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AmeriGas Partners LP Message Board

rrb1981 50 posts  |  Last Activity: Aug 25, 2015 9:19 PM Member since: Apr 18, 2001
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  • Reply to

    MCEP not participating in this little bump

    by herlod.glitch Aug 25, 2015 1:31 PM
    rrb1981 rrb1981 Aug 25, 2015 9:19 PM Flag

    MCEP needs to cut the distribution. That I worth $15 million on he borrowing base. Issuing preferred is ridiculous at this time.

    MCEP is in much better shape than many of the other E&P MLPs but they need to resolve the issue sooner rather than later.

  • rrb1981 rrb1981 Aug 24, 2015 10:27 PM Flag

    I had not heard that he made those comments.

    He was far too inexperienced to run an operation of that size.

    At current prices, I cannot imagine they have really any plays that give them as good a return as buying 7% notes at 43 cents on the dollar.

    The capital budget needs to halt and be reduced to under $100 million.

  • Reply to


    by rrb1981 Aug 18, 2015 9:37 PM
    rrb1981 rrb1981 Aug 24, 2015 10:19 PM Flag

    Cease the distribution now, use that cash to pay down the revolver faster, stay ahead of the banks and be proactive rather than reactive.

    I think MCEP can survive, but they need to deleverage as quickly as possible to withstand a lower for longer environment if it comes to that.

    The market isn't giving them any credit for the distribution anyway.

  • rrb1981 by rrb1981 Aug 24, 2015 9:51 PM Flag

    About 5 years too late.

    Ellis should be next.

    Linn's chance of survival is slim, but a resurgence in crude in late 2016 or early 2017 might give them breathing room.

    Notes trading at low 40 cents on the dollar range.

    They need to cease cap ex and devote that cash to delevering via note repurchases. Let production go into decline for a year, retire $2 billion of face value notes.

  • Reply to

    NG and why the product will remain cheap

    by robbyvanhalland Aug 23, 2015 6:27 PM
    rrb1981 rrb1981 Aug 23, 2015 8:37 PM Flag

    Actually it has already peaked, several months ago. Already down several hundred thousand bpd from the peak.

    You continue to let your ego get the best of you. It's what you do.

  • Reply to

    NG and why the product will remain cheap

    by robbyvanhalland Aug 23, 2015 6:27 PM
    rrb1981 rrb1981 Aug 23, 2015 8:01 PM Flag

    Read Genscape. They compare their projections to EIA. Genscape projecting crude production declines from a peak of 9.6 million bpd to 8.7 million bpd (this time next year).

    EIA numbers may not be perfect, but they are directionally fairly accurate with revisions following as more information is available.

    Genscape notes that US production decline began several months ago and will be even more evident over the next couple of months. It will still take quite a while for the market to come into equilibrium but US production is declining.

  • rrb1981 rrb1981 Aug 22, 2015 4:32 PM Flag

    I expect MMLP will build coverage rather than raise the distribution. In this environment, it doesn't make sense to grow the distribution as the market isn't giving them credit for the current distribution.

    The best thing they can do is go out and execute and deliver greater than 1.0x coverage for 4 or 5 Q's in a row before thinking about raising it.

    This malaise will eventually pass and crude will likely creep back up towards $60.

  • Reply to


    by jbcguy Aug 22, 2015 2:13 PM
    rrb1981 rrb1981 Aug 22, 2015 3:39 PM Flag

    Cohen is a shill. Always has been. He's also terrible at operations. He nose dived APL in the '08/'09 debacle, then layered on hedges at the worst possible time and was forced to divest crown jewel assets, then quietly handed the day to day stuff over to Eugene DuBay and disappeared back to ATLS. Rinse repeat. No doubt he is good and raising capital and finding ways to get his hands on other peoples money (Atlas Growth, the private drilling partnerships etc).

    There is no doubt whatsoever that Cohen is trying to salvage ATLS. He needs to get ARP unit price up high enough to divest the units and retire the debt or to keep paying distributions and let ATLS deleverage with that cash. That leaves him holding a stub with AGP, Lighthorse, Arc Logistics assets, none of which produce a significant amount of cash but might allow ATLS to stay solvent and Cohen to live another day. The whole Cohen empire (ATLS, ARP, REXI, RSO, RAS, and others) are meant solely as vehicles to pay large salaries to his family.

    The Rangely deal was horribly timed and they used far too much debt in order to goose accretion from previous deals.

    The Barnett Shale and San Juan assets are high quality gas assets and will generate cash flow. Removing Matt Jones was long overdue (lap dog, yes man) and putting Schumacher in charge is a huge improvement.

    I personally don't think ARP will survive but admit it will be entertaining to listen to Cohen deny reality.

