The poster listed the DCF for the years 2010-2012 if the put costs are not capitalized as -
2012 - 91.2%
2011 - 106.4%
2010 - 99.5%
spacuna, thanks for the kind words. I remain heavily invested in MLP's (approx 40% of total investments). I also enjoy and pay attention to your posts.
I have been spending most of my time focusing on my private family business. I mostly "lurk" on message boards, but occassionally post when I think I have something to add.
I remain a believer in Richard Kinder, despite (1) his detractors, (2) high IDR's, and (3) distribution of near 100% of DCF. Somehow, he continues to generate outstanding returns (to me, management and success count a great deal).
From KMI's 10K annual report for 2010 (filed with the SEC in March 2011), Richard Kinder owned 216,538,834 shasres of KMI. During 2011, he purchased 19,723,865 additional shares of KMI (according to a Form 4 SEC filing).
Mr. Kinder owns a BIG stake in KMI!!!!! It is safe to say that Mr. Kinder fortunes are directly aligned with KMI holders. Due to the KMI/KMR/KMP relationships, he is indirectly aligned with all KM* entities.
EVEP owns significant acreage in Ohio which is prospective for the "Utica" formation. The Utica is a shale play underneath (deeper) than the Marcellas. CHK and others are currently drilling wells to the Utica which, if successful, could result in a "step change" in the cash flow, distributions, and Unit price for EVEP Units.
"Deduct the post-production costs and applicable taxes. (Go big here, you have to do something with lots of saltwater in this oil play, and consider the costs of NG storage, compression, and transportation all over the state of OK)."
Just a comment regarding the above. Handling saltwater (the most significant of the costs mentioned) is NOT a "post-production cost", it is rather a cost of production. The other costs will be a factor if reference value to oil, NG, and Natural Gas Liquids.
The good news re oil is that the deduct for transportation will be modest since Cushing, Oklahoma is the delivery point for WTI. On the other hand, the delivery point for NG is in Louisiana; however, this NG will probably be used in local markets in Okla.
PPI rate increases relate to oil and product (gasoline, diesel, etc) pipelines. These would include PAA, MMP, BPL, NS, about 30% of KMP, about 5% of EPD. The risk for oil and gasoline, etc pipelines is decreased volumes over time (a very long time and minimal risk).
WPZ has natural gas and natural gas liquids pipelines. These are regulated without regard to PPI. However, the income from the NG and NGL pipelines does tend to rise with inflation, but there is not a direct connection. The risk for FERC regulated NG and NGL pipelines is basin depletion, which is minimal.
Any comments on the quality of this Trust?
I understand SD will attempt to raise about $250,000,000 on Friday (4/8/11). The Trust will consist of certain Royalty interests in SD's Mississippian play in Northwset Oklahoma.
I own some SD and I am considering a position in SDT.
$1.13 was the last distribution for OKS. The recently announced dividend of $.52 is for OKE, the General Partner of OKS.
OKS is the MLP.
OKE is the corporate general partner of OKS. OKE also is a utility company with local distribution of NG and other products to consumers (homes and businesses).
EPD did something similar several years ago; reducing the IDR's from 50% to 25% by issuing LP units to EPE. It has worked out OK for EPD (and EPE) holders since.
My quess would be that this is a favorable transaction for NRP unit holders.
The 4th quarter distribution is generally declared in January and paid in mid-February.
The 1st quarter distribution is generally declared in April and paid in mid-May.
KMP/KMR - great company.
I live in Okla City. I am retired from a 30 year oilfield career. I have many friends retired from similar careers and others still active. The GW play in Tx panhandle and western Okla is indeed high profile. The landmen are actively trying to obtain acreage in or near the play.There is much confidence about the potential. It will take a couple of years to really know the value of LINE's holdings as wells are drilled, high initial production (hopefully) pays out well costs and declines to a stable rate (a stable rate being an annual decline of 4 to 6% per year). Currently, engineers are (educated) guessing at ultimate recoveries and long term stable rates. (This is a normal part of the production process).
However, based on the "oilfield grapevine" I invested in LINE in April 2010. I intend to hold for a few yaers (at least).
LINE is the largest E&P MLP and I expect (hope) oil and NG prices rise over the next few years. In addition, LINE has the GW to help offset future production declines.
Regarding structure, many investors believe as you that no IDR's are better than a GP receiving IDR's (and diluting unit holders). I respectfully believe it is not that simple; it is a very complex value issue. Some GP's (EPB, WES, CHKM, NGLS, WPZ, and others) have strong GP "parents" who drop down (or sell) assets to the MLP at favorable prices. This arrangement makes the MLP almost an annuity to unit holders and a source of cash to the GP parent ( a very attractive arrangement to me seeking stable long term income). Other MLP's have managements demonstrating long histories of solid distribution increases (KMP, EPD, ETP, PAA, BWP, OKS, and others). These management teams "earn" their IDR's. Most of the successful MLP's have GP's which have waived or reduced IDR's at various times. This is comforting to me.
There is a growing trend to eliminate IDR's (MWE, CPNO, MMP, and others are similar to LINE). These are ALSO attractive, but I do not consider one structure to be superior to another.
With respect to ENP, DNR owns 20,924,055 LP units (or 47%) plus 504,851 GP units (or an additional 1.1%). There are no IDR's for ENP (although ENP is a partnership with a GP, its allocation between GP and LP is pro-rata or similar to an LLC).
However, I agree DNR is interested in acquiring 100% of certain ENP assets, which may or may not work to the benefit of ENP unitholders.
Just to add a few comments to the well written response by Jackhiller...
Please refer to the National Association of Publicly Traded Partnerships (PTP's, or commonly referred to as MLP's).
LINE is listed under this association. LINE is an LLC which elects to be taxed as a partnership; this tax election qualifies LINE as a PTP or commonly referred to as an MLP.
An LLC does not have a General Partner. This eliminates the need to compensate the GP, which is commonly done through IDR's (Incentive Distribution Rights).
However, partially offsetting the lack of IDR's, LINE must pay the salaries and incentives of all management. In most MLP's with IDR's, some management costs are born solely by the GP.
To be clear, a lack of IDR's provides Limited Partner unitholders (us) more upside. On the other hand, most GP's provide help to the unitholders in difficult times (refer to PAA, KMP, EPD, WPZ, NGLS, and many others in which the GP provided help to continue distributions through difficult periods or to waive some IDR compensation to make acquisitions more attractive to unitholders - us).
I own both MLP's with GP's and MLP's without GP's (such as LINE). I also own some GP's (ETE, EPD, NSH, and PVG). I consider the MLP's facing high IDR splits as slightly safer; while the MLP's without GP's as having more upside, but slightly more risk.
Call activity is interesting, net bullish.
However, remember that if a call is purchased, someone also sold it. Call Options are a zero sum game.