Well, no, it can't, by definition. That is, the remaining company has reserves that support the financing, otherwise the credits wouldn't be granted. They can get into a situation where they have to cut the distribution (again) to meet covenants, especially after what will apparently be another horrible quarter, but they can't go out of business altogether.
The big question is, will there be a trading opportunity coming up? How will the market react to a bad coverage miss on the lower distribution, or on shaky guidance concerning future distributions? Will the unit price crater into the $4's, or will there be a sense of relief that it wasn't worse? I could see the unit price going 50-75 cents either way! I see no way to take a position now, it's just a dice roll, but if there's carnage, there could be a chance to buy for a dead cat bounce (or a wounded cat I guess, given my argument).
Yeah, the accounting office is tearing out their hair, I'm sure. LINE's done a lot of acquisitions, but a big complicated merger is a lot different than folding in a couple hundred wells.
I'll be really interested not just in what they say about 2014 guidance and so forth, but how they say it, what lasting impact is there from conforming with the silliness imposed on them by the SEC. I haven't seen any other MLP stop using "DCF" or "adjusted EBITDA", just LINE gets whacked with this nonsense?
I'm going to say yes to this, it's a routine kind of action, they need incentives to attract and keep good people in the management positions. It's relatively minor, and I don't feel like restricting their range of actions just because I don't like the structure, I bought this with eyes wide open in that regard.
They can't retire debt, they're in the very early stages of capitalizing on their properties. Indeed, they need more debt (and capital), to move faster. North Fork doesn't fit this company, even if it was a huge bargain (and I don't know that it was). They need to devote their resources to create new reserves, not buy existing production, what are we, an MLP?
Anyway, it's done, and they got the financing, but I assume the market reaction reflects disappointment that they didn't get a more normal line of credit with traditional banks, rather than a high interest credit with a speculative lender like Apollo. This is the result they get from hiring a financing whiz? Another unnecessary salary. I think they could have got this deal with a phone call.
Dude, a Ponzi scheme is where you convince people to invest with you on the promise of large cash returns, and make the initial payments from new money raised. With a true Ponzi there is no actual business or trade, it's all fiction, with an accidental Ponzi, like Madoff, the person may start with good intentions but get in too deep to back out, when typically they go all in. The key factor in a Ponzi scheme is that the early investors get those unreal returns, that keeps it going. Miller cannot be a Ponzi, by definition, because . . . we're not getting paid!!
There's no accounting for it. MEMP was also down, and big. There was some news there, but it seemed neutral to me. On the other hand LINE is flat, so is BBEP. Go figure.
I really don't understand that at all, a change in officers in a small MLP doesn't seem like that big of deal, the old dude is still there. Very strange, given that most of the upstreams held there own in the market downturn.
Well, this is an income security, so one wouldn't expect it to trade in tandem with the market, aside from sentiment. BBEP is actually slightly green, though MEMP and VNR suffered. Kinda odd, the disparity, one would think the upstreams would pretty much trade together.
Agree, they've been flat for too long, to justify a lower price to yield they need to show that distribution growth is back on track. I think they should have done a "good faith" nickel raise after the Berry deal closed, and I'll be very disappointed if we don't at least get visibility on this front. I expect them to go to $3.05. We'll see.
Whattya mean pay off the loan? It will be replaced by new credit, obviously. Companies usually carry debt . . . why am I saying anything more? Lame question.
Sounds okay, if they do a deal with Apollo, I don't have a problem with that so long as it covers the acquisition. I think the market would be happier if Apollo was out of the picture and the company had a "normal" line with normal banks, but it's early, and it would be expensive to move Apollo out.
I expect this to re-price in yield, which will provide a shot of capital appreciation over the next couple of years, but that's not why I got back in last year, I hold for cash flow, and the current structure of the company makes me believe my distributions are safe, for the next few years at least.
I am trying to take my March calls off the table, assuming I can attract a reasonable bid, very thinly traded. I'm concerned the recent run-up will motivate management to pull the trigger again, not leaving enough time for the unit price to recover after the offering dip. And, I have an equal investment in longer dated calls, so it seems wise to take profits on this tranche.
Only about a 175-200% gain, depending on the breaks. Why oh why didn't I buy more? During those crashes when you have complete conviction that dollars are on sale for a quarter, you just don't tend to go all in, the prevailing mood affects the rational mind. I should have mortgaged my house to buy LINE calls when it was in the low $20's.
I think you're incorrect, this is still priced too low in terns of yield, and there's a floor on oil prices due to the costs involved in shale drilling and production. Besides, this company is well hedged and can live through just about any depression in prices for the next several years, as you say. But, hey, it's your nickel, if you have a better target, do it.
Sure, for awhile. Systematically you would expect LNCO to trade at a slight discount to LINE, due to the extra layer of tax at the corporate level. Granted, if LINE isn't spinning out taxable income then that doesn't matter, but there will be a tax bill some time. Probably a very minor component of the market valuation over the next couple of years, at least.
Could be, but that doesn't mean MLP's will participate. They are yield instruments, not growth securities. Oh sure, in a huge move they will follow, but if the market melts down gradually these should hold their own. LINE should go up of course, it's still at a depressed value.