I'd rather have no distribution if they can buy back debt at a discount. Income investors will be gone, but value investors will surge the stock price, then when they bring back a secure distribution only when the partnership can prove its worth.
Rest assured September is the last divy month. They need to use the money to buy back debt, hopefully at a discount. So LNCO/LINE has turned into a value stock based on the price of oil/ng. If they spend the next 2 years buying back debt they will survive.
As usual the attorneys are tweaking the paperwork.
No one can say anything until the ink dries.
So please, everyone, enjoy life over the weekend.
I'll be on my boat burning up some hydrocarbons for fun.
Okay. September is the last divy, then it converts to a value/growth play with DrillCo and AcquisitionCo as catalysts. It uses free cash flow to buy back its debt. Oil goes to 70 and ng to 4. Then what are shares worth?
It appears SA has shot themselves in the foot trying to maintain market share at $40 bo. They want to keep its welfare state intact. Now they produce 10MM bod. At $40bo they are grossing $400MM day or 146B a year. They are afraid to cut to 9MM bod and think they will lose $14.6B a year. However, if they cut 1MM bod the price would likely jump to $60 bo. So the 9MM bod will gross $197.1B clearly a better deal for them. But they think other producers will come on-line and fill the gap. So the saying has risen "longer and lower" in the oil patch. Ouch. But it is nice to hear Dennis Gartman turn bullish.
Somebody needs to read the Federalist Papers and maybe the 2000 Year Leap to understand government's real role.
MHR and its Eureka Pipeline system is in a great, hot area. Here's just one reason: Shell wants to build a plastics plant in Beaver County, Pennsylvania (nearby). If Shell goes through with it the gas MHR produces will be in big demand.
"Shell is evaluating the possibility of building a petrochemical complex that would include an ethane cracker with an approximate annual average capacity of 1.5 million metric tons of ethylene, three polyethylene units with a combined annual production of approximately 1.6 million metric tons, and facilities for power and steam generation, storage, logistics, cooling water and water treatment, emergency flare and offices. For commercial reasons, we do not share capital investment information. Shell looked at various factors to select the preferred site in Beaver County, Pennsylvania, including good access to liquids-rich (Marcellus and Utica) gas resources; water, road and rail transportation infrastructure; power grids; economics; and sufficient land to accommodate the facility while providing a buffer from our neighbors."
The big money looks into the future for real growth.
Compare a 2 year chart of MHR versus EGY, both decimated, but EGY has no net debt, in fact about 50 million cash-in-hand. Both MHR & EGY follow down the same chart. The energy market sucks right now plain and simple. Only investors with longer courage & determination are buying. "Longer and lower" is the new mantra in the energy field. IMO - MHR has catalysts that make this a better buy then EGY.
I saw talk that an oil price drop into the 30's was needed to force production lower to 'balance' supply and demand. Then price would head to the 60's in 2016.
Worse, IMHO, Dr.Cu points to a recession coming that could put longer downward pressure on oil.