The market does not care about growth at this time. I understand some management teams are focused and do not care what the "street" wants, but this applies to a limited number of midstreamers like Magellan and Enterprise, which are well capitalized and can do as they wish.
As for NGL, it would make far more sense for them to cut the distribution, use that cash to finance growth projects or better yet, clean up the balance sheet. This does not need to be a permanent cut, but a year or two, let the market see that they are focused on balance sheet strength and retrenching.
They have assembled a nice set of assets, but they have little synergy and some of them are under stress.
It was very poor to not have a Q&A. In other words, management is more than happy to accept credit when times are good, but are too thin skinned when times are bad. No real plan to address leverage, which is out of hand. Wake up people, there is a reason these guys are trading under $8 and yielding ~30%.
There are many high quality MLPs that will be around for a long time. The E&P MLP model has been broken by a variety of factors, including the desire to grow aggressively.
Look at midstreamer like Buckeye (BPL), Magellan (MMP), Enterprise (EPD), Spectra (SEP). No one questions whether they will survive or even if they will cut the distribution.
ARP's demise is multifaceted. Extremely poor management with weak operational experience, the desire to have IDRs and of course, overpaying for assets, chasing liquids and lack of scale (too far flung, no cost synergies).
Cohen is a shill and cannot face reality. He did the same thing in '08/'09 when he nose dived APL. He sheepishly handed control over to Eugene Dubay and disappeared, after botching the hedges.
It is finally becoming clear to investors that ATLS and ARP have major conflicts of interest. Cohen is a shill and will milk ARP for ATLS's gain as long as the banks will allow it, then he will likely try to merge the 2 entities, to save ATLS.
The real issue is that if Cohen had not been so greedy and wanted to hold onto the IDRs, he could have merged ATLS with ARP at the time of the Targa transaction. This would have allowed them to cease distributions much earlier and buy back debt at a discount and possibly survive, but that would have meant giving up his precious IDRs, and that wasn't going to happen.
Finally you get it about Cohen. Yes, he is a shill. He has no clue how to run a company. Reckless, clueless.
I don't laugh at investors losses, but I laugh at ATLS, which is on life support. It's Cohens baby. It is essentially insolvent.
Ellis was desperate to plug gapping holes in their DCF. So, he overpaid to get Berry. He also neglected to continue hedging out 5 years. He and Rockov were far to reckless. Remember, this was supposed to be an MLP, where they mitigated risk by hedging and operating mature, low risk, stable production and operated them to maximize cash flow.
Instead, he abandoned the plan and decided to be a wildcatter. Granite Wash, Hogshooter, etc.
But, to be clear, many of the assets in Linn's portfolio are quite excellent and will be eyed up when they go bankrupt.
Oil and gas prices are low at present, but long term equilibrium prices will be much higher. Who knows what that price will be, but it won't be $32 and $1.80. Smart money buyers can snap up attractive properties like the Hugoton package, where they have size/scale, low operating costs and excellent midstream connectivity.
Don't forget that Alinda Capital owns half of the Incentive Distribution Rights, you know, when MRMC was cash strapped, they had to divest half of the golden goose.
They clearly stated on the call that the leverage ratio would deteriorate in 2016. Don't get MRMC and MMLP confused. Also note they attributed some of MRMC's improvement to lower working capital. Will that reverse itself if crude oil rises?
See quote below from Joe McCreery on the conference call.
"So, a slight leverage creep kind of based on our cash flow prediction for 2016."- This is in regards to their projected 2016 debt/ebitda ratio.
Again, with a coverage ratio of 1.0x MMLP will need to borrow money from the revolver to retire notes (at a discount). This is a profitable exercise retiring notes at 80 cents on the dollar and borrowing at a few percent to get a cash on cash return of 10%. But that comes at the expense of increasing the revolver, and the banks are not always thrilled with accepting risk so junior (subordinate) debt can be retired.
I highly doubt they buy back any equity. To make a meaningful impact, they would push the leverage ratio up towards 5.0x. That didn't work well for Kinder Morgan.