Yes, disregard clowns that don't understand MLPs.
Regency has been a long term turn around play. Energy Transfer has slowly been turning things around.
Distribution growth is slow, but they have been building out the Eagle Ford system, which once complete, should add materially to DCF.
We have been range bound for some time. Looks like we are building a base.
It looks like a 12.3% yield based on the pending $2.60 distribution.
A lot of positives that likely support that $2.60, solid hedges at $4/mcf level, company wide decline rate of 11% which is manageable.
Still think Marble Falls will be the growth driver here. Wells paying out in 12-18 months, 30-40% of production stream is oil, which can be hedged out 4 or 5 years at very nice prices $100/bbl.
If gas languishes, ARP can likely maintain DCF by simply pouring more money into the MF. I think they have about 700 potential drilling locations, assume maybe half of them are really prospective.
ARP drilled 50 this year, so you are talking about 5 years of inventory.
Agreed, acquisitions should be carefully reviewed. I think ARP can achieve marginal growth via the drill-bit if they can raise $200 million annually in the partnership programs. ARP appears to have plenty of acreage and PUDs, so it should simply be a matter of correctly allocating maintenance capital and promoting the partnership program and executing on the drilling side.
We have a lot of things going in our favor. Marcellus results (30 day and maybe even a few 90 results if they elect to give them).
Utica results, or at the very least, a hint at whether we will move forward acquiring more acreage or not.
Mississippi Lime, this one doesn't get as much fanfare anymore, but I think we have good acreage and likely will be a key reason the partnership raises are successful.
Marble Falls - We need to see a good update/summary on Marble Falls. DTE had very good results, we should continue to see similar returns. Oil is up (though NGLs and gas are down) so they probably counter balance. Hopefully they have made improvements with completion technique and costs. Was around $800K per well, but they were looking at foam frac's etc. Also sounds like they are completing the Barnett when they drill the wells, so perhaps we are getting more comingled gas in the production stream as well, which probably adds marginally to the economics at minimal additional expense.
Fund raise should be over by 3Q report, and hopefully we are at least $150 million (2012 was $125 million). I'd love to see $200 million but am not holding my breath.
Company is slowly gaining critical mass. We need another $1 billion or so in acquisitions, presumably in areas where we already have field operations, so that we can really drive down SG&A costs.
Wish we could have landed the second Carrizo Barnett deal, but EVEP got it. Oh well. Others said we may move into CBM now that we added 70 back office and field hands in the EP deal (Black Warrior and Raton Basins). Ok, if they are accretive and low decline, maybe, especially if they help us lower SG&A on a per unit basis.
The Marcellus wells ought to help for now, especially if we drill the other 15-20 potential locations on pad sites.
I know I am harping on SG&A, but if you run the numbers, you would be surprised at how $.10/mcf impacts this companies bottom line.
You point about decline rates is well understood. That is why it is important for E&P MLPs to have a large base of legacy, low decline ("mature") production to help counterbalance the new wells that exhibit both high initial rates but also high declines. A good E&P management team will set aside enough maintenance capital to keep production flat to slightly growing.
What becomes very important is overall returns. The quicker they get full payout on the well the better.
Sabine is a royalty trust and in my opinion, one of the best to own. I'll continue to add on weakness.
Indeed. I think it all requires a nice steady movement upward in the unit price. If we can get back above $25 and close to $30 (sub 10%) yield, we should be able to mint money.
Natural gas continues to "languish" which means that producers will likely continue to focus on liquids, with oil being the primary choice.
I am still somewhat bullish on gas long term, though I have to limit my ceiling to around $4.50/mcf. The export terminals will likely help but no doubt that the days of $6+/mcf gas are likely gone. Hurricanes might help a little, but as gas supply shifts from offshore to onshore, supply disruption becomes less critical.
As long as ARP can continue to buy decent, low decline assets with PUDs and hedge them at $4/mcf, we can lock in nice margins.
Agree that $3.00 distribution is indeed possible within the next 18 months. I think we know that next Q will likely be $.65, followed by $.68 and then if they achieve good partnership raises and perhaps a decent sized bolt on, we could easily be pushing close to $3.00.
Meanwhile, we just have to keep cashing those quarterly checks.
Agreed, a 9.25% yield seems plausible. The volume is indeed an issue. Even after the latest offerings liquidity seems like a lingering issue.
I'll settle for 10% on the $2.72 distribution..
Looks like Linn cloud may finally be lifting. This could very well mean a dark cloud is lifted off the whole sector and we might see some moderate yield compression.
ARP has been bouncing between $21 and $20 for weeks now.