  • Reply to

    Ellis on Linn

    by garrh Aug 20, 2015 11:00 AM
    rrb1981 rrb1981 Aug 20, 2015 10:41 PM Flag

    I wouldn't be so sure on 2018 oil prices being under $60 goskiing99.

    It appears quite gloomy at present, but note that already US production is predicted to be under 9 million bpd by year end, from a peak of 9.6 million bpd. And the fragile non middle east OPEC members are also suffering.

    Additionally, associated gas production is likely to taper off with reduced crude development. Mexico exports, LNG exports and chemical plants (crackers and polyethylene plants) will lift natural gas and ethane prices. Retirement of coal plants also will help firm gas prices, which currently look like a coiled spring, just waiting to pop in the next 12-18 months.

    I am not calling a bottom on crude, as it would be foolish to attempt such a thing, however, it is worth noting that LOE and SG&A for most producers make production below $20-$25 pointless. Oil companies margins are being squeezed and investment is being reduced. The sector cannot withstand much lower without investment being reduced completely by those that are either unhedged or those that are overleveraged. That reduction in investment will become evident in a few years, the same way the overinvestment from several years ago is being felt today. As an example, even world class and low cost operator EOG is focusing on just completing their inventory of drilled but uncompleted wells (DUCs). We may not be at the bottom for crude, but we are getting close.

    Linn's survival will hinge on how much debt they can retire and how much recovery they get in crude pricing..

  • Reply to


    by rrb1981 Aug 18, 2015 9:37 PM
    rrb1981 rrb1981 Aug 18, 2015 10:57 PM Flag

    I did look at it. The solid hedges run out soon. They even alluded to potentially cutting again on the conference call.

    The market isn't viewing it as sustainable with a 20%+ yield.

    MCEP isn't in terrible shape, but they do need to delever the balance sheet. Cutting would allow them to make some progress and when prices recover, they can reinstate.

  • Reply to


    by wyatt_oil_2 Aug 18, 2015 6:39 PM
    rrb1981 rrb1981 Aug 18, 2015 9:58 PM Flag

    Kolja's margin call probably didn't help things either...

  • rrb1981 by rrb1981 Aug 18, 2015 9:37 PM Flag

    I think it would be prudent for MCEP to go ahead and cut the distribution to zero.

    MCEP could devote that cash to delivering and gain valuable breathing room on the revolver when it gets reset.

  • rrb1981 rrb1981 Aug 18, 2015 6:02 PM Flag

    I suspect that Linn will be directing as much discretionary capital as possible towards purchasing of notes at a discount.

    The 2021's are well under 50 cents on the dollar. The 2019's are trading at 50 cents on the dollar.

    The upcoming redetermination will be critical for Linn. Management projected $1 billion in capacity post redetermination. If that holds, look for Linn to pull down a large portion of that and use it to buy back notes. It is one of the few knobs Linn has to turn and if executed, and to what extent they repurchase, could result in significant interest expense reduction.

    They may also end up letting production slip into modest decline, diverting some of the $530 million towards note repurchases.

    I am still not convinced Linn will go bankrupt, but it will take skillful management of cash and the balance sheet and a nice uptick in commodity prices in 2017 for them survive.

  • Reply to

    Survival Mode

    by ronharv Aug 17, 2015 8:11 PM
    rrb1981 rrb1981 Aug 18, 2015 5:13 PM Flag

    Linn bond still not at $40...but Linn bonds trading at $.40 on the dollar.


  • Reply to

    Survival Mode

    by ronharv Aug 17, 2015 8:11 PM
    rrb1981 rrb1981 Aug 17, 2015 10:12 PM Flag

    Of course the market is efficient with random and usually brief spells of irrational exuberance and pessimism. The equity is priced at $3.00 unit, a full $.08 less than the distribution that sandforbrains predicted after the Berry merger. Of course sandforbrains was a degenerate math challenged huckster.

    And it is worth pointing out that the market is now pricing Linn's notes in the high 40's (yes, a greater than 50% discount to par). Linn's mismanagement of hedges post the Hedgeye fiasco and subsequent SEC inquiry has been nothing short of laughable and reflective of the fact that perhaps, the hockey kid got the best of Ellis and Rockov, even if he got the facts wrong. Of course, Kinder took care of business as he always has. A driven micromanager that loves what he does and puts his heart and soul into it. Ellis is no Kinder.

    Abandoning the use of puts and staying hedged out 5 yrs has cost them dearly. Nevertheless Ellis and Rockov continue to beat the drum, pretending they are brilliant operators when they are really nothing more than asset aggregators stringing disparate producing properties together at inflated prices and failing to protect the downside and margins. They are not value creators, but rather playing business with OPM. And of course, one cannot forget that Linn simply could never recover from the great hedges that protected them during the last crash. Try as they may, they were simply not able to plug the holes in DCF as those hedges ran off and were replaced with much lower hedges, evaporating massive amounts of DCF. The reckless behavior of Ellis and Rockov is amazing continuing to grow the distribution when their margins continued to compress year over year. Even more reckless than Harold Hamm blowing out his hedges (trying to call a bottom) and leaving CLR unprotected and leaving hundreds of millions on the table. The gunslinger mentality of Ellis has cost unit holders dearly.

