TALK ABOUT ANAL RETENTION!
A ONE TENTH OF ONE CENT PAYOUT HIKE!
A ONE TENTH OF ONE CENT PAYOUT HIKE!
If you are a holder of E V Partners i have to put this question. Where are you planning to spend the one tenth of one cent extra you will get on your distirbution (10 cents for every 100 shares)? You have to love a company that is so anal retentive that they can hike by a tenth of a cent!
A one tenth increase is better than this however. No surprise if you've been following this one. Hiland Partners (HLND) and Hiland Holdings (HPGP) are eliminating the distribution all together which puts them in violation of minimum payout covenants etc etc. They have an offer from Harold Hamm which he lowered (no surprise) for both the LP and the GP. Commodity price exposure has killed this mlp which once traded in the lower 60s.
We have Teppco earnings this morning and the company is also ex distribution this morning by 73 cents. The company says they were "pleased" with the results achieved under recessionary conditions.
Okay we are coming off a 3 point plus gain yesterday in MLPS while the marketst themselves closed lower on the day. And that gain also came in the face of energy stocks being weak so we are enjoying some postitive divergence here and i expect it to continue. 220-230 is my next upside target on the MLP index. That takes us back to an early November high from the October sell off.
Stock futures this morning are weak by 100 dow points as the markets focus on all sorts of distractions from financials failing stress tests to swine flu. Crude is down a buck as it follows equity.
joseph cioffi's Source Page - Associated Content
1 comment:
Here are some comments by M* from Justin Perucki and Eric Chenoweth, who attended the IPAA Confernence in New York on April 20-22, which was a meeting with a number of E&P as well as services companies.
Mixed views on the natural gas price. In general there was a lot of optimism for natural gas pr ices heading into 2010, though many expect severe weakness over the next 60-90 days. Bullish views were driven primarily by the dramatic pullback in drilling and completion activity that should allow the steep natural decline curve to bring down supply. Longer-term bullish views were driven by the continued trend of conversion of more and more power generation to natural gas, away from coal. XTO Energy XTO suggested that too much attention is being spent on the size of new discoveries instead of the role accommodative credit markets played in financing aggressive drilling over the past five years. Forced to live well within internal cash flows now, companies can only afford to drill at much reduced levels. Put another way, natural gas supplies can be abundant, but at an appropriate price. The price to develop the new shale plays is thought to be much higher than the current market price; many suggest $6 to $8 per mcf.
Bearish views suggested that a turnaround in gas prices could be postponed until later in 2010 or possibly 2011. Bears point to high present storage levels, high line pressures curtailing potential currently available production, a large supply of drilled and cased wells awaiting completion, greater LNG cargos hitting U.S. shores, and a weak economy suppressing industrial demand for gas longer. Nearly everyone seems to agree that the U.S. natural gas industry doesn't work at sub-$4 gas, and prices should eventually rebound once the decline curve rationalizes enough supply.
Banks are using a firmer hand when influencing firms' behavior. In exchange for maintaining borrowing bases, banks are forcing companies to shed assets, expand hedge positions, and issue equity--even at apparently better capitalized firms. Some firms have liquidated longer-dated deep-in-the-money hedges, paid down debt, and reestablished hedge positions at a l ower price level.
M&A trends still point to greater activity, weaker prices. Companies are largely split into two camps: those seeking greater liquidity, and those considering deploying liquidity. There are a lot of assets for sale, and a lot of leases are set to expire in 2010. Both of these factors are aiding potential bidders' patience. Better assets and terms are expected before the end of the year as sellers could become more desperate unless a natural gas price rebound materializes. The Helix Energy HLX package is a key one to watch near term in the Gulf of Mexico market.
Majors are hunting for shale assets. Many believe that the majors are looking very intently at the independents and the various shale plays. The intellectual flight following the ConocoPhillips COP, Burli ngton Resources acquisition has majors reticent to acquire an entire company, and many would prefer JVs or an asset deal. Access to capital and cost of capital advantage make the majors ideal financial partners in these highly capital-intensive, manufacturing-style shale plays.
Haynesville still a dominant conference topic for a second year. Of note, East Texas is less prolific than Louisiana but sports a flatter decline curve. East Texas is still early in this area of the play. Key well to watch: EOG's EOG (Petrohawk HK is also a 45% working interest partner) Gammage H well in Nacogdoches County, Texas - the western-most well drilled in the play to date. Results expected in Q1 calls. Smaller operators are moving up the learning curve, so expect better drilling results in near future.
New industry advocacy groups being formed to tackle larger political issues. Producers are joining together to educate the public and politicians about the industry and natural gas' key selling points--clean and local. General consensus that IDC tax deduction won't be repealed for independents, but expect some form of higher taxation down the road.
Costs are down big, but still have further to fall. Cost declines are in the ball park of 30%-50% across the country. Marcellus costs have been sticky due to higher activity levels relative to a smaller local services buildup, but are expected to fall through the course of the year as service capacity increases. Frac costs also holding up better and longer, but are expected to fall over 50% in coming quarters. Jack-up day rates in the Gulf of Mexico have reached as low as 1979 levels.
New lease terms very favorable relative to peak. Lower royalties (<15% vs. 25%) , longer terms (five to 10 years versus three years), and smaller bonuses ($300-$1,500/acre vs. $3,000-$25,000/acre) are making leases more attractive for E&P firms. Many desperate sellers (e.g., companies, landmen, and neighborhood groups) are pressuring the marketplace. Some talk of lease bonuses being amortized vs. being paid up-front.
Ron
Post a Comment