Dow down 150 but mlps down a little under 2 points which is nice. Sunoco Logistics (SXL) which made a new 52 week high yesterday is at another 52 week high today up 1 and some change and leading the winners list. Another MLP approaching a 52 week high is Suburban Propane (SPH) which is also up a small fraction today. Little by little repair work is getting done.
Coal MLPS Penn Virginia Resources (PVR), Penn Virginia Holdings (PVG) and Alliance Resource (ARLP) lead the losers list down major fractions to 1 point as we head into lunch time.
Took a look at Terra Nitrogen (TNH) which is sitting at 120 today up 2. This one to my surprise has held up so much better. You would think when the ag names got taken to the woodshed this one would have taken a hit...it did but it has gotten most of it back.
joseph cioffi's Source Page - Associated Content
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A note from M* Jason Stevens
Analyst Note 01-28-2009
There have been two separate announcements this week concerning new pipelines providing takeaway capacity for Haynesville Shale gas. Energy Transfer Partners ETP announced plans to build a large-diameter pipeline across the Haynesville Shale. The proposed Tiger Pipeline would have initial capacity of at least 1.25 billion cubic feet per day, of which roughly 80% is committed to Chesapeake CHK through a 15-year firm transportation agreement. Depending on shipper interest, Energy Transfer may increase the initial capacity to 2.0 bcf/d. If past projects are any guide, we'd expect that Energy Transfer obtained terms from Chesapeake that would provide for adequate, though not stellar, project economics. Energy Transfer would then seek to charge higher rates on uncommitted capacity to garner very attractive returns. Energy Transfer estimates that the project may cost anywhere from $1 billion to 1.2 billion, depending on ultimate capacity, and expects to have the pipeline in service by mid-2011. The capital expenditures would be heavily back-end loaded, so we do not believe Energy Transfer would need to tap capital markets in the near term specifically to finance this project. Given the company's strong track record building large-diameter pipes in East Texas over the past several years, we have little doubt Energy Transfer will be successful with its Haynesville project.
The same cannot be said for Regency Energy Partners' RGNC plans to expand its existing north Louisiana pipeline system. After downscaling its Haynesville Expansion Project in November to an undertaking of 1 billion cubic feet/day worth $650 million, Regency acknowledged today that securing funding for the project is the final hurdle. Unfortunately, funding has been the key hurdle since the original project was announced last September. If unsuccessful in funding the project, Regency would incur $230 million in purchase commitments with no offsetting revenue and would likely be forced to cut and/or suspend distributions. While we're not quite ready to assume this negative outcome for Regency, we note that in this eventuality, our fair value estimate would drop toward our low-case scenario.
As we consider our forecasts, a scenario in which the Regency pipe does not get built makes matters interesting for Haynesville producers. Existing takeaway capacity is effectively full, and as production ramps up during 2009, we are likely to see a pipeline constraint unless Regency's project comes online. Even with Regency's pipe, we think a lack of takeaway capacity is likely to constrain production beginning in early 2011, a constraint that would not be alleviated until Energy Transfer's Tiger pipeline enters service in mid-2011.
Ron
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