Recent Mergers Might Drive Vanguard Natural’s 4Q15 EBITDA
4Q15 Results Unlikely to End Vanguard Natural’s Ongoing Troubles
Vanguard Natural’s 4Q15 EBITDA estimates
Vanguard Natural Resources (VNR), an upstream MLP involved in crude oil, natural gas, and NGL (natural gas liquids) exploration and production, is expected to release its 4Q15 earnings on February 29, 2016.
In this series, we’ll talk about VNR’s 4Q15 estimates, market performance, and analyst recommendations. Let’s start with analysts’ earnings estimates.
Wall Street analysts’ 4Q15 consensus EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate for Vanguard Natural Resources is ~$125.5 million. VNR’s 4Q15 estimate is flat compared to the 4Q14 reported adjusted EBITDA.
According to Wall Sreet estimates, Vanguard Natural Resources’ peers, Breitburn Energy Partners (BBEP), EV Energy Partners (EVEP), and Memorial Production Partners (MEMP) are expected to post YoY EBITDA growth of 25.9%, 8.6%, and -11.8%, respectively, in 4Q15 versus 4Q14.
Vanguard Natural’s 4Q15 EBITDA drivers
Vanguard Natural’s (VNR) 4Q15 adjusted EBITDA might continue to grow despite the huge YoY drop in crude oil, natural gas, and NGL prices. The partnership’s 4Q15 EBITDA growth is expected to be driven by the LRR Energy and Eagle Rock Energy Partners mergers completed in the fourth quarter.
On a comparable basis, VNR’s 4Q15 EBITDA is expected to be impacted by lower natural gas prices in 4Q15. Natural gas prices saw historical lows in 4Q15 due to the lower natural gas demand considering the warmer winters in 2015 compared to 2014 and growing natural gas stockpiles. Plus, the crude oil and NGL prices also touched record lows.
The above EBITDA measures are adjusted for impairment charges. Vanguard Natural recorded $491.5 million of impairment charges in the third quarter of 2015 due to the decline in commodity prices and the impairment charges might continue to grow in the fourth quarter.
Vanguard Natural’s adjusted EBITDA versus consensus estimates
Vanguard Natural (VNR) met its 3Q15 EBITDA estimate. The 3Q15 EBITDA estimate for VNR was ~$87.6 million while the adjusted EBITDA was ~$88.2 million, a marginal ~0.68% beat. We have to wait for the 4Q15 earnings release to see whether VNR beats or misses its 4Q15 EBITDA estimates. We’ll cover this in our post-earnings series for VNR once it reports its 4Q15 results.
VNR forms 3.37% of the First Trust ISE-Revere Natural Gas Index ETF (FCG).
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