if they could just buy those bonds at 5 cents for $500 mil, they would have $400 mill left over from the line and pretty much take care of all the debt. Unit owners may have a tax problem though
The way I look at it, it's probably a game of chicken w creditors. The got the money out likely to try to buy back some cheap bonds. However, with this hanging over their heads, this one is dead money until something significant happens to change their capital structure.
They have a presentation on their website. Pretty straight forward. $175 mil bank line. No bonds. 75% hedged this year and 40% next year. $43 break even. No nat gas. I think nat gas will stay lower for much longer. The only risk that I see is a small reduction in the line and obviously oil not reaching $43. The way I look at it, there is a much smaller chance of going to 0 and the reward could be a 20 bagger.
I see some forecasts predicting US production to drop to 8.4 by july or so. It'll help. If Andy Hall, The God trader, could lose a couple of billion calling the oil bottom then I don't feel so bad taking a bath like I did in the past few months.I don't feel good either
a bit below $1.03. This may be the buy of a lifetime. As a disclaimer, I've been wrong before but I don't see oil being this low in the next 6 months.
Sentiment: Strong Buy
From other people's research I gather that unless oil jumps this yr BBEP and LINE and EVEP are toast. MCEP would be the "safest". Seems they're not making a killing but oil doesn't have to go to $70 for them to make money. LGCY haven't done much research but shows pretty good cash flow until 2019 so they must be hedged and break-even oil $47 or so. Have to take a look at that one. MEMP also looks pretty good cash flow wise. VNR may last for a couple of years. I like MCEP but hate putting all my eggs in one basket, so I'll do more DD on LGCY and MEMP. ARP break-even oil would be $79 but I'm sure that they'll bring that down a bit
They have a pretty good presentation on MCEP website. Even I can understand it. From what I see they have hedges for about 70% of production through the end of 2016 through collars and $50 puts and 40% via those puts through the end of 2017. What attracts me to them is no debt outside the $180 mil bank line. The line re-determination is the only thing that I see as a challenge coming up (outside of low oil) but even so, we're talking about $10-$20 mil they may be short vs billions for others. Otherwise $43 oil is break-even for them and that includes all expenses, G&A, debt and capex. I think $43 oil is very achievable in next 6 months and will be many others going belly up before they do.
Thanks guys. Has anyone looked at LGCY preffered? They've cut the distribution but aren't those cumulative? Looks like a pretty good deal but then again I don't follow as much as some of you
I own ARP and BBEP and thinking of dumping BBEP and put it in ARP. Would this be a good move? Seems to me ARP is hedged a couple of years beyond BBEP. Any reason why I shouldn't do it? Informed opinions please
MCEP is the least leveraged by far. They make money at $35 oil ($43 including debt) ARP needs $78 oil and is highly leveraged. But ARP has some pretty good hedges for the next 3 yrs. I think BBEP and LINE are goners unless oil goes to $80 by the end of this yr. That being said who knows what's gonna happen when prices drop this low? They can buy back bonds at 20-30 cents on the dollar, someone with a lot of money could buy them on the cheap, they could issue shares and dilute at these prices, they won't have money for capex etc
don't feel bad. I also own ARP, CLF, BBEP, LNCO, MCP before it went BK, MCEP among a few other losers and not to forget WPRT ...that one cost me $110k or so. $300k in the hole so far. A winner for me is a stock in my portfolio that dropped less than 50%. Good news is that it probably won't take long until I lose everything. A lot of cold showers in the fetal position and the nightly glass of wine turned into vodka but hey, life goes on