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Inergy, L.P. Message Board

rrb1981 112 posts  |  Last Activity: Nov 28, 2015 6:05 PM Member since: Apr 18, 2001
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  • Reply to

    $20 oil

    by harehau Oct 9, 2015 1:24 PM
    rrb1981 rrb1981 Oct 11, 2015 8:03 AM Flag

    Yes, the EVEP deal was terrible.

    The hope of the market was to buy at a low multiple on current low prices. This did not happen.

  • Reply to

    $20 oil

    by harehau Oct 9, 2015 1:24 PM
    rrb1981 rrb1981 Oct 11, 2015 8:01 AM Flag


    To be fair, the $20 Goldman call was the "ultra bear case and not their projected scenario". The market does like to sensationalize those things. Let's not forget that these are the same clowns that made the $200 call when oil was hitting $140/bbl. We know how that worked out.

    I believe crude will return to $60-$65 over the next 18 months. As you say with gas, it may indeed be mired lower unitl a variety of things happen, including LNG, a prolonged slow-down in drilling, exports to Mexico, increased industrial demand, coal to gas switching etc and even then gas may only rise to $3.50.

    As for Atlas, yes, the writing is on the wall. I will make sure to listen in on the next conference call, to hear Eddie's spin on how Atlas will prosper from this malaise and how he is working on so many great things...around the corner, hang on, investors will leap from their seats in joy and nausem...

  • Reply to

    $20 oil

    by harehau Oct 9, 2015 1:24 PM
    rrb1981 rrb1981 Oct 10, 2015 11:44 AM Flag


    What has been so amazing is the lack of action at ARP. It was laughable when senile Eddie said, "we are overleveraged, but not by much". They were overleveraged when oil was at $90 and gas at $3!

    This is a slow motion train wreck and Eddie is doing everything he can to move cash from ARP to ATLS. ATLS is the lifeboat. He is hoping that at the end of the day, somehow, someway he can protect his last bastion of the fledgling Atlas family. While ATLS will be just a stub, they still own their interests in Atlas Growth Partners, Arc Logistics and Lightfoot. If ATLS can survive, even if ARP perishes, he can continue to milk ATLS for a few million a year along with his son.

    It really is quite amazing the value destruction he has presided over.

    I just wonder if he'll speak Latin again on the next conference call and of course, somehow blame everyone but him for these seemingly, unseen events that have so unfairly punished Atlas.

    And to think, of all times, this is when a well capitalized E&P MLP could really prosper, buying up distressed assets at the bottom of the market and locking in rising strip prices going out 5 years. Too bad poor Eddie has no cash in the piggy bank to participate.

  • Reply to

    $20 oil

    by harehau Oct 9, 2015 1:24 PM
    rrb1981 rrb1981 Oct 9, 2015 10:15 PM Flag


    You are correct. This company has no direction. Cohen is clueless and milking it as long as he can.

    Remember, Cohen always prides himself on being so much smarter than the rest of the crowd...and yet, here he finds himself with a severely overleveraged balance sheet, declining hedges, a GP that is hobbled and up to its eyeballs in debt.

    Oh, and aside from Mark Schumacher, they have no one in the management ranks that has operational experience.

    This one is going to crash and burn and I predict that Cohen will quietly slip away. He did the same when he nose dived APL years ago. It's time for the old man to retire.

  • rrb1981 by rrb1981 Oct 2, 2015 10:24 PM Flag

    Management should be fired if they do not significantly cut their drilling cap ex and redirect it to buying notes.

    Linn's chances of survival are not great, in fact, they are slim but investors must remember that while the "lower for longer" theme seems likely, it is far from certain. Crude collapsed in a little over 1 year, they have over 3 years until the 2019's are due, and a lot can happen in 3+ years.

    Retiring debt at 25 cents on the dollar gives them the absolute best risk adjusted returns including drilling anything within their portfolio.

  • Reply to

    Just a thought

    by stockfatt Oct 2, 2015 1:12 PM
    rrb1981 rrb1981 Oct 2, 2015 9:09 PM Flag


    You hit the nail on the head. The only chance ARP has to survive is to stop the distribution immediately, but that would crush ATLS.

    I still think ole Eddie will try to merge ARP and ATLS in order to save his investment. He's a value destroyer and has been for years.

    He's on his last rodeo. This one is going to end badly. No doubt the asset mix is excellent but the balance sheet is a complete disaster. I look for asset divestitures soon.

  • Reply to

    Why in the world

    by mwalk65 Sep 24, 2015 10:11 PM
    rrb1981 rrb1981 Oct 2, 2015 8:57 PM Flag

    The only real concern is whether or not the lease is at "above market rates". Otherwise, EXXI, or the creditors should EXXI file for bankruptcy, are essentially captive to the system.

    I have no real opinion on EXXI, however, given their break-even cost is $52/bbl, and $17 of that is interest expense and preferred dividends, a bankruptcy would leave them with a break-even cost of $35/bbl, assuming all debt was converted to equity (and of course, many other assumptions).

    I think the risk and concern is real, but I think the market is probably a little spooked and has overreacted amidst the panic sell-off.

    CORR would be wise to clarify whether they believe the rates to be at market rate.

    The Jonah/Pinedale field does not overly concern me, UPL should be ok, the transaction they did with Shell a few years ago did lever up the balance sheet, but gave them a lot of scale and got them largely out of the Marcellus. I think prudent balance sheet management by UPL results in a zombie company, not strong enough to really grow, not weak enough to slip into oblivion.

  • Reply to

    value at $3 nat gas

    by harehau Oct 1, 2015 3:06 PM
    rrb1981 rrb1981 Oct 2, 2015 7:13 AM Flag

    That is wishful thinkng on your part.

    ARP's hedge profile is declining both in quantity and price.

    This is a slow motion train wreck, but fear not, ole Eddie will have his rose colored glasses on, promising something...just around the bend, coming soon...only it never happens!

  • Reply to

    value at $3 nat gas

    by harehau Oct 1, 2015 3:06 PM
    rrb1981 rrb1981 Oct 1, 2015 8:53 PM Flag


    You are absolutely right. Eddie is simply milking ARP to help delever ATLS.

    Cohen really isn't a numbers guy, he's a promoter. That has been the problem, that and he surrounds himself with young, inexperienced yes men rather than strong, experienced managers that will disagree with him.

    I wonder if he'll speak Latin when they file bankruptcy?

  • Reply to

    Bought on 7/30/2015

    by eusdond Sep 4, 2015 2:45 PM
    rrb1981 rrb1981 Sep 19, 2015 6:08 PM Flag

    Yes, however what is important is whether or not EXLP is still performing well and what the outlook is. If they are doing well, the price may recover somewhat as the market realizes that rental compression is fairly stable and that cash flows are not meaningfully reduced.

  • Reply to

    Added today

    by budfoxtrading Aug 24, 2015 10:32 AM
    rrb1981 rrb1981 Sep 19, 2015 5:56 PM Flag

    I think MMLP will surprise the market this coming Q. For as long as I have followed them, they have always been viewed as a low quality, low growth MLP, and perhaps that is correct, but the assets they have are fairly good.

    If they can maintain a 1.0x coverage ratio I would expect to see some yield compression.

  • Reply to


    by rrb1981 Sep 19, 2015 12:39 PM
    rrb1981 rrb1981 Sep 19, 2015 5:20 PM Flag

    The current management team is inept, however, they have already informed the market of their intentions to buy back bonds and I would not look for them to go out of their way to broadcast it to market any further. They can apprise the market during the conference call if they make any such purchases.

  • Reply to


    by rrb1981 Sep 19, 2015 12:39 PM
    rrb1981 rrb1981 Sep 19, 2015 4:33 PM Flag

    Indeed robbywanholland, the bonds trading in the 20's is indicative of what the market thinks of the financial situation of the company.

    It does however give Linn a very interesting opportunity to retire debt at a huge discount. As has been discussed here at length, it is highly unlikely that Linn has any drilling prospects that provide the kind of risk adjusted returns that buying debt at $.34 cents on the dollar can provide.

    It is why I have stated numerous times that Linn might be better off aggressively reducing their drilling budget, which has thus far produced growth of 1-4% y-o-y and instead redirecting that cash towards purchasing notes either in the open market or thru negotiated transactions.

    It is also why I believe Linn, post redetermination, will likely elect to pull down what remaining liquidity they have and deploy it into debt repurchases. The kicker will be how much liquidity there is on the open market to buy literally hundreds of millions of dollars worth of notes (up to 2+ billion in par value).

    Otherwise, Linn must "hope" for a recovery in commodity prices. The plan to prove up the Ruston and STACK plays are great, but will not be enough to move the dial meaningfully.

    I also expect to see minor divestitures of "non-core" assets where Linn does not have scale.

  • Reply to


    by rrb1981 Sep 19, 2015 12:39 PM
    rrb1981 rrb1981 Sep 19, 2015 4:02 PM Flag

    Now now, deluded norrishappy (aka dadnorris1) - Don't let your personal feelings get in the way of being objective.

    Your years of defense of Linn must be so frustrating.

    You've been mad at me for years for being critical of Linn's capital structure, their falling hedges and DCF and their need to make numerous acquisitions to shore up DCF.

    But don't despair, Linn might yet avoid bankruptcy with a little luck and solid cash and balance sheet management.

  • rrb1981 rrb1981 Sep 19, 2015 3:50 PM Flag


    Cohen has always worn rose colored glasses.

    "We are overleveraged, but not by much"

    I also might add that during the Targa deal, I posted that Atlas would be better off combining the GP into ARP. Instead, old Eddie was salivating all over his chin, thinking about all of those fabulous IDRs, Lightfoot and Arc Logistics cash flow streams that he would collect.

    Instead, now he is going to have to scheme up a reason why ARP should take on all of ATLS's debt load in order to merge the 2 entities together.

    The pity is that they actually have some good assets.

  • Reply to


    by rrb1981 Sep 19, 2015 12:39 PM
    rrb1981 rrb1981 Sep 19, 2015 3:09 PM Flag

    Still using multiple logins I see.

    Oh, and Linn bond still not at $40 :)

  • rrb1981 by rrb1981 Sep 19, 2015 12:39 PM Flag

    Linn's bond prices continue to drift lower, with some now in the high 20's and others in the low 30's.

    Linn may not survive this malaise, in part due to poor decision making by management and of course, complete disregard for the balance sheet and abandoning the practice of rolling hedges forward as they expire. Removing Rockov was a huge step forward but Ellis also needs to be removed. It is clear that a "war time" CEO is needed and Ellis has proven he could not manage the firm during the good times, let alone during the bad.

    However, the silver lining in all of this is Linn actually has a fairly decent amount of borrowing capacity available on their reserve based borrowing base, and, may still have a decent amount post redetermination.

    Linn's future survival hinges on essentially on 2 things: the recovery of commodity prices (outside of their control), and their management of cash (and liquidity) including reduction of debt.

    Given the relatively low cost of borrowings on the borrowing base, Linn might do exceedingly well to pull down all of their liquidity and pour it into purchasing notes. Linn gets a double whammy, the benefit of the arbitrage of buying notes that are yielding 23-25% while also getting the back end benefit of essentially retiring debt and effectively deleveraging. The biggest limit it appears is simply their ability to acquire enough notes on the open market.

  • rrb1981 rrb1981 Sep 16, 2015 5:25 PM Flag

    Predicting oil prices is, well, about as hard as predicting whether the Fed will raise interest rates.

    All kidding aside, it appears that the market may finally be sensing that the worm is turning. US monthly production peaked in April or May. It's been falling 100K bpd/month since then. Not fast enough for impatient Wall Street, but for those that understand the world could easily be undersupplied in 2 years due to lack of investment, the pace is just right. The excess will get worked off very slowly and the price will rise very slowly over the next 12-18 months.

    I believe that the shale revolution is a paradigm shift and that the sutainable price to keep the world supplied is now around $60-$70/bbl. Remember, even though shale producers can make good money at these prices, credit will no longer be available as easily and producers drilling within cash flow will have a natural limit at least for another 3 or 4 years until bankers forget and relax lending standards again!

    World demand grows at 1+ million bpd, year over year. Long term, the US shale fields will be important but for the next year or so, they will decline.

    I expect BPL will muddle through this, perhaps suffering some on their Eagle Ford assets, but I think longer term, the Eagle Ford is the #2 US basin behind the Permian. The Bakken being #3 perhaps once the pipelines are built and netbacks increase.

  • Reply to

    My notes from the 2Q:

    by blotechproflteer Sep 14, 2015 5:06 PM
    rrb1981 rrb1981 Sep 15, 2015 11:22 PM Flag

    I saw a quote on this board that perfectly summarized Eddie's skills, perhaps it was from you mark, but it said, Ed has the ability to take something that is good and turn it into something that is not as good.

  • Reply to

    ete deal

    by harehau Sep 14, 2015 12:38 PM
    rrb1981 rrb1981 Sep 14, 2015 3:20 PM Flag

    WMB management and the BoD really needs to resolve this soon.

    They turned down an offer and then offered the shareholders/unitholders essentially no reasoning on how or why their strategy is superior to being part of what would be a leviathan in terms of midstream presence in the US.

    It appears that management may be simply looking to save their jobs. If that is the case, simply dangle an attractive incentive to Armstrong to leave and do the deal. A 2:1 exchange would keep shareholders largely intact on income (until the recent bump, which was likely meant to serve as a negotiating tactic to up the ante), give them upside and leaves WPZ free to continue to grow without causing a taxable event.