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Elliott Gue  

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  • Solid As Granite: Chesapeake Trust Ramping Up Distributions [View article]
    CHKR provides distribution projections for the trust through its termination date. To calculate fair value I typically calculate the net present value (NPV) of all future cash flows. I tend to look at a conservative case (lower distribution projections, higher discount rate) a base case (moderate distribution projections and a slightly lower discount rate) and an aggressive case (higher cash flow projections and a lower discount rate). To give you an idea of how this works, I offer a free article showing how I value Whiting USA Trust II here ($WHZ): http://bit.ly/HdKRQh

    As for $CHKR my base case valuation is about $25. I actually recommended selling some to readers of Energy Strategist when it was trading in the $27 to $30 area earlier this year as to get to that valuation, one had to make some heroic assumptions in terms of commodity prices or accept a discount rate of well under 5 percent annualized. At current prices I do think it's a buy.

    And, yes, I am also talking my own book.

    Disclosure: Long $CHKR
    Apr 23, 2012. 05:13 PM | Likes Like |Link to Comment
  • Big Opportunity In Big Oil: Total [View article]
    My publisher has a policy preventing me from buying a stock I recommend for a period of 30 days after I recommend it in The Energy Strategist. This recommendation is still within that window; therefore, I don't yet own Total $TOT.
    Apr 22, 2012. 12:14 AM | 5 Likes Like |Link to Comment
  • Solid As Granite: Chesapeake Trust Ramping Up Distributions [View article]
    Thanks for the kind comments about my articles. The April 18th Reuters article about Aubrey McClendon's loans doesn't change my opinion on $CHKR (or $CHK for that matter) in the least. I really don't think this was much of a revelation; we've known about the CEO's deal to acquire a piece of $CHK's wells for years and his contract doesn't prevent him from taking out loans based on his personal holdings. I really don't see how this represents a conflict of interest or anything scandalous or improper.

    The article that sparked all of this appears to be just dredging up old news. McClendon has always been a controversial CEO--people seem to love him or hate him--so this article is just playing into those sentiments.

    I don not currently recommend Chesapeake common stock in my newsletter, the Energy Strategist, due mainly to the fact that I don't like their exposure to natgas prices. That said, I do think they're executing well on their plans to dispose of assets and raise capital to help fund their development plans. I do recommend Chesapeake's preferred shares in the newsletter and am happy holding onto those.

    I don't think this has any impact on $CHKR. In fact, I have recommended $CHKR as a buy only on dips under $25; I recommended taking profits back in late February/early March when its valuations ran out of control. So, yesterday marked the first time since late January where I considered $CHKR a buy candidate. I see this as a buying opportunity.

    Disclosure: Long CHKR and CHK Preferred D
    Apr 19, 2012. 04:01 PM | Likes Like |Link to Comment
  • Penn Virginia Resource Partners: Much To Like About This Low-Risk, 8 Percent Yielding LP [View article]
    Hi David--

    Thanks for the comment and for subscribing.

    I in no way interpreted your prior post as an insult. I value comments to my articles and the conversation here on SA.
    Mar 31, 2012. 01:12 PM | 1 Like Like |Link to Comment
  • Penn Virginia Resource Partners: Much To Like About This Low-Risk, 8 Percent Yielding LP [View article]
    Thanks for the kind words, it's always appreciated.
    Mar 30, 2012. 11:31 AM | 1 Like Like |Link to Comment
  • Penn Virginia Resource Partners: Much To Like About This Low-Risk, 8 Percent Yielding LP [View article]
    It seems to be reacting to the negative newsflow about natural gas prices in that ultra-low gas prices will tend to drive more gas use and less demand for coal.

    What I believe is way under-appreciated is the partnership's midstream energy business which is likely to be the source of nearer term distribution growth. If you look at a long-term chart of this name you will see that, like many MLPs, it does see these periodic bouts of extreme volatility. Often these have proved to be opportunities.

    I'm not changing my view on this one.

    Disclosure: Long PVR
    Mar 30, 2012. 11:16 AM | 1 Like Like |Link to Comment
  • Worried That The Market Is Overbought? Play Defense With Kraft Foods [View article]
    Thanks for the comment. I actually recommend Nestle in my Personal Finance newsletter as well so I agree with you that it's a good play. That said, I think Kraft's proposed split probably means that KFT has more upside catalysts this year.
    Mar 29, 2012. 03:11 PM | 1 Like Like |Link to Comment
  • Recent MLP IPO LRR Energy Yields Nearly 10% At Current Prices [View article]
    Thanks for the comments. This illustrates precisely why I pay so much attention to IPOs of Master Limited Partnerships (MLPs), US Royalty Trusts and other income-paying securities. Websites like Yahoo Finance and most brokerage sites only show a company's actual historical payouts. To calculate yield, sometimes these payouts are annualized and sometimes they simply show the yield based on a single quarterly payout.

    In the case LRE, Yahoo Finance is showing an annualized payout of 0.928 which is based on their January 27 dividend of $0.232 annualized ($0.232 x 4 equals $0.928). But as Borderite points out that first dividend payout was based on just part of a quarter.

    This opens up a huge opportunity. If you look through the actual S-1 filings of LRE or other new IPOs with the SEC, they lay out precisely what they intend to pay. You can often pick up new IPOs offering very attractive yields long before the crowd realizes their full income potential. When the yield figure starts to show up correctly on other financial websites, interest in the security picks up.

    A classic case of this was when Seadrill (SDRL) listed in the US for the first time back in 2010. I recommended the stock at the time due in part to the quality of their fleet and to their intention to offer a double digit (at the time) yield. It took six to nine months before that yield started to show up on financial websites correctly. It was a great opportunity to get in.

    Disclosure: Long SDRL
    Mar 20, 2012. 11:42 AM | 3 Likes Like |Link to Comment
  • Teekay LNG Partners LP: Investors Overestimating Risk [View article]
    Thank you Don P. That is/was exactly my intent in the article. I actually regard TGP as a relatively low-risk MLP thanks to its long term charter coverage. But, it's yield is above average for the industry, which suggests that investors believe it's riskier than is actually the case.
    Mar 19, 2012. 07:10 PM | 1 Like Like |Link to Comment
  • Teekay LNG Partners LP: Investors Overestimating Risk [View article]
    LNG carriers aren't a bad neighborhood. As another commenter noted, you can't carry LNG on crude oil tankers and the supply of LNG carriers is tight. The orderbook for newbuild LNG carriers is also not sufficient to keep pace with demand over the next few years so I don't see a glut emerging near term.

    This is why LNG carrier dayrates have been setting new all-time record highs even as tanker rates plumb multi-year lows.
    Mar 19, 2012. 07:06 PM | 2 Likes Like |Link to Comment
  • Growth In Deepwater Drilling: Ensco [View article]
    Thanks for all of the great comments on this article. While I agree with some of the comments about Transocean (RIG) being a decent value here, the fact is that the company has been a laggard compared to names like Ensco (http://bit.ly/Gztvwv) and Seadrill (http://bit.ly/u1d6zb).

    Some of this underperformance is due to a "Macondo" discount but RIG has also had its share of operational issues including the cancellation of a contract in Malaysia due to rig issues and generally higher-than-expected rig downtime over the past few quarters. The company also recently suspended its dividend; RIG had paid out $0.79 per quarter over the past four quarters.

    I think RIG will perform reasonably well as the offshore contract drilling market tightens, particularly for deepwater rigs but I just prefer other names. My favourites are Seadrill (http://bit.ly/u1d6zb), a high-yield name I have written about repeatedly on Seeking Alpha over the past few years, Ensco (http://bit.ly/Gztvwv) as highlighted above and Pacific Drilling (http://bit.ly/GztvMR), a relatively new IPO. As one reader commented above, PACD has a couple of new drillships due to enter the market that I think will garner impressive dayrates.

    Disclosure: Long SDRL
    Mar 19, 2012. 07:01 PM | Likes Like |Link to Comment
  • Penn Virginia Resource Partners: Much To Like About This Low-Risk, 8 Percent Yielding LP [View article]
    Another point of differentiation is that NRP has more exposure to metallurgical coal (the type of coal used in steel-making). Met coal accounts for about 20% of reserves.

    Also, another coal MLP worth watching is Alliance Resource Partners (ARLP) and its General Partner, Alliance Holdings GP LP (AHGP). This firm has more exposure to the Illinois Basin. The IL Basin is interesting because it's mainly high sulfur coal, which has traditionally had a limited market. But, as more scrubbers are being installed on US coal plants the potential market for IL Basin coal is expanding.

    I am Long AHGP
    Mar 19, 2012. 06:40 PM | 1 Like Like |Link to Comment
  • Starved For Income: Where To Find Income In Today's Low Interest Rate Environment [View article]
    It's hard to argue with 30 consecutive quarterly distribution hikes. $EPD is just remarkably consistent
    Feb 29, 2012. 09:42 AM | 1 Like Like |Link to Comment
  • 4 Recent IPOs To Watch [View article]
    Thanks for the comment. Yes, you're quite right it's Noble Energy (NBL) not Noble Corporation (NE) I was referencing in the article. I just wrote up a piece on deepwater contract drillers so I guess I still had NE in my head.
    Feb 22, 2012. 08:46 PM | 1 Like Like |Link to Comment
  • Making Sense Of North America's Shale Oil And Gas Future [View article]
    Thanks for all the great comments. A few points:

    1. Yes, I believe that one of the plays on the US unconventional gas (and oil) boom is infrastructure -- the pipelines, processing plants and storage facilities needed to take gas from the field to the burner tip. In many cases, the companies or Master Limited Partnerships (MLPs) building these lines sign up producers as customers long before they begin construction. Fees charged don't depend on commodity prices and part of the fee structure is a capacity reservation charge that must be paid whether the pipe is actually used or not. A very stable, cash generative business that can back up impressive dividends/distributions.

    2. Be careful of the natural gas storage market. If storage facilities are booked under long-term deals and supported by capacity fees, the business can be solid. But demand for gas storage can also be driven by volatility in the natural gas market and the summer/winter price spread. For example, if prices tend to be low in summer and high in winter a company can purchase gas, store is and then sell it in a sort of seasonal arbitrage. Using futures these profits can actually be locked in. The boom in shale gas production has not only pushed prices lower but has also reduced volatility and seasonal variations in gas prices. The market is, in effect, permanently oversupplies. This has really hurt storage levered companies like PNG and NKA.

    3. US consumers aren't being ripped off in my view by the utilities or anyone else. In fact, quite the contrary, it's not widely appreciated just how good shale oil and gas production is for parts of the US economy. I went to the UK late last year and one of the stories dominating the airwaves was the fact that many customers were seeing massive increases in their electricity rates forcing people to take all sorts of measures to conserve power. Rates in some cases were up 30 or more percent over the past year due, in large part, to the soaring cost of natural gas in Europe. Meanwhile, across the Pond in the US electricity prices are actually falling.

    And, look at US-based chemicals companies like Eastman (EMN) and Dow (DOW). These firms are benefiting handsomely from the increased availability of natural gas liquids (NGLS) used in petrochemicals production. US chemical production capacity is being re-started and capacity expansions are underway because it's actually cheaper to produce certain chemicