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Plains All American Pipeline, L.P. Message Board

rrb1981 149 posts  |  Last Activity: 17 hours ago Member since: Apr 18, 2001
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  • Reply to

    CEP

    by rrb1981 Aug 23, 2014 8:06 PM

    The only problem is they don't have enough cash to pay their preferred dividends, which means they pay them in-kind. They are growing oil volumes slowly while they let gas volumes decline rapidly.

    PSTR is essentially dead for all non White Deer holders. They are heavily laden in debt, which they are not paying down other than thru asset divestitures.

    This has been a major albatross for White Deer. I don't think they have an exit strategy.

  • Looks like the pieces are slowly falling into place. I'm thinking that obtaining majority approval is fairly probable on the conversion to an MLP.

    Hopefully PSTR will be nearly fully divested by the time the vote takes place. I can see them trying to throw a wrench in the works as one last parting shot. They are under 10% now.

  • rrb1981 by rrb1981 Aug 28, 2014 8:04 PM Flag

    Sure wish sandforbrains was still on the board. That way we could give him a hard time about Linn once again not increasing the distribution to $3.08 as he so pompously predicted (over, and over, and over again).

    Must have been something wrong with his finviz charts..

  • rrb1981 rrb1981 Aug 28, 2014 8:49 AM Flag

    What you haven't taken into account is the vast holdings of undeveloped mineral rights. Of course, it is extremely difficult to value these but what is evident is that Sabine seems to maintain reserves on a per unit basis and to maintain a constant reserve life year after year.

  • Reply to

    Interesting

    by rrb1981 Aug 25, 2014 8:09 PM
    rrb1981 rrb1981 Aug 28, 2014 7:51 AM Flag

    They won't buy back EROC. It makes very little sense unless it becomes extremely underpriced. They benefit far more by reinvesting proceeds of divesting RGP into producing assets. That helps increase their reserve based borrowing facility, which in turn allows them to lever up and make additional debt funded acquisitions.

    It is all about increasing PDP reserves and ebitda and lowering SG&A on a per unit basis.

    These guys will either need to run without a distribution for a year or more and reinvest all of the proceeds into developing their asset base, which is rich in prospects but is not nearly as PDP as they (or the market) would like, or they will have to pursue the paths they have already highlighted, which is JV (farm-outs with carried interests) or a swap/direct-sale.

  • Reply to

    Interesting

    by rrb1981 Aug 25, 2014 8:09 PM
    rrb1981 rrb1981 Aug 27, 2014 1:54 PM Flag

    bobdbus,

    Agree. I haven't purchased any, but am watching intently. They are trapped in a tight spot. Where the market may trade them down below NAV because of either a lousy distribution or no distribution at all. It smells like opportunity but patience and timing are key.

    Management is a complete cluster but buying dollars for $.50 can compensate for that.

  • Reply to

    CEP

    by rrb1981 Aug 23, 2014 8:06 PM
    rrb1981 rrb1981 Aug 26, 2014 9:38 PM Flag

    Why do they need a recap?

    They are struggling to maintain a share price above $1. They have divested their midstream assets, are looking to divest their Appalachian assets, gas prices are low, they are swamped in debt, White Deer is having their preferred paid in kind.

    Equity holders here have very little chance of ever seeing any meaningful gains. White Deer will need to pump more money into this concern to keep them alive.

    The shift to oil focus has helped them, but it appears to be too little, too late.

  • Reply to

    Price

    by rrb1981 Aug 23, 2014 1:51 PM
    rrb1981 rrb1981 Aug 26, 2014 10:48 AM Flag

    It might not need to be rolled out to the market if Sanchez takes the equity via a drop down, thereby allowing an increase of the distribution to something like $.32/unit

  • rrb1981 by rrb1981 Aug 25, 2014 8:09 PM Flag

    I've been following EROC for a while. Management is terrible, but at some point it is going to bottom, and that bottom is getting very close. While the latest presentation shows that SG&A still is out of control, we are getting to the point where the market has eroded all of the premium and it is trading at NAV.

    Clearly the golden lining is their ability to divest their Regency holdings and redeploy those proceeds into producing assets or to help develop some of their holdings.

    At present, it appears that EROC is better suited to hold onto their cash and work to develop some of their premier SCOOP holdings. It remains to be seen however if they will have the patience to develop them, or instead will opt to go the route of Linn and divest them in lieu of something more heavily PDP and lower decline.

    It's an interesting story when it drops below $4/unit and worthy of watching more closely.

  • Reply to

    Price

    by rrb1981 Aug 23, 2014 1:51 PM
    rrb1981 rrb1981 Aug 25, 2014 6:15 PM Flag

    stevegaskill,

    White Deer made a huge mistake when they invested in PostRock. I see very little chance of PostRock surviving without a major capital infusion. At this point, I think White Deer is simply trying to decide if they walk away and write-off the loss, or pump cash into the concern and try to recoup their original investment.

