they are not going out of business but they are not going to make the dividend coupon clippers any money other than the 5% dividend and when factoring in the decline in share price they are not making any money. A 5% return is lousy.
I see no reason to own this equity. The dividend does not justify holding as the equity has
been in free fall when North American stock indexes have been going up to all time highs.
Management has cut the dividend down to a level not seen in 15 years. There is no real
growth and my reading of the financial information indicates that there is more pain to come
with all the coal fired power plants in their asset base.
I would be surprised if this does not fall much lower during the year wiping out any dividend
bminoramajor, I do not take short positions. I am always on the lookout for investments with dividends or distributions that are growing and where there is growth in equity price. I evaluated this company thoroughly and prior to retiring I was an attorney-cpa here in Southern California. I come back every quarter and go through the financials and news on each potential target investment. When I first commented on this board about NRP the equity was much higher and I predicted it was going lower because there was no growth in coal royalties, the opposite in fact and no growth in the equity value. I suggested that investors in NRP revisit NRP when the decline in the coal sector had stopped and turned around and I further suggested that investors might want to sell and re-enter NRP at a much lower price. I suggested that NRP investors would see a better opportunity in distribution support and equity appreciation in BBEP and LINE. Since I posted that, both BBEP and LINE climbed 10% while NRP declined more than 10%. I still believe that BBEP and LINE will climb another 10% over the next year while NRP will probably decline another 10%.
You mention that in your gut the decline in NRP is temporary but why ride an equity down 20-30-40% during a sector decline when you could have been in other options where the distribution and equity appreciation is double that of NRP?
When management received almost a billion dollars for their incentive rights they basically ripped off the retail investor that got sucked in for the high and growing distribution.
BTU said this month that they expect demand in China for coal to be down in 2014.
Looking at everything, the IDR sale for units, the dumping by management of units
the cut in the distribution and the lack of growth in coal use and therefore royalties to NRP and this looks like the unit price is going down more.
The stock market is basically at all time highs and where is the price of NRP? That says it all. I looked at this as a potential investment and did not see anything to change the price trajectory. I previously said I thought this would drop down to the $14-16 range and from I am seeing, it looks like the bottom of my target is going to be taken out as soon as this market corrects. Nothing goes up forever and the stock indexes in the U.S. have been on a tear. When they correct everything is going down.
I previously said why ride NRP down when you could get out and invest in BBEP or LINE.
Those have both appreciated by 10% over the last quarter while NRP has declined by 10%. I expect BBEP and LINE will appreciate another 10% over the next six months and NRP is going down another 10%. So far my call on this one over the last 12 months has been right on target.
Self-serving incentive rights do not help the management of BBEP and LINE like they do/did with NRP and other operators.
Actually you should read the press release from Diamondback Energy. The narrative is Diamonback's. My comments are about the engineering changes in the oil and gas recovery area that are going to impact this industry during the next decade the way horizontal drilling did which is not reflected for these companies future performance.
Just today LINN Energy's partner on its first horizontal well, Diamondback Energy, announced that it was adding to its acreage position in the play. The company is picking up 2,825 net acres in the play, and it's paying $174 million for those acres. The company hopes to eventually buy out its partners on the 6,450 gross acres that are associated with this asset package, and it's willing to fork over a total of $397 million to buy out those partners.
To put those numbers into perspective that's more than $61,500 per acre. That's a lot of money for just 1,600 barrels of oil equivalent per day of production and about 4.4 million barrels of oil equivalent in proved reserves. That's because Diamondback Energy isn't interested in what those acres are doing now, it wants the potential riches underneath. These riches include prospective drilling locations in the Wolfcamp A & B, Upper & Lower Spraberry, Cline and Clearfork horizons. In total, Diamondback Energy sees upwards of 112 future well locations.
What this deal means for LINN Energy and LinnCo Investors
Like I mentioned previously, LINN Energy believes it holds about 60,000 net acres and 675 future drilling locations that are prospective for the Wolfcamp. Using the latest Diamondback Energy deal as a guide, that values LINN Energy's acreage at upwards of $3.7 billion.
I do not think this is an isolated situation in the Linn-Berry portfolio. From what I have been reading the last 10 years have been the horizontal drilling revolution in U.S. energy. The decade of 2015-2025 will see the same breakthroughs in EOR (enhanced oil and gas recovery methods). Many companies only recover 10-20 percent of the energy from a well. With improved methods and technology CO2 and water flooding recovery will raise those percentages to 20%-30%-40%. What is recovered from a well today is going to change significantly over the next 5-10 years and those numbers are not reflected in any major oil and gas company price.
PETEF only had $16 million left in cash (working capital) at the end of the last quarter if you look at the quarterly report. That sum of money will be less at this date as operating the company which is not making money costs something in salaries and rent.
