Looks like Tom Long who was the CFO for ETP will now be also the CFO of ETE, one person - two hats.
Could be removing what in reality are duplicate positions. I see no reason why one person, Tom Long or Jamie Welch, could not be CFO for both companies. Kelcy Warren is in chairman and CEO of both, ETE and ETP - so why not.
Respectfully, disagree. Oil and gas flows are not slowing - as evidenced by the continuous buildup in oil storage inventory as reported by the EIA. Seems like that is the crux of the matter for oil prices - too much oil is flowing, correct?
Granted, future flow growth or increases will certainly be impacted by the continuous decline in rig count, both for oil and gas.
I think it would be better to look at this differently.
You mention the decline in oil and gas rig operations. OK, that is clear but that means that future volume flows will be impacted. But what about current oil and gas well operations, they are there now and they will produce until depleted which will take 2 o 3 years at the earliest.
Seems to me that SXE needs to hold on to the gas flows that they had already. Future volume growth is another matter.
Fundamentally agree - but - SXE still needs to cut the debt or find a way to boost EBITDA significantly. We need to get the debt/EBITDA ratio to less than 5 but preferably less than 4.
Agreed, something here is very odd. Heck, VNR, which is an upstream E&P, announced suspension of their common and preferred distributions late on Thursday, the common closed yesterday at 1.24. VNR's balance sheet is not even close to what SXE has.
Respectfully, I must disagree with you on debt-holders swapping debt for equity. Debt for equity swaps are in fact a frequent process. There are going to be debt holders who want their money back ASAP and there are some who would rather continue getting their interest payments.
Totally agree with you, though, on EBITDA. That is the most important number to value this company. The good news of a debt for equity swap would be the significant reduction in debt to EBITDA ratio of less than 3. That would place SXE way up there with the super high quality MLPs, thus raising the unit price.
OK, we know that we have a big problem with the $ million debt on SXE. So, let's do this.
1. Assume a very conservative EBITDA of $ 80 million per year.
2. Multply by 10 for a capitalization value, and we get $ 800 million.
3. Divide that by half - give the $ 400 million in newco stock to the bond / debt holders to reduce the debt down to $ 175 million.
4. We, the common unit holders then divide the other $ 400 million in newco stock by ? If there are 40 million units in existing common, subordinates, and preferreds, then that will come to about $ 10 / old or new units.
It would be best for CEQP as a whole if FR bought these from treasury stock inventory. Either way; FR increased their holdings, the main difference would be for CEQP to have additional working capital, without having to borrow money. Yes, there would be dilution - but at this point, that would be my least worry. Cleaning up the balance sheet with equity would be much better.
OK, I see that First Reserve bought a bunch of CEQP shares. Now, did they buy them on the open market - or from CEQP thus raising working capital for CEQP?
Odd, though, Moody's key point is concern about SXE taking on more debt for growth projects - say what??
Clearly, the Moody's analyst does not understand that SXE needs to concentrate on selling more contracts especially with the oil export ban being lifted.
There will not be anymore Capex, nor should there be until the balance is cleaned up. The capacity utilization for what we have now is only 65%, per the latest CC. Thus, they should concentrate on closing deals and collecting on what there is already.
Besides, they are obviously seriously hurting for working capital right now. No sense to dig a deeper hole with more debt for Capex projects.
They should use the bulk of the free cash flow to pay down the debt.
OK, we know about the Swift CH 11, but how much in revenue $'s was that to SXE? Is / was this a major account?
Actually, they should have cut the distribution in July.
However, they delivered a Q3-2015 well above expectations and guided upward.
One would have to wonder, what happened since?
Just curious, how did you arrive at this statement.
If it goes BK, Holdings will still control around 70% if the shares of SXE.
Not disagreeing with you per se, but just curious how the 61% currently owned by Holdings - how that becomes 70%.