Bringing in a more senior team who already knows how to work with each other well and has confidence in each other. Yeah, that sounds horrible. Go away with your nonsense.
These changes to me explain why the silence during the Q4 results. They are probably building an updated plan with a newer finance team and want to put that together before communicating. I've seen this many times before.
NGL's assets and cash flow are weaker at these oil prices, but the business overall is very secure and trading at stupid low ratios to expected 2017/18 cash flow.
The build in liquidity was amazing, they did a great job there. The advantage of course is now they are positioned to go for more growth projects as the energy market improves, instead of being stuck underwater and bailing out leverage.
They did screw themselves a bit by not having an analyst call in Feb when every other MLP was being very open about their situation and plans. NGL used to be well followed by analysts and a favorite of a few. But on the last call there was only one analyst on and it was a short CC as a result. I think NGL will be ignored a bit by analysts for a bit, not that I think it matters. Management should just focus on growing DCF from here. That's what I care about.
ETE put out a press release saying they rejected Williams tax proposals for the deal. This means ETE is serious about not closing the deal and letting the time frame to close pass.
Of course this would put the whole thing into a massive law suit by Williams for damages, but ETE is probably banking on a settlement that works out much better than the deal going through.
If the deal falls apart ETE is $20 easy.
Wait until oil recovers in a year and ETE starts to grow the dist again. It will easily pass its ATH and hit $40 in two years. Wish I bought more at $4, only doubled up there should have quadrupled up
Add no IDRs to that on the equity side and equity still trading at a low yield, and EPD has one of the lowest cost of funding in the sector, this is why they will continue to grow and capture any upside of US based energy investments.
NGL is at zero risk of a redetermination and most of their debt is due after 2020, leverage isn't even that bad once you factor in grand mesa after it comes online in two quarters. The only reason debt looks elevated is they used debt to build assets that are in progress and haven't contributed to revenue yet. Its almost as if you know nothing about NGL...
Except that ETE management believes they have an out with the tax ruling and will not close.
Of course WMB will sue and sue, there will be a settlement in the end, but the settlement will work out much better than ETE taking on $20B of new debt.
The rest of the ETE complex is rocking it and ETE will see much larger IDR inflows in 2017/18.
Personally I am looking forward to a crash to the 4's again, I didn't buy enough last time.
There is no way WMB is paying anything, the question is how much if any ETE pays.
Either way this will all be done soon and life for both firms will go on.
We are looking at 14% yield at today's closing price with expected growth to the mid 20% range if you assume just their current growth projects and future raises to the 1.3-1.5x coverage range.
On top of this NGL is exposed to oil prices, we learned this through the current cycle. NGL's forecasted EBITDA numbers assume today's oil prices. When oil hits $80 again in 2 years NGL's cash flow will increase as well, that brings NGL to an expected 30% yield in a few years time.
All with strong coverage and a solid balance sheet that is paying down debt, plus extra money for funding growth into the next cycle.
I don't know where we end tomorrow, but it will still be a buy at the end of the day.
After over estimating cash flow again and again, management is finally taking a conservative approach to guidance, which is positive. They are now guiding $500M DCF post the Grand Mesa expansion using very low energy prices.
Just a few quarters ago with the same assets they were estimating well north of $600-700M. Given that even the IEA has come around to the fact supply is rebalancing, it is not unreasonable to expect prices moderately above $50 throughout the rest of the year, which provides significant upside to their $500M DCF guidance. The stock definitely has more upside from here.
Essentially KMI is no longer an MLP but a high growth dividend aristocrat, I can live with that. BTW their 4x coverage will fund quite a lot of growth
Or have to pay a nominal amount worth only one or two quarters of cash flow. In the grand scheme that is not much.
Once the merger issue is cleared, we are looking at a very stable cash flow greater than $1.3/share today and growing rapidly over the coming few years with clear visibility as projects come online with a run rate of around $2/share by 2018/19.
In today's ZIRP (or NIRP) environment what do stocks with a stable $2 of annual distributable cash flow trade at? Hint: It's not below $20 or even $30.
The reasons for ETE's drop was the merger and the large capex program at ETP that ETE needed to support. We are close to both of those issues closing, after that we are going to see a monster run.
The $1000 UBTI limit will not hit you with 1000 shares. Capital gains and distributions do not count toward the $1000 limit, only unearned income as reported on the K-1 does. ETE will show you as having negative UBTI for years....
They have close to 3x coverage on 2017 cash flow. I'd say the dist is pretty save and well covered. Oh, they also have low debt ratios compared to most other MLPs and so are well positioned to grow when the market turns and the timing is right.
That debt has paid for assets under construction that come online in 6 months, assets which are expected to generate $160 in DCF. You have to put that incremental cash into the calculation if you are going to add the debt. Also that $450M number is what you get with the worst possible market conditions, the same assets will generate a lot more in 2017/18 after oil recovers.
You might be waiting awhile. Even a year ago when oil was in the $50 range ETE was trading 300% higher than it is today. It was the massive debt burden of the deal that crashed ETE, without that overhang this stock will rebound nicely.
$20 very quickly if it is, otherwise we're back below $10