  • Reply to

    what should happen to LINN

    by tennis_bridgefit Aug 15, 2015 8:21 PM
    rrb1981 rrb1981 Aug 15, 2015 11:36 PM Flag

    I think you are being a bit premature taking credit for the $1.5 billion that MAY be invested by GSO and Quantum.

    Remember, on the DrillCo, Linn gets a carry and a back-end step up on the working interest provided certain return hurdles are met. This is not a major source of cash flow for Linn, but does allow them to prove up acreage and they get full ownership of any PUDs generated. No monies have been invested as of the last Q report.

    The AcquisitionCo with Quantum is similarly not a major source of cash flow. They do get a promote, but let's be serious, this is also not a meaningful source of cash assuming the whole $1 billion is invested.

  • rrb1981 rrb1981 Aug 15, 2015 11:25 PM Flag

    Actually, Perry did a decent good job while Governor of Texas. For those that really look at his record, he managed the state finances capably through the downturn and the economy has expanded at a nice clip and contrary to popular belief, is not tied so heavily to energy as many would believe. His legal issues are nothing more than political chicanery brought about by the only liberal bastion in the state (Austin). I suspect the 2nd indictment will no doubt be tossed, as the first one was. Unfortunately for Perry, his campaign is simply going to run out of money and he will likely drop out of the race. The GOP race will likely narrow quickly with major donors deciding who will and won't be advancing.

    Texas was fortunate that after Perry left office, they elected Abbott over the dim-witted Wendy Davis, whose knack for making tacky, crude and callous comments conjures up memories of Clayton Williams campaign of 1990 vs Richards. In my opinion, Wendy Davis's campaign was so poorly run that she has likely ended her chances of holding major public office in the State of Texas for some time and raising funds from donors will be quite a chore after she so ineptly wasted them making personal attacks on her opponent rather than discussing her ideals. One does not simply attack a man because of his physical disabilities and get away with it, not even liberals.

  • Reply to

    LINE drop dead date is 2018.

    by goskiing99 Aug 15, 2015 1:28 PM
    rrb1981 rrb1981 Aug 15, 2015 5:32 PM Flag

    I don't think you will have to wait until 2017 to know if Linn will survive.

    Watch the pricing action on their notes as well as the strip.

    Linn's survival will be largely dependent on commodity prices, but also prudent management of cash flow. At present, it appears retiring notes at 50% of par provides an excellent return with essentially no execution risk. Linn's management of their revolver as well as maximizing capital efficiency are crucial. Every dollar they can take from their cap ex and redirect towards debt reduction buys them time.

    It is very likely that we may see some rationalization of their portfolio in an effort to further reduce G&A. The South Texas assets are not a meaningful portion of Linn's reserves and production and certainly not receiving meaningful cap ex and are prime candidates to be divested and likely will find eager buyers in the well developed South Texas basin. Additionally, the Michigan Antrim Shale gas assets are also candidates for divestiture if they can receive a price enticing enough to part with the low decline gas assets.

    Overall, I expect Linn to continue to find ways to high grade their drilling inventory, meaning do more with less. Reducing the maintenance capital budget while keeping production flat and buying time by continuing to reduce debt at 50% of par. They also seem interested in proving up the Ruston area in an attempt to monetize it. Similar to what we saw in the Wolfcamp. Extract more value by de-risking the play. It remains to be seen how much capital this will take, but is likely one of the best wild cards the company has in terms of showing meaningful value creation.

    If Linn does everything right, and that is a big if, considering they have Ellis and Rockov leading the circus, they might survive...with strong cooperation from the commodity markets in 2016-2017.

  • Reply to

    Linn's 2020 Bonds

    by ronharv Aug 11, 2015 11:26 AM
    rrb1981 rrb1981 Aug 12, 2015 7:55 AM Flag

    I would have though a permabull like you would have disappeared by now like that degenerate sandforbrains did years ago!

  • Reply to

    Linn's 2020 Bonds

    by ronharv Aug 11, 2015 11:26 AM
    rrb1981 rrb1981 Aug 11, 2015 9:12 PM Flag

    Management abandoned long term hedging, let the balance sheet get bloated, lost focus on what an MLP should do, tried to be a hybrid driller/operator, tried to buy their way out of trouble. It is staggering to see the collapse, but we can't say it is surprising. Ellis was a gunslinger that never really bought into the idea of purchasing mature stable assets and operating them and Rockov was an egotistical quant that thought he was smarter than everyone else. Rocov's reckless margin call should have served as a clue to investors at how reckless he was.

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