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.
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)
Crude oil (bpd)
• 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
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
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...."
hyphy If I was counseling BBEP management I would suggest they be painfully prudent in their response to the oil price crash and be seen as thoughtful stewards of BBEP by not making quick decisions leading to unintended consequences, without exploring all options as they have went down the distribution deferral/cut path before.
First to your point on cumulative deferreds which is another point I did not have room to get in my original message when I said "there are others considerations" and one I had in mind was the cumulative deferreds, by stopping the preferred payments before cutting the common below $2.08. I presume some of the QRE holders who retained their bbep units may sue and have a strong case if bbep cuts the distribution so soon after the merger from economic reasons (which was not one of the reasons for not moving the distributions to $2.08 in the merger agreement) before using all other options; as again the $2.08 was part of the merger consideration recognizing both companies were reasonably hedged into 2015 and that if oil prices dropped operating and capital costs would decrease. The oil price drop is into the standard deviation tail on the bell curve, but I again believe BBEP will need to, and actually want to, implement other cash flow savings options first not only for liability protection but also by cutting so soon it leave the impression the merger is a bust and bbep management is dilatory
Second, again they are reasonably hedged for 2015 and I would bet the beginning of the year 2015 hedges are higher than the end of years as the hedge coverage they present is average and also their California oil is still at the slightly higher brent price.
Lastly the recovery time in unit price will be extremely slow for a distribution cut, but will be more robust when oil prices recover and they will need to go into the market to issue new units and or to borrow and by depressing the price longer than needed it will make for expensive financing's.
Those looking for a new opportunity- DPM (7.35% yield)-55% fee moving to 70% in 2017 (80% of 45 % commodity exposure hedged in 2015)-Strong dropdown plans from LLC-GP (DCP)
(fee moving up to around 65% in 2016 but drawback only 25% of 35% commodity exposure hedged in 2016)
Combined GP and DPM are no. 1 gas processor, no. 1 ngl producer and no. 3 pipeline in country. Pay close attention to supplementary slides as it shows were drop-down potential emanates from
Remember parents to LLC-GP are Phillips 66 and Spectra Energy
marion on your second point (fourth sentence). there have been advanced economic papers written on the subject of deferring production after a well has been completed, in a low price environment, and based on the actual factors it has been demonstrated that generally the worse economic case is to shut in/defer production (in essence the case has been substantiated that deferred production in essence results in that production not being withdrawn until the end of the reserves life thus killing the NPV of the deferral)
I speculate BBEP can not reduce or suspend the $2.08 distribution at this point in time without being subject to a lawsuits from former QRE holders; unless they can concretely demonstrate their cash flow has been materially and irrefutably harmed at this point with their hedges in place, costs reductions that will come from lower oil prices, flexibility with capital budget, etc. In the QRE merger agreement they agreed to increase distributions to $2.08 as part of the consideration for the merger, unless related to terms of their partnership agreement or Delaware law, but did not specify due to a change in economic conditions and they have already declared the $2.08 so they were capable of doing it under Delaware law and partnerships agreement. I believe before they reduce or suspend the distribution from the $2.08 level they will first have to clearly establish their inability to economically make the distribution and that has not happened yet. First they can optimize capital expenditures. Secondly they will see C02 and other operating and capital cost reductions from the lower oil price and they are in process of trying to JV their Permian development program. Thirdly they are reasonably hedged in 2015 and from a macro perspective in the world of oil and gas prices both over and under shoot in response to an unexpected event and eventually overtime revert back to the mean moving trend line, which is still upward trending over the long term and not enough time has lapsed to prove oil prices will not revert to the mean upward trend. Fourth analysts have estimated at current oil prices level they can maintain an approx. 94 coverage ratio in 2015 before any additional optimization steps. So taking these 4 and I am sure there are others considerations into mind, I do not think there is enough concrete evidence at this point in time to reduce or suspend the distribution without subjecting BBEP unit holders to potential liabilities and it would distract mgt. from duties.
still no evidence of oil and gas price hedging on e&p asset purchases. being naked in this current oil price manipulation is a poor tactic
barry i would speculate at the point in time a 20% to 30% response at best that we know what LS is
cheap this was the original post from bicep that started this thread I was attempting to respond to. did appreciate all of your feedback
" Is there any serious doubt that a re-determination in April, not late spring, will cut it by that, given a 12 month look-back?"
I could not clearly ascertain question either, but the way he answered I surmise and again only surmise it was what is fair yield on the units
Redetermination lower not a forgone conclusion
iv bry board Msg 155909 of 155934 at 12/10/2014 8:51:52 AM by sandgrey
Denbury Announces New Credit Facility
BN 12/10 13:45 *DENBURY NEW CREDIT LINE MAXIMUM FACILITY SIZE OF $3.5B
BN 12/10 13:45 *DENBURY REPORTS NEW CREDIT LINE INITIAL BORROWING BASE OF $3B
Denbury Announces New Credit Facility
2014-12-10 13:45:08.227 GMT
PLANO, Texas, Dec. 10, 2014 (GLOBE NEWSWIRE) -- Denbury Resources Inc.
(NYSE:DNR) ("Denbury" or the "Company") today announced that it has entered
into a new five-year revolving credit facility which amends and restates the
Company's prior facility that was set to mature in May 2016. This new amended
and restated revolving credit facility ("Facility") has a maximum facility
size of $3.5 billion and an initial borrowing base of $3 billion. The Company
elected to maintain the aggregate lender commitments at $1.6 billion to be
consistent with the Company's prior facility. The Facility provides for an
annual redetermination of the borrowing base around May 1 of each year and
permits the Company to increase the aggregate lender commitments up to the
borrowing base amount with approval and incremental commitments from the
existing lenders or new lenders. The Facility also reduces borrowing costs by
25 basis points on the drawn spread, provides for a lower interest rate on the
undrawn spread, and grants Denbury the option to release all collateral upon
the receipt of a single investment grade rating. The Facility was provided by
a syndicate of 24 financial institutions including JPMorgan Chase Bank, N.A.,
as administrative agent, and Bank of America, N.A. and Wells Fargo Bank,
National Association as co-syndication agents.
Denbury is a dividend-paying, domestic oil and natural gas company. The
Company's primary focus is on enhanced oil recovery utilizing carbon dioxide…
"Is there any serious doubt that a re-determination in April..?"
Do you have concrete evidence to back up that leading supposition?
bbep indicated they have a lot of capital spending flexibility if need be and indicated they could even go as low as $150mm in 2015 capital compared to a combined capital spend over recent 12 moths for combined entity approaching $550mm. In what ever capital spend scenario the go with for 2015 they suggested would be a lot less than $550mm and also indicated when the oil prices collapsed in 2008/2009 they saw a 20% reduction in operating costs from reduced material/service costs (personal note could be greater with postotle co2 flood now being 15% of revenue) and cost reductions in capital costs from reduced material/service costs and over all will see around a 3-5% reduction in ebitda for every $10 change in oil price at current hedged levels. Also at this point did not seem panicked on the distribution and felt good being hedged at their current level even though it would nice if it was more. Have over $350 mm in liquidity and no re determination till late next spring. Market price reaction today seemed encouraged by what they said.
Chrx found article. you should be able to search for this title
Focus on top spots to boost US oil output even as well permits fall
Fri Dec 5, 2014 6:00am GMT
By Ernest Scheyder and Kristen Hays
WILLISTON, N.D./HOUSTON Dec 5 (Reuters)