If ARP does indeed announce a $.65/Q distribution for Q3 and assuming an 11% yield, which might or might not be fair, we are talking about a price of $23.60. If Q4 turns out to be $.68/Q then we are talking about $24.70.
And then one could argue that perhaps they deserve a 10% yield rather than 11%
I view this as having at least some decent capital appreciation potential while we collect a nice distribution.
Oh wow, you must have wanted to give yourself a thumbs up, so you broke out the dadnorris1 handle rather than the norrishappy handle. How clever of you...
Why did Kinder Morgan rally when Hedgeye attacked, yet Linn fell when Hedgeye attacked?
You don't want to discuss a primarily, almost exclusively midstream MLP like Kinder Morgan?
Go look up the list of the largest crude oil producers in the state of Texas. Guess which MLP will be far and away above Linn. That's right, Kinder Morgan.
You got your panties wet over the Anadarko Tertiary recovery deal that Linn made...guess what, go look up the SACROC, Yates and Katz fields that Kinder owns.
Now go back and take your meds before you make a fool of yourself again tonight.
As I mentioned earlier, the report doesn't highlight anything new. All MLPs that have IDRs have conflicts of interest. All MLPs face the issue of skimping on maintenance capital to goose distributions. Even here at Linn it is evident that maintenance capital has not been enough to maintain cash flow. One can argue it is the fault of NGL prices or collapsing natural gas hedges, but they have not maintained cash flow.
This is a rehash of what Kurt Wulff did virtually every month for 2 or 3 years back in the early 2000's after Kinder publicly embarrassed Wulff at an analyst meeting. Wulff has it in for Kinder thereafter and eventually ended up making a fool of himself. Come to think of it, Wulff runs a shop very much like Hedgeye, where he has no assets under management and charges monthly subscriptions for very basic data that is packaged into a report. Oh, some might call them leaches...
What does your moaning and groaning about ethanol have to do with an E&P MLP...absolutely nothing.
You are so full of hatred that it is eating you up. You cannot let a single comment of mine go without attacking. You are exposing yourself to the whole board as a weak and inferior individual.
And I seriously doubt your claims at being a Christian. You appear to exhibit none of the qualities and characteristics of Christ.
I never made any such claims about Bakken producers. But I sure do miss busting sandforbrains chops. I'd love to hear him spin doctor how Linn is beating the Alerian Index!
Wow Norris, are you off your meds again. Your Christian character is starting to show through again.
Someone posted the Hedgeye Kinder Morgan expose on the KMP board. For those interested, it was a summary of the same items Kurt Wulff raised 12 years ago during the Enron debacle. Nothing extraordinary, no smoking gun, lots of innuendo.
The market appears to have looked at it and laughed.
I do find it humorous though that Hedgeye built in some "outs" at the bottom, stating in essence, even if the market doesn't think we are right and the share price goes up, we are still right . I doubt Rich Kinder even addresses such a poorly constructed hatchet job.
The addition of 60 field and back office personnel should indeed allow us to be an operator in these basins. I guess that as long as we do have these basins, if we can find attractive bolt-on deals in the area that can be covered without much incremental SG&A then it probably makes sense to try and leverage these people and drive SG&A down on a per mcfe basis.
It is my belief however that the best way to do this is by growing the Barnett and of course the Marcellus, where we already have legacy shallow Upper Devonian production. Adding 30-40 monster horizontal Marcellus wells should not create huge additional overhead and instead should help reduce SG&A tremendously.
I am curious to see how the oily Marble Falls production impacts SG&A. Oil and liquids typically cost more on a mcfe basis, but the margins are so much better that it doesn't really matter.
As an example, EVEP's latest Barnett deal (from Carrizo) added $125,000 to SG&A on an annual basis. They are using their existing field hands to address another 60-80 wells that get tucked into the fold.
Wherever we operate, we need to have a very large footprint, to maximize economies of scale.
Hedgeye should be releasing their report (to clients) today regarding their "brilliant" short idea: Kinder Morgan
This ought to be interesting to see what they conjure up, but also how Kinder responds.
Regardless, I don't think this ends well for Hedgeye. You can mess with a guy like Ellis, that simply came over to Linn from another company, but Rich Kinder built Kinder Morgan from nothing into the largest pipeline MLP in the country. He isn't going to take this the way Ellis did!
Correct. He cannot afforf to lose "control" of the board. Anyone posting informative nuggets of info is a threat to him. He would prefer to spam the board with rants and ravings about ethanol.
So, how do you decide which login name you will post with each day? Some days you post under norrishappy, other days under dadnorris1 and some days you post under both names, starting a conversation under one and ending it with the other.
Are you schizophrenic or do you just feel the need to have at least one friend on the board?