Albert Alfonso
Dividend investing, dividend growth investing, master limited partnerships, oil & gas

QR Energy: The Buyout Of The General Partner Is A Big Deal

Executive summary:

  • QR Energy has agreed to purchase QR Energy GP in exchange for 11.6M class B units

  • The units will be issued in equal installments over four years

  • Transaction is immediately accretive to 2014 DCF

  • QR Energy was one of the few upstream MLPs to have a GP, likely depressing its valuation

  • As a result, the stock should start trading inline with other upstream MLPs based on both yield and DCF multiple

As a long time holder of units in QR Energy (NYSE:QRE), I know that the stock had a bad reputation among the upstream MLPs. While the stock was cheap based on all relevant metrics, there was a clear overhang regarding its rather complicated "management incentive...

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