    I am holding my CEP. It may indeed drop back some, but longer term, with the potential for a distribution...it simply becomes another E&P MLP, but with a small capital base upon which to build, meaning deals should be meaningfully accretive.

  • Reply to

    Price

    by rrb1981 Aug 23, 2014 1:51 PM
    rrb1981 rrb1981 Aug 25, 2014 6:09 PM Flag

    coochy.cooty,

    I hear what you are saying, but I think you missed my point. CEP can initiate with a low .01/unit per quarter distribution and increase it by .01/unit per quarter thereafter. That would be $.16/unit at the end of the year which is a little over 4.4% based on current price. Two years from now would be a market yield. The recap will be "dilutive" as you state, but isn't that the case any time an MLP does an offering? It may dilute your ownership stake but the cash that is received by the company will be deployed into something that should be accretive and ultimately additive to DCF on a per unit basis.

    I suspect Sanchez will be buying a portion of the units during the recap, perhaps in essence a decent sized drop-down that is equity financed. Of course, one could argue that if they wanted more units, they would have purchased PSTR's directly. Once the GP/LP relationship is established, I think Sanchez will utilize CEP as a conduit to acquire mature (i.e. low decline legacy production) both from affiliates of Sanchez as well as from 3rd parties.

    I do not know how much equity they intend to raise. I'm holding for now. I like the story in this, in my opinion, very overpriced market. In essence, if CEP can make deals using equity, it will boost their borrowing base, which in turn will give them leverage to make more deals.

    It's a slow process, but one that I believe will be very, very profitable for those willing to ride it out.

  • Reply to

    Something on my mind

    by hwrbrickman Aug 23, 2014 8:36 PM
    rrb1981 rrb1981 Aug 24, 2014 3:14 PM Flag

    It put in place the ability to purchase LNCO units while simultaneously issuing LINE units via the ATM. This would, in theory, help drive the 2 issues towards parity, and, while clearly not a big profit center, would essentially be either a no cost exercise to Linn or a slightly profitable one.

  • Reply to

    Price

    by rrb1981 Aug 23, 2014 1:51 PM
    rrb1981 rrb1981 Aug 24, 2014 3:03 PM Flag

    coochy,

    Yes, I caught the uplift. I've been buying for months (actually going back to late '13) when it was first stated that Sanchez wanted to be the sponsor. That was the catalyst I'd been looking for. I've followed CEP for years, like many other MLPs but finally started nibbling when they divested the Black Warrior Basin production and then did the Sanchez deal.

    As for direction..I think CEP has more upside to it, especially once the sponsorship becomes official. I'll be cautiously optimistic, but I see no reason that 1 year from now, CEP couldn't be paying a very nice distribution, be much better capitalized and once again an "investment" rather than a speculative play.

    I have made a lot of money on CEP with the uplift, actually one of my better returners as of last few months. I think It has plenty of room left to run if/when the distribution is restored. I've been postulating that they might start off with a $.01/quarter ($.04 annualized) and then ratchet it up by $.01/ every quarter. That would allow them to slowly ease into returning to being a cash paying entity without overstretching the balance sheet and finances. It is imperitive that whatever they do is well thought out and methodical.

  • rrb1981 by rrb1981 Aug 23, 2014 8:06 PM Flag

    Looks like PSTR continues to divest CEP units. Frankly, I am skeptical that PSTR will survive without a major recap from White Deer. Of course, White Deer appears to have no interest in putting more money into PSTR...

  • rrb1981 by rrb1981 Aug 23, 2014 1:51 PM Flag

    Looks like the market is pleased with the pending transformational transactions.

    Will be very interested to hear more details on the recap. With Sanchez as a drop down partner and potentially as a GP, we could be looking at a very remarkable recovery.

    I'm quite pleased with the direction CEP is headed, especially if they are finally able to resume paying distributions.

  • Reply to

    Trading

    by ronharv Aug 22, 2014 10:09 AM
    rrb1981 rrb1981 Aug 23, 2014 8:23 AM Flag

    What happened to the board degenerate sandforbrains? He hasn't been seen for some time?

  • Reply to

    There is so much Nat Gas

    by opinionsarelike33 Aug 22, 2014 10:01 AM
    rrb1981 rrb1981 Aug 22, 2014 6:35 PM Flag

    ENLC = GP, ENLK = LP

  • Reply to

    Trading

    by ronharv Aug 22, 2014 10:09 AM
    rrb1981 rrb1981 Aug 22, 2014 4:44 PM Flag

    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.

  • rrb1981 by rrb1981 Aug 22, 2014 3:45 PM Flag

    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.

PAA
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