Also PETEF agreed to loan Keek up to $2 million to stay in business which has been tendered to them in return for a promissory note to PETEF.
There is nothing I could find in the financial press about anyone providing Keek $100 million. Neither is that number mentioned in any of the PETEF financial information I reviewed on the merger.
I stand corrected. I am unable to find anything regarding Keek and the $100 million fundraising in terms of any major financial firm raising this kind of money for them.
The only thing I could find is that PETEF is loaning Keek a couple of million dollars.
PETEF has around $15-16 million dollars and if they loan Keek a couple of million then new company will be left with around $14 million in working capital.
Currently PETEF is valued in the market at close to $30 million dollars with neither company profitable or making money at this time since PETEF disclosed that Keek has not monetized anything at this point in time. That makes me wonder how long PETEF's cash will hold out until Keek figures how to get its followers to pay them or obtain advertisers.
Petef does not need the executives to run a social media company. The company has already reached 60 million subscribers over the last 24 months and is growing rapidly without Petef management. They also reportedly obtained $100 million in financing without Petef. Seems to me they are better management than Petef. Petef management couldn't raise $100 million if they tried in 2014 based upon what they did in the oil patch during the last few years.
So what is NRP beat on earnings and revenue. The equity price has been all down. That should tell you all you need to know. The market indexes are at all time highs.
The biggest coal company in the world expects world coal demand and prices to be down in 2014.
The L.A. Times reported this past weekend that a study in China reported that 60% of the country's millionaires wanted to relocate out of the country at some point because of the pollution situation in the country. Pollution levels are 100% percent higher than in NYC and L.A. The cause, coal burning.
Yes, CCG builds more and more facilities, yes FFO doubled but with all the activity there is no per share increase in dividends or share price. No matter what it builds it does not increase dividend growth. It is basically flat for 3 years which tells you that they have a problem increasing dividends which is a negative for a dividend stock.
I constantly troll for potential investments. I spent a day going through financials, reports, news and articles on Campus Crest. You hope to find something worth an investment. My research came up with more negatives than positives. No improvement in dividend growth for three years, no improvement in share price, more debt, most likely higher interest rates in future years from the low interest environment of recent years. So I passed on some info. to investors. Some time investors post back that I missed something very important and its not as negative as I see or others see, such as Schwab, Zacks, etc.
Of course if the equity price drops in half from here, the yield will go to 6%.
Many MLP's have a 5-6% yield in this sector.
So how low is the price going?
BWP has fixed price contracts that are dropping on price on renewal. They also invested $60 million in a project that is going bust. The have debt coming do in the next few years and capex requirements that are going to eat up most of the cash flow for the next few years.
They are going to pay 10 cents for a quarterly distribution and that might have to go to zero.
That is not going to happen with El Paso.
The problem for El Paso is the yield after tax for those living in high tax states like California or New York is in the 6% range. So with no growth over the next three years El Paso equity is probably not going to rise.
There are better investments out there for total return in the pipeline and other energy sectors than what El Paso Pipeline offers. While the shares may drift lower over the next three years by 10% it is not going to crater 40-50% like BWP.
The big issue for investors in El Paso is do they want to ride the unit price down another 10% or so over the next few years where there is no growth while other investments offer 5%-9% distributions and also offer growth opportunities. I am speaking about Linn Energy, Breitburn Energy and ARP among others.
As to Market Edge and Zacks that is true. Charles Schwab is much more thorough across all
areas of the research scope. An "A" for "Schwab and an "F" from Schwab is pretty difficult to achieve on both ends of the spectrum.
Distribution has been cut almost in half.
Price of equity has been all down hill as the stock market indexes
continue to hit all time highs.
I would encourage investors to sell coal and move into the real
natural gas opportunities: LiNE, EVEP, and in oil: BBEB, which are all better
income opportunities than NRP.
I think you hit the nail on the head. The company has been talking about paying down the debt for 4-5 with no decrease in the debt load.
$12 billion is a lot of debt to hold all the land CHK is holding. In addition to the $12B in debt they are paying almost 3/4B dollars in interest every 12 months.
With the latest news and two more quarters of bad weather factored into operations there is going to be very little improvement.
If the market corrects 10% in 2014 as many are predicting the shares could easily shed another 10-15%. The last major sale by CHK did not bring a good price to enable them to pay down any of the debt, why should that change on the next disposition. I do not see the debt coming down in 2014 and as long as this debt hangs on Wall Street is not going to shove the share price up. There are other producers to put their money into that keep going higher.
Take a look at EOG, Devon, etc.
You might be right. I believe they did report that revenue declined $200 million dollars.
The East Coast coal is the Appalachia coal region and they not immune to the price per ton situation and the decrease in exports BTU mentioned.