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Inergy, L.P. Message Board

twfry_2001 78 posts  |  Last Activity: Apr 28, 2016 12:37 PM Member since: Sep 20, 2010
  • Reply to

    We crossed 40$ today

    by cyclop_one_eye Mar 1, 2016 2:30 PM
    twfry_2001 twfry_2001 Mar 1, 2016 5:21 PM Flag

    Shorts have experienced run ups before and waited it out. EBIX ran to 37 early last year and short interest never fell below 8M. 41 isn't much higher, the question is when do shorts capitulate? So far they have been able to maintain positions.

    I've been in this stock for 6 years now and don't think I've ever seen short interest fall below 8M. This to me is the number to look for, if short interest falls below 8M then there is definitely capitulation finally happening.

    Part of me has also wondered if some of he short activity might just be hedging by owners to offset risk from being acquired. There was speculation this was the case a while back, if so there may never be a short squeeze because the shorts are really hedges offset by ownership. Frankly the continuous 8M short number as always looked suspect to me.

  • Reply to

    Distribution question.

    by burnaka Feb 26, 2016 3:22 PM
    twfry_2001 twfry_2001 Feb 26, 2016 6:09 PM Flag

    From the call it is clear Warren thinks ETE will be making bank in 2 years.

    There is no way he wants to dilute ownership more than needed or already agreed to.

    He will take the cheap $6B loan for two years and eliminate the ETE distribution. Doing so would fully pay of the $6B and enable ETE to get WMB on the cheap with limited dilution. That is what is going to happen.

  • Reply to

    Suppose they Give a Positive Web Cast

    by ya_whos_who Feb 25, 2016 1:04 PM
    twfry_2001 twfry_2001 Feb 26, 2016 12:14 PM Flag

    You might just find the stock rallies on a moderate dist cut.

    Remember they are already into the IDRs, a small cut for LP holders saves quite a bit of cash because the IDRs stop being paid to the GP as well. It is for that reason that I think mgnt probably will not cut. In 2009/10 they held steady and did not cut.

    It is a steal at these prices and waiting for a further drop might make you wait a long time. My strategy was to put in 1/2 of my (large) buy at these prices and then if drops significantly more to put in the other 1/2. If it goes up I will be content with the amount purchased already.

  • Reply to

    Revenue slide

    by wholemole Feb 25, 2016 9:32 PM
    twfry_2001 twfry_2001 Feb 26, 2016 12:37 AM Flag

    Learn to read a financial statement.

    Revenue went down because oil price went down, but so did costs to the same proportion. EBITDA was not impacted

  • twfry_2001 twfry_2001 Feb 25, 2016 2:03 PM Flag

    KMI showed a temporary distribution cut for 2 years is the right thing to do in a down environment.

    MLPs operate on the edge when times are good, this is the model, they are cash cows but pay out that cash. But when things turn down the capital markets freeze.

    Taking two years to use that cash to de-lever and improve the balance sheet is rewarded by the market. KMI cut but are trading around where they were before the cut. The reason is because the market knows KMI will be able to fully restore the distribution, and increase it in 2 years time. That is what the market is valuing now.

    ETE is in a bind though because a cut at ETP causes them to blow the covenants, but banks should be OK with this move as it de-risks the whole group.

    The reason ETP is a great buy now is unlike KMI which cut 75%, ETP can not cut 75% because it would starve ETE, so ETP will probably cut 25% for 2 years and ETE 100% for 2 years. Both will be restored and then some in 2018.

    What we are seeing is firms like EPD have the better model, they run at 1.3x coverage, not 1.0x, and are able to easily absorb downturns with no problem.

  • Reply to

    Suppose they Give a Positive Web Cast

    by ya_whos_who Feb 25, 2016 1:04 PM
    twfry_2001 twfry_2001 Feb 25, 2016 1:35 PM Flag

    They did, business has slowed slightly but the investment thesis is still intact. The compression business is paid on volumes and volumes might go down slightly (5-10%) for a year or two but that is the most, and volumes are locked in to grow by 2020.

    Distribution coverage is still fine, capex needs are fine (they can essentially stop capex which they have) and debt is more than manageable.

    I'd prefer that they cut the dist by 25% to be able to internally fund all growth needs and delever some, but it is an option for them, not a necessity like it is for other midstreams.

    Basically we are looking at a stable and secure 35% yield at the current price. Compression services are not going away. This is a crazy entry point today.

  • twfry_2001 twfry_2001 Feb 25, 2016 1:10 PM Flag

    Well considering they mostly move natural gas and are mostly paid on volumes of gas moved and the volumes of gas moved is only expected to go up over the next few years due to consumption and exports, then I think ETE/ETP will do very well even if oil stays low for a while.

    If oil stays low for a while, these firms will simply stop growth project and slowly delever, putting them in a better and better position.

  • Reply to

    be careful out there

    by titusbythesea Feb 22, 2016 7:47 AM
    twfry_2001 twfry_2001 Feb 24, 2016 12:20 PM Flag

    Exactly, in a BK the lenders take over the assets. The Lenders want to sell and monetize the assets as soon as possible as they are not in the E&P business. So they will put the assets up on the block to the highest bidder.

    Bidders will only come if there is profit to be made. To make a profit they have to be able to transport gas out of the basin.

    Guess who is their only option, the existing pipeline operator. The new owners can only exist if they pay the pipeline operators what they want, otherwise the value of the assets is zero.

    Throughout the BK the E&P operators will keep paying the minimum commits. If they don't then as doogoo1 says they open themselves up to market rates. The next best alternative for and E&P is trucking which is 5x more expensive, that is market rates.

    The only downside is if even after wiping out existing debt the basin is still uneconomical to produce at today's prices, and so the basin is capped to wait. In that case the pipeline is screwed, at least until oil goes back up.

  • twfry_2001 twfry_2001 Feb 22, 2016 12:14 PM Flag

    The market is not valuing TGP at all. It is as simple as that. TGP has a steady and growing business with significant growth projects. They cut the dist in order to internally fund growth since the MLP market crashed, the market is treating this as if TGP's business is deteriorating, it is not. Buyers here are looking at a 30-40% yield in a couple of years.

  • Reply to

    Hammer

    by rrb1981 Feb 21, 2016 10:07 PM
    twfry_2001 twfry_2001 Feb 21, 2016 11:56 PM Flag

    Analysts expect management to provide them estimates and to their job for them. This one is having a hissy fit.

    Wells Fargo who is infinitely more knowledgeable in this space has listed NGL as a top pick in out of "dislocated" MLPs for the past few months.

  • twfry_2001 twfry_2001 Feb 19, 2016 6:54 PM Flag

    I agree. If we enter a lower for longer period a cut now will pay off. Much of NGL's cash flow will remain operating even in a long lower oil price environment. But cutting today enable NGL to pay down debt and buy back stock. That is simply the best use of cash today. Forget growth projects.

    Who cares if the stock tanks again? (I don't think it would, it might even go up) The stock is already in the pits. It is time for management to buckle down and fix the balance sheet. Otherwise in a lower for longer scenario NGL could run into real liquidity issues.

    I'm am looking at this like the Teekay complex (TOO, TGP). These are amazing buys now after the 80% cut. They can self fund all the growth they want and delever and do so without issuing equity. In 3 years these stocks will restore even higher distributions. Same with KMI.

  • twfry_2001 twfry_2001 Feb 19, 2016 6:50 PM Flag

    "Could be that was overly optimistic. If you read the section on the Marcellus gathering business, that now sounds like wishful thinking."

    What about the MVC's? I thought that was what the worst case was based on, Antero is still operating so those MVC's still apply. Right?

  • twfry_2001 twfry_2001 Feb 18, 2016 12:40 PM Flag

    Basically the worked out the deal over the summer of 2015 when it looked to be a fair deal. Finalized it in the fall when it wasn't as great of a deal but they worked through and found $400M in synergies that it still seemed reasonable. Then after the deal was finalized the market went to hell and the deal started to look a lot worse.

    The deal may be closing today, but it was really done in the early fall / late summer in 2015 when it looked better.

  • Reply to

    If you are long on ETE then you must buy PUT.

    by harveykoff Feb 16, 2016 10:32 AM
    twfry_2001 twfry_2001 Feb 16, 2016 4:11 PM Flag

    They have a 5.5% loan with an option to extend it to 3 years. They also have a temporary covenant increase to 7.0x for a year. By the time these expire ETE will be making significantly more cash through the export terminals. ETE might temporary reduce the dist for a year or two to lower leverage, but they don't have to, and we are looking at a $2/share dist by 2018/19.

  • Reply to

    New terms of Deal

    by polygeo200 Feb 12, 2016 8:00 AM
    twfry_2001 twfry_2001 Feb 15, 2016 1:17 PM Flag

    Source? They have made no statements there will be an announcement on Monday and Wells Fargo just published they believe the deal will go through as-is (and work out fine).

  • Reply to

    Want to turn a $2 bill into $5.35??

    by lan_wan_man2003 Feb 14, 2016 8:09 PM
    twfry_2001 twfry_2001 Feb 15, 2016 1:07 AM Flag

    SXL is expected to double the distribution over the next 5 years, this is why. And all of those distribution increases feed more and more to ETE.

  • Reply to

    Will this POS ever come back to 32

    by gqgerb Feb 11, 2016 3:49 PM
    twfry_2001 twfry_2001 Feb 15, 2016 1:02 AM Flag

    Most of EPD's customers are utilities and other domestic users of natural gas. Just about every user of natural gas touches EPD somewhere along the line. Oil could stay at $10 for years and EPD would still be a cash cow, the only way that changes is if the US stops using natural gas. This is not happening in my lifetime.

  • Reply to

    New 8k

    by pfapooh Feb 12, 2016 7:07 PM
    twfry_2001 twfry_2001 Feb 12, 2016 7:58 PM Flag

    It takes years of planning to merge entities such as this. Kinder did it only after talking about it for years. He even recommended KMR was a better deal that KMP, and you know what it was. During the merger KMR has zero tax consequence while KMP got hit hard.

    The div cut at KMI also had nothing to do with the merger. Post merger Kinder went on a buying binge and took debt way too high. The credit markets called him on it and he slashed the div for 2 years to pay down debt. After 2 years the div will go right back to where it was and then some.

    A merger of the ETE family would be great in the long term. I had EPD, EPE and something else in the family and the merge has been fantastic there.

    Also in my experience the GP usually gets a better deal. This was true for EPD/EPE, true for KMI/KMP/KMR, is true today for TRGP/NGLS.

    Basically what happens is the LPs take a div cut in return for higher growth over time. This enables the combined entity to pay out less in distributions then it did before and use the extra cash flow to grow.

  • Reply to

    1.35 X EBITBA ?

    by gmax97 Feb 11, 2016 3:13 PM
    twfry_2001 twfry_2001 Feb 11, 2016 7:54 PM Flag

    And usually acquisition prices go for around 10x EBITDA in this space....

  • Reply to

    1.35 X EBITBA ?

    by gmax97 Feb 11, 2016 3:13 PM
    twfry_2001 twfry_2001 Feb 11, 2016 6:06 PM Flag

    What is crazier is NGL is one of the few midstream with growth still expected. Wells Fargo recently updated their EBITDA forecasts and they had NGL as one of the ONLY midstreams growing and forecasted $650M EBITDA in 2017. That puts NGL's market cap at less than 1x EBITDA in 2017.

    I have never seen something so low. I could understand if they had a critical debt issue, but they don't. They don't even have to access any public funding for 1.5 years. By then oil will be higher again and worse case is NGL holds the distribution flat and pays for projects out of excess cash flow.

    Looking at NGL's businesses, so are at risk but some are OK. For example in propane they are paid on the margin of retail over wholesale, this margin actually INCREASED in the last quarter because wholesale price fell so far.

    Is retail propane going away? No. This and a decent chunk of other cash flow is mostly OK, and selling for