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Inergy, L.P. Message Board

rrb1981 111 posts  |  Last Activity: 18 hours ago Member since: Apr 18, 2001
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  • Reply to

    Let me know when this hits $4.74

    by dr_robinhoood Sep 5, 2015 5:44 PM
    rrb1981 rrb1981 Sep 6, 2015 11:06 PM Flag

    Walker does know the business, but he has been a disappointment in the past few years. I don't blame him for the plunge in commodity prices. He has however, failed to deliver on the Utica deal, which was always right around the corner and always going to be a game changer. Instead, it has been a series of small, less than amazing deals. Yes, Cardinal and UEO were great deals that have been monetized and the proceeds redeployed into quality assets at prices that were inflated.

    Yes, I realize it is hard to buy assets at the bottom of the cycle at a 6x multiple, however, I believe there will be many more assets on the open market soon. There are numerous distressed players. Many are zombies, with debt not being due for several years but hopelessly overleveraged and in a death spiral.

    SandRidge, Halcon, Magnum Hunter, Penn Virginia, Goodrich Petroleum, Energy XXI, Exco and many others are all hurting and struggling to stay above $1/share. Prime candidates for divestitures.

    I think the Clinton is fine, but lets not get carried away with game changer status.

    And I contend that Walker at present, likely has far more to gain by keeping the institutional investors happy, the ones that brought him $3+ billion in capital in the latest fund.

    His 4 million units are valuable, but again, the ongoing fees that come from managing billions of other peoples money is quite impressive.

    I think he does what is necessary for EVEP to survive, but it's #2 on his priorities after EnerVest.

  • Reply to

    Let me know when this hits $4.74

    by dr_robinhoood Sep 5, 2015 5:44 PM
    rrb1981 rrb1981 Sep 6, 2015 6:28 PM Flag

    I have to say that I liked the idea of buying gas assets in mature basins like the San Juan and Antrim which will indeed prosper if gas prices rise. However, I do not like the multiple on the interparty transaction.

    Walker knows the business, but he has far more allegiance to EnerVest than he does to EV Energy Partners. EVEP is secondary to taking care of his institutional investors that can bring him lots of capital and recurring fee income.

    This deal at 10x multiple (albeit at what appears to be close to the bottom) is simply not that great. They get "upside" but if prices stay low, they are treading water at a 10x multiple.

    When the analyst asked why the funds were selling, John "ummed" his way through the answer. What a disappointment.

    I think EVEP will have to cut the distribution again and the current yield says that market thinks so as well.

    I do agree though that the assets they are acquiring are likely very low risk and that they won't have any surprises. I actually think the San Juan basin is very attractive for mature PDP.

    I think a distribution cut to something more sustainable would actually help the equity price.

    This E&P MLP concept is proving to be like the wave in the 80's. A great idea on paper...but difficult to implement even with hedging. Too much emphasis on growth and not on balance sheet quality and stability. Now would be a good time to float a new E&P MLP and pick up properties from distressed sellers. Operate with low leverage, hedge 5 years out (regardless of where the strip is), pay a variable distribution, operate with a minimum of 1.2x coverage ratio.

  • rrb1981 rrb1981 Sep 5, 2015 7:45 PM Flag


    Unfortunately, the deal between MWE and MPLX is quite bad for MWE holders. I sold my MWE at almost $70 and now feel lucky having no idea it would drop this low.

    If it continues to drop, I may consider purchasing MPLX or MPC.

  • Reply to


    by lakeviewave Jul 26, 2015 2:17 PM
    rrb1981 rrb1981 Sep 5, 2015 7:25 PM Flag

    Yes, I am familiar going back to the Dorchester Hugoton days (DHULZ).

    When gas and oil climb, DMLP will as well. This isn't at risk of going under. They have no debt. They have modest operating costs. The pay a variable distribution, so coverage isn't an issue.

    I like DMLP, SBR and to a lesser extent, SJT as nice recovery plays.

    DMLP has excellent management in Casey McManemin.

  • Reply to

    Before I die

    by jbcguy Sep 1, 2015 7:17 PM
    rrb1981 rrb1981 Sep 5, 2015 5:36 PM Flag

    It is much cheaper and easier to simply buy reserves and production directly from distressed sellers than to go thru the mess of buying the distressed companies.

    Besides, the majors don't want mature PDP, they want lots of untapped prospective acreage. Chevron sold Rangely to Atlas, companies like ExxonMobil and Chevron don't want to go back and acquire that stuff again.

    The market is simply trying to determine whether crude and gas prices will recover enough to allow these overleveraged firms to survive.

    ARP is simply living on borrowed time. Cohen is milking it to help ATLS survive.

  • rrb1981 rrb1981 Sep 3, 2015 8:46 PM Flag


    Yes, Finra does show a number of their issues in the 35-37 cents on the dollar range.

    I expect Linn to do 2 things; first, to let their cap ex budget fall to a point where they go into modest decline rather than trying to produce modest 1-4% growth. Two, post their redetermination, I expect them to pull down $700-$800 million and deploy those proceeds into buying notes at current prices. You are talking about over $100 million in potential interest expense savings. While things look bad, remember Linn has 3+ years until the 2019's are due. We are less than 1 year from the Saudi Thanksgiving decision. A lot can change in 3 years. Clearly Linn is toast as a pass thru entity, but I am not yet convinced of the bankruptcy that so many believe is inevitable.

    Linn can continue to harvest undrilled acreage that is not generating cash flow and monetize it applying proceeds to debt reduction. They are in walking dead zombie mode...

    Anyone hear what Rockov is doing these days?

  • Reply to

    Cost to OPEC of not cutting oil production

    by rperquy Aug 28, 2015 10:42 PM
    rrb1981 rrb1981 Aug 30, 2015 2:58 PM Flag

    We have demand growth to account for as well. It is possible this debacle rolls into 2017, but the point is that the hundreds of billions in cap ex cuts over the next 2-3 years will eventually result in a balance.

  • Reply to

    Cost to OPEC of not cutting oil production

    by rperquy Aug 28, 2015 10:42 PM
    rrb1981 rrb1981 Aug 30, 2015 2:56 PM Flag

    Exactly. The Saudi's are defending market share and the weak members in OPEC are in no position to cut, but I would not be surprised to see SA tell them they can cut if they wish to cut.

  • rrb1981 rrb1981 Aug 30, 2015 9:24 AM Flag

    Private equity is not interested in buying out Linn. Have you see the leverage? Rockov left the place in an absolute mess and with hedges for gas dropping 10% next year and oil hedges also rolling off next year..PE funds will probably instead focus on acquiring sr secure notes in hopes of coming out in control in a potential bankruptcy, which, I might add, isn't a foregone conclusion at this point.

    They may however be interested in buying select assets directly from Linn.

    In the meantime, LINE has become a leveraged proxy for crude oil price movements.

  • Reply to

    Cost to OPEC of not cutting oil production

    by rperquy Aug 28, 2015 10:42 PM
    rrb1981 rrb1981 Aug 29, 2015 2:47 PM Flag

    Alost zero chance of Saudi Arabia cutting. They might let other OPEC members cut, but the other members want SA to cut.

    Saudi Arabia is the low cost producer, no point in cutting. They are committed to shaking out the marginal producers.

  • rrb1981 by rrb1981 Aug 28, 2015 11:14 AM Flag

    Linn is setting up to be a nice levered proxy for crude oil prices over the next year.

    With deleveraging accomplished via negotiated purchase of notes at well under 50% of par, this is shaping up nicely to be a trading proxy for those that want to bet on a rebound in crude.