One of my favorite Energy MLP's reported earnings this week. Legacy Reserves (LGCY) beat on the top and the bottom line and this earnings report should bolster the positive case for this income vehicle over the coming months.
Earnings highlights for Legacy
- Distributable cash flow increased to $36.4 million in the first quarter of 2012 compared to $29.4 million in the fourth quarter of 2011.
- Legacy's general and administrative expenses were $6.5 million or $4.91 per Boe during the first quarter of 2012 compared to $8.5 million or $6.68 per Boe during the fourth quarter of 2011.
- Production increased 5% to 14,440 Boe per day in the first quarter of 2012 from 13,750 Boe per day in the fourth quarter of 2011.
- Both production and SG&A expenses came down in the quarter.
- Distributable cash flow per unit increased to $0.76 per unit in the first quarter of 2012 from $0.64 per unit in the fourth quarter of 2011.
Legacy Reserves - "Legacy Reserves LP, an independent oil and natural gas limited partnership, engages in the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Mid-Continent, and Rocky Mountain regions of the United States". (Business description from Yahoo Finance)
4 reasons the stock is a solid bargain for income investors at $28 a share.
- The stock yields just less than 8% and has raised distribution payouts some 35% over the last five years despite the financial crisis.
- Operating Cash Flow almost quintupled from FY2009 to FY2011.
- This quarter marked the fourth straight quarter that the company beat earnings estimates and analysts expect double digit revenue growth in both FY2012 and FY2013.
- The stock sells for around 7.5 times OCF. The median analysts' price target for the 8 analysts that cover the stock is $32.75 and Global Hunter Securities put an "Accumulate" on the stock in April.
Disclosure: I am long LGCY.