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Magellan Midstream Partners LP Message Board

not_totally_gray 63 posts  |  Last Activity: May 26, 2016 1:05 PM Member since: May 14, 1999
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  • not_totally_gray not_totally_gray May 26, 2016 1:05 PM Flag

    if you read the WMB announcements carefully, what they actually say is, "We are committed to delivering the *benefits of the merger* to WMB shareholders" not the merger itself. Meaning what they really want is a nice cash settlement. They can't get that if WMB shareholders don't approve the deal.

  • Reply to

    Typical investor overreaction

    by fairlyamusin May 24, 2016 1:14 PM
    not_totally_gray not_totally_gray May 26, 2016 11:27 AM Flag

    It's not an overreaction, it's simple supply-and-demand: huge amount of new shares available, with no obvious new source of demand = much lower price. The flip side is, big drop in price with no change in fundamentals = good entry point in the stock.

  • Reply to

    Time to get In is under $16.50 to $17

    by clovus May 20, 2016 1:29 PM
    not_totally_gray not_totally_gray May 24, 2016 10:47 AM Flag

    I grabbed some shares myself below $14.60, but this has to be a disappointment to the company, selling new shares at basically a 4-year low. I don't think replacing the 9.5% preferred with common stock paying over 10% was the intent, especially after spending so much $$ buying back common shares only to have to reissue them anyway at this price. But opportunity to buy shares at trough value is tough to pass up, 10% yield has historically been a nice buying opportunity.

  • Reply to

    Time to get In is under $16.50 to $17

    by clovus May 20, 2016 1:29 PM
    not_totally_gray not_totally_gray May 24, 2016 10:07 AM Flag

    The past year and a half they've spent $ tens of millions buying back 1.5 million shares in open market purchase, including almost 600,000 shares last quarter... now they're doing a secondary for $14.70, which probably nets them about $14 after underwriting fees? That's less than what they paid to buy back in 1Q, and almost certainly less than what they paid in 2015, considering how little time the stock price was below $15.

  • not_totally_gray by not_totally_gray May 20, 2016 2:17 PM Flag

    ...only $0.17 as of last month. Looks like we might not get another large special distribution this year or an increase in the regular distribution.

  • Reply to

    WMB stock move

    by harehau May 17, 2016 10:49 AM
    not_totally_gray not_totally_gray May 18, 2016 9:48 AM Flag

    "And I still think he'll have to have a NE pipeline."
    That's pretty clear. It's unfortunate that while they've been pursuing WMB, Transcanada picked off Columbia, which is basically the only other big pipeline into the NYC area, even though it doesn't quite make it into NE. If WMB deal falls apart, have to wonder if a ETE/Transcanada hook-up isn't down the road.
    With Keystone dead (apparently) and ETP's Bakken pipeline getting built, wonder if you could extend that to Canada?

  • Reply to

    WMB stock move

    by harehau May 17, 2016 10:49 AM
    not_totally_gray not_totally_gray May 18, 2016 8:45 AM Flag

    "What other co could get away with treating it like their piggy bank. "
    Sadly, quite a few...

  • not_totally_gray not_totally_gray May 14, 2016 3:03 PM Flag

    I believe the mechanism is ETE is issuing ETE Class E shares to ETC shareholders (in exchange for transferring the Williams assets to ETE), which I would assume have the same voting rights as other ETE shares. So ETC shares don't vote, but the ETE class E shares do (as far as I know...) I can't believe WMB board would accept shares that don't have any voting rights attached to them somehow.

  • not_totally_gray by not_totally_gray May 14, 2016 1:37 PM Flag

    Have they actually announced the dividend for this quarter with record & payment date? Seems like the ex date would be next week, I would have expected it to announced by now.

  • Reply to

    Accumulation point

    by mdb4403 May 13, 2016 1:01 PM
    not_totally_gray not_totally_gray May 14, 2016 1:35 PM Flag

    Personally, I've been looking to open a position and think current price is already pretty attractive, at what, 10X cash flow? Normally I hate retail stocks for all the usual reasons but IMO this is one of the most Amazon-resistant brands out there. Not a lot of great brands in this market selling at multi-year lows.

  • not_totally_gray not_totally_gray May 14, 2016 1:28 PM Flag

    The problem from Kelcy Warren's pt of view is the more new shares he issues, the more the new company is controlled by former WMB shareholders. That might not have been a big deal last year -- even though the current terms meant a majority of shares would be held by WMB -- but the more unpopular he makes himself with the WMB crowd, the less appealing it has to be to increase that majority even more. Given the current environment, not hard to imagine a new set of directors being nominated and supported by the WMB camp with the goal of shoving Warren out of the combined company. A 2X ratio means over 1.5 billion new shares vs the 1 billion ETE shares currently held, so a pretty solid majority.
    Might be one reason why WMB mgmt might still want to actually do the deal and not just posturing, if they think they have a plan to force out Warren and wind up running the new company themselves in the end. Would not be surprised if a new all-stock deal includes a gigantic golden parachute for Warren.

  • Reply to

    future distributions

    by greg1420 May 3, 2016 11:35 AM
    not_totally_gray not_totally_gray May 12, 2016 1:51 PM Flag

    That's funny... I was looking at the numbers in the distribution announcement. If you look at the previous distribution announcement dated Jan 28, the production & pricing numbers match the 10-Q for March 31, 2016. The distribution announcement for May distribution is based on production from Nov - Feb, so it looks like there is a reporting lag with the 10-Q, and the distribution announcement has the more recent figures.

  • Reply to

    future distributions

    by greg1420 May 3, 2016 11:35 AM
    not_totally_gray not_totally_gray May 12, 2016 11:38 AM Flag

    It's easy enough to model how the distribution changes with oil price changes, since the expenses will be largely fixed, no more new drilling, no more hedges, and no more new units. The tricky part is estimating future depletion/production. Last two quarters have shown Q-Q declines of 10% and 5%, which I assume reflects the really high initial decline rates for all the new wells that were drilled. So in my spreadsheet I assumed future Q-Q declines of 4%, 3%, then 2%. PER's realized price for oil historically is a discount to WTI spot price, my impression is that this has typically been 5-10%, so if WTI averages $40, they might net $36. If we give them net prices of $34, $38, and $42 for rest of year -- meaning WTI settles in $46 or so, you're looking at distributions of $0.10, $0.11, and $0.12 for the next couple of quarters. I personally don't see WTI getting into $50s on a sustained basis.

  • Reply to

    today's move

    by sdrl55 Apr 28, 2016 12:47 PM
    not_totally_gray not_totally_gray May 11, 2016 10:09 AM Flag

    There was an estimate in the original IPO prospectus for end-of-trust liquidation value which might well have been $1.80 (I don't recall the exact number, but it was certainly about that), but all the numbers in that document were based on +$100 oil prices, increasing a couple % annually. I believe on the trust termination date they will liquidate e.g. sell the royalty rights to remaining production and distribute proceeds to shareholders, but can't believe it will be anything close to $1.80/unit unless oil climbs back well above $100 and stays there and production from the new wells actually comes in as projected over that period.

  • Reply to

    why the big pop today?

    by heavyphil May 9, 2016 1:43 PM
    not_totally_gray not_totally_gray May 10, 2016 2:19 PM Flag

    "My question is why would you sell more equity for which you have to pay dividends versus a bond sale at around 5%"
    Because at some point you have to get equity financing on your balance sheet to balance out additional debt... you can't just finance everything by selling new debt. In a regular corporation the additional equity comes from retained earnings, but if you're a REIT and you have to pay out 90% of your earnings, at some point you need to sell new shares in addition to new debt.

  • Reply to

    why the big pop today?

    by heavyphil May 9, 2016 1:43 PM
    not_totally_gray not_totally_gray May 10, 2016 10:15 AM Flag

    HCP, HCN VTR are all down same amount as OHI, so must be something sector-specific... my guess is some sort of carry-over from HCP news re: ManorCare, probably spooking people in general.

  • Reply to

    Ssw dividend withholding tax rate?

    by robinbeaulieu Apr 25, 2016 11:00 PM
    not_totally_gray not_totally_gray May 9, 2016 11:34 AM Flag

    There is no withholding -- SSW is a US corporation.

  • Reply to

    The merger is still on!

    by bill105 May 6, 2016 9:36 AM
    not_totally_gray not_totally_gray May 6, 2016 10:45 PM Flag

    Personally I think he is pretty sincere that if he can use this chaos to get the deal reworked and eliminate the cash, he'd do it. It's pretty clear that ETE/ETP is the stronger company on a standalone basis and don't know how much pressure WMB feels. They look pretty bad if deal doesn't happen and they need to cut WPZ/WMB distribution anyway while ETE is covering their distribution at 1.45X.

  • Reply to

    SubjectKelcy Warren said

    by gasio77 May 5, 2016 12:34 PM
    not_totally_gray not_totally_gray May 5, 2016 1:04 PM Flag

    If the deal does get cancelled, it will take maybe 15 minutes for someone to file a new lawsuit attacking the convertible deal from the perspective of other ETE unit holders. Once the WMB deal is off, the whole premise of the convertibles evaporates. At a minimum, they will be forced to offer the deal to all ETE unitholders, since the original premise for not doing so -- that WMB objected -- is off the table. I doubt the convertible deal will stick in its present form if the WMB deal doesn't happen.

  • not_totally_gray not_totally_gray May 4, 2016 9:05 PM Flag

    I think the decline in ETP coverage is related to the Sunoco transactions -- on the line-by-line listing, overall DCF was up until you get to a series of Sun transactions that brought it back down. But it's so hard to tell...
    Hard not to contrast ETE's 1.45X coverage (and trending higher) -- off a higher distribution -- with WMB's sub-1.0 coverage, which has been trending lower. Much better shape than WMB if deal gets cancelled. ETE has lots of space to relax IDR's to ETP to help out ETP if necessary without threatening its own distribution. Although I would think that the lower DCF related to Sun does not take into acct the $2.2 billion ETP received -- I also noted in their report that only $4million of their $3.75 billion credit line is drawn, presumably that's where that 2.2 billion got parked. ETP might not need any help from ETE anyway.

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