tax-loss selling will persist until EOY.

  • Relates to topic we have been discussion on distributions and costs coming down to offset some of the price delcine

    Goldman: U.S. oil producers may boost output beyond highest rate despite price decline

    U.S. oil production may increase from its highest rate in over 30 years despite the decline in oil prices, Goldman Sachs Group said Monday. "Costs are falling nearly as fast as the price, which means oil producers can spend less to get the same or potentially even more in terms of production," it said. Producers are also shifting drilling rigs to lower-cost fields in response to the price slump, it added.

    http://www.bloomberg.com/news/2014-12-15/goldman-sees-u-s-oil-output-maintained-as-costs-sink-with-price.html

  • moneyonomics moneyonomics Dec 15, 2014 11:48 PM Flag

    looks like well in the low btu area so probably needs no processing or they would have added an "e" in the 59 mmcf/d and would have read 59 mmcf(e)/d

  • Do not jump off the cliff on distribution until you see what is below. A cut of deferral now is irreversible in longer term penalties

    http://finance.yahoo.com/video/oil-prices-rebound-within-3-223200011.html

  • a must listen to. the coxeadvisors web cast below, it supports the wait case on any distribution move. Why take the whole step now, it is very costly in the,longer run (ie if they can even do it yet as discussed before). the time for the price to recover from a cut or deferral is drawn out which prolongs and lengthens the impact on forward financing costs (new units or debt. If oil prices do not recovering in 5-7 months then can reduce or defer the distribution.

    http://coxeadvisors.net/november-28-2014don-coxe-oil-and-politics-a-toxic-mix/

  • HOUSTON, Dec. 15, 2014 (GLOBE NEWSWIRE) -- LINN Energy, LLC (LINE) ("LINN" or the "Company") and LinnCo, LLC (LNCO) ("LinnCo") announced today that LINN has closed the previously announced sale of its entire position in the Granite Wash and Cleveland plays located in the Texas Panhandle and western Oklahoma to privately held institutional affiliates of EnerVest, Ltd. and FourPoint Energy, LLC at a contract price of $1.95 billion (the "Granite Wash sale"), subject to pre- and post-closing purchase price adjustments.

    In addition, on November 14, 2014, LINN closed the previously announced sale of its Wolfberry positions in Ector and Midland counties in the Permian Basin to Fleur de Lis Energy, LLC at a contract price of $350 million (the "Permian Basin sale"), subject to pre- and post-closing purchase price adjustments. These sales are expected to be tax efficient upon successful completion of a reverse 1031 like-kind exchange.

    The Company intends to use combined net proceeds from these sales to repay in full the $1.3 billion term loan, which is the only remaining interim financing from its $2.3 billion acquisition from Devon Energy Corporation which closed on August 29, 2014, and reduce borrowings under its revolving credit facility.

    Upon closing of the Granite Wash sale and repayment of the term loan, lenders under the Company's credit facilities will complete the semi-annual redetermination and increase LINN's borrowing base to $4.5 billion and reaffirm the $1.4 billion borrowing base for LINN's wholly owned subsidiary, Berry Petroleum Company, LLC ("Berry"). Previously, LINN's borrowing base was reduced by $275 million in connection with its $1.1 billion unsecured notes offering in September 2014. As a result of the redetermination, the maximum credit amount under LINN's credit facility will be restored to $4.0 billion while the commitment amount under Berry's credit facility will remain unchanged at $1.2 billion. The maturity date for the LINN and Berry credit

  • ARP/ATLS 8k filing

    Two filings today, ATLS set the expected distribution of SPINCO to be $1.10. ARP gave new estimates for their distribution and coverage ratios for 2015.
    The filings are very short, I'd suggest you glance over them.

    In summary ARP expects to pay out $2.36 per unit for the year, resulting in a 1.1 ratio based on the following assumptions.

    Net production volume per day:

    Natural gas (mcfd)
    221,443

    Crude oil (bpd)
    7,179

    NGL (bpd)
    4,408

    Total (mcfed)
    290,964

    • Net realized natural gas price after hedges of $3.74/mcf (72% hedged)

    • Net realized crude oil price after hedges of $78.15/bbl (68% hedged)

    • Total net production costs of $1.94/Mcfe

    • Partnership management funds raised of $225.0 million for the year ending December 31, 2014 and $275.0 million for the year ending December 31, 2015

  • this is really a must listen to presentation by Coxe

    go to investorvillage mlp board under same subject line

  • moneyonomics moneyonomics Dec 15, 2014 1:37 PM Flag

    biggest issue i have with nrp oil and gas holdings is it does not appear they are hedged in any data I can find

  • iv bry Msg 156725 of 156744 at 12/14/2014 5:12:23 PM by

    imagery

    Why Senate spent the nite rushing thru the House $303T Dodd-Frank Gutting Derivatives Bill?

    "...Meet WTI-structured-notes... the transmission mechanism for oil-price-shocks blowing up the financial system...."

    http://www.zerohedge.com/news/2014-12-14/exposing-oil-price-shock-contagion-transmission-pathway

    http://www.zerohedge.com/news/2014-12-13/crude-crash-comes-wall-street-counterparty-risks-rear-their-ugly-heads-again

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