thegreatone561 aka barf
LNCO's shield should continue until '17 (and perhaps further), then we should begin to see a delta in the distribution and the dividend, and that deviation may not be meaningful for some time. It's actually come up on some of the conference calls in the past and is likely excellent fodder for analysts to ask, if nothing else than to keep the retail investors informed.
Volume continues to be high. Likely signs of continued divesting by PostRock and continued buying in the market due to the Sanchez story finally making it to the street.
Name change, recap, drop downs and distributions all likely to happen in the next 6 months.
It's amazing how well the company is doing now that it is unfettered from PSTR. I wish nothing but bad luck on the poor saps at PSTR and White Deer.
Linn and LNCO now trading near parity. It will be interesting to hear the Q3 report to see if they indeed go into the market and buy LNCO units (while simultaneously) selling LINE units via the ATM of if the market simply corrected this inefficiency on its own.
Regardless, as a LNCO owner I am pleased to see the 2 issues trading pari passu again.
Looks like PSTR holdings have decreased by about 400K units per the latest filing. They were 200K of the 1.5 million units that traded last Friday. Monday was also a high volume day so perhaps more units divested yesterday as well.
Really nice movement in the price in the face of fairly consistent selling by PSTR. As I've mentioned before, having PSTR out of the picture is great.
Will be interesting to see how high CEP rises. Of course, as it rises, it seems likely that they will feel more comfortable using their equity as a currency to make acquisitions. Given they have dialed back their drilling, they are building cash that can be used for acquisitions. Coupling the building cash with equity and borrowings on their revolver means CEP may actually have the ability to acquire some meaningful packages of producing properties, perhaps as high as $40-50 million.
Regarding the alleged purchase of Barnett acreage by Linn...well, it is interesting. Both EVEP and ARP have nice holdings in the Barnett. It's very much a mature shale play with plenty of infrastructure and a favorable drilling environment. We will see more and more mature shale assets being absorbed by the MLPs. The Fayetteville and Haynesville are likely other potential candidates in the future.
ARP has been having quite a bit of success with the Marble Falls producing plenty of oil and liquids as well as gas. ARP is producing from multiple zones (vertical wells).
This isn't really "breaking" news that the panhandle assets are going to be divested, but depending on the source, it may be a sign that consummation of the deal may not be too terribly far off. An auction rather than a direct sale is also interesting.
Worth noting is that Wolfcamp II is not mentioned as much. The company appears to still be drilling heavily in an attempt to delineate the acreage. This is looking more and more like a late '14 or '15 event.
Essentially more of the same, but now with a bit more clarity..
Company not drilling as much on their legacy acreage...target for the year was $22 million capital budget, at mid year they have spent $5.4 million. I suspect they will deploy that capital via an acquisition rather than via the drill-bit.
Sanchez deal isn't complete, but approval with Board of Managers seems like a lock, then unit holder vote. PostRock holdings down below 10% (likely much lower after today's volume). Unitholder approval needed to convert to GP/MLP...seems likely, though we will need to see how the IDRs are set up if they do have them.
Distributions...wow, management used the term distributions unprompted.
Recap coming in '15. Not much more was said on this. I assume that this likely means Sanchez drop down with equity, giving them a meaningful LP position.
Abella only one on the call...asked the same question about reducing leverage per reserves in order to boost borrowing base. It seems likely that a large equity recapitalization will resolve the problem...allowing the borrowing base to be boosted which will allow them to pay a decent distribution.
New name, symbol, logo and website...ok guys, the website is actually fine.
As for KMI/ATLS...Kinder always delivers...the Cohen's at Atlas (and RAS, RSO etc.) have a very long history of over-promising and under-delivering. Ed Cohen loves to hear himself talk, he thinks he is "smarter" than everyone else. He conveniently likes to forget how he nose-dived APL not hedging at the top, then hedging at the absolute bottom. One of the board main-stays can give more details as I did not really follow APL closely. Look at APL's distribution history compared to KMP, APL has cut multiple times, not so with KMP. ATLS does have the benefit of smaller size at APL and ARP to push growth up...but I trust Kinder far more than I would ever trust Cohen. Kinder also has a much better integrated network and better support staff. ATLS is cheap because you are in essence getting a discount because the market knows he will screw something up eventually.
Volume is at 1.5 million as we approach closing. I am hopeful that of that, PostRock is a significant amount. The sooner they are divested the better. It will be good for CEP to be rid of that dark cloud.
Meanwhile, our little gem is pushing $3.00.
Seems unnecessary and contrary to their stated intent. LNCO was created to give them "access" to the portion of the investment community that do not want to deal with a K-1.
Kinder's issue was high cost of capital (incentive distribution rights were well into 50/50 splits). Linn of course has no incentive distribution rights.
Well, looks like the first part is in the works. It sounds like a proposal will be brought to the board of managers to elect to convert to an limited partnership, presumably with Sanchez as the GP.
One would expect the rebranding to happen at that time.
Unfortunately no acquisition looks to have been made, however, liquids production was up nicely. It also sounds like they have curtailed growth capital. They may be planning to utilize that capital for an acquisition rather than by drilling.
And unfortunately, no initiation of a distribution, but again, the conversion to a limited partnership seems like it may lead to that eventually. At this point, it is probably better for CEP to hold onto their cash if they can continue to grow production effectively.
"Anyways, after all your babble about shales you think an MLP should add exploration assets? Wouldn't a EOR carbon sweep play make a great deal more sense? If Mr. Kinder woke up one day and decided to put back all the commodity price risk he has strived so hard to reduce or eliminate?"
You are very dense. I never advocated exploration. In fact, I stated that I doubted Kinder would ever be interested in EOG/Linn. However, I believe he would be interested in Denbury if he wanted to increase his exposure to EOR.
As for Jon Stewart, that is your man crush. I don't watch that garbage.
You clearly misunderstood Norris, as is so often the case. Again, for the umpteenth time, I said IF Kinder were interested in production he would not pursue something like EOG or LINE.
As for utilities, owning transmission lines is far different than being a generator. It is a sector that is ripe for investment.
As for sandforbrains. It was a social degenerate and the board is much better off with its mindless babbling and copy and paste. I do however miss making fun of itss finviz charts, that really was fun watching it get all wound up and spouting off like a hotheaded buffoon about things that it clearly had no understanding of. Of course, the board is much better off without it around.
Thanks gumbyisle. I appreciate your comments as well.
Look on the bright side, at least we aren't discussing ethanol on an E&P LLC board!
Sorry Norris, but you have once again gotten confused. I am not a Progressive. I do not support our President nor any of his objectives, most of which I view as anti-American and with the real intent of lowering America's world standing. So, you will have to address your Jon Stewart man crush issues to someone else as I do not watch his show.
You are nothing short of a liar. I have never once stated that Kinder would target producing assets. Not once, ever.
I stated that IF Kinder were interested in pursuing more exposure to production, he would likely target Denbury, with its very excellent CO2 supply, pipelines and of course, their numerous CO2 flood fields.
As for Jones Act tankers, the latest Buckeye Borco ruling is certainly quite interesting.
I can see why you looked up to sandforbrains so much. Both of you are of the same ilk. Degenerate pond #$%$.
As I've stated numerous times, never mess with Rich Kinder.
He will outwork and outsmart them. He buried Kurt Wulff years ago. Wulff is far smarter than the clowns at Hedgeye. He took Carol Coale to taks when she was, at I think Prudential, when she had the gall to tell Kinder, on the conference call no less, that KMI was a big utility. They never learn.
BTW, I never said local distribution assets. Once again that is you running wild with the facts. High voltage long haul transmission is preferable.
I cannot imagine Kinder ever wanting to enter local distribution again (gas or electric).
He had that exposure back in the late 90's that he inherited via KN Energy (when he merged his privately held GP into KN Energy and he and Bill Morgan took control and rebranded it as KMI). Kinder divested his local gas distribution business along with some merchant power plants that KN owned during his "back to basics" strategy. He also divested the gathering/processing assets as well.
As for electrical generation, I think once again you prove how clueless you are. Our country is in dire need of major investments in our transmission assets.
In fact, it looks like PPL just made a proposal for major east coast infrastructure investment. It has been discussed numerous times at the annual NAPTP conference on seeking to get transmission assets qualified, which thus far, has been unsuccessful. The point is, Kinder's re-boot into a c-corp opens him up to many opportunities that in years past, he may not have entered.
Of course, we know Kinder is on the prowl for coal assets. They have spoken at length on some of the road shows last year about seeing the value. Buying at the bottom of the cycle is fantastic, especially when you have ultra low cost of capital. It puts KMI in a position to be capitalize on any recovery in the sector (post Obama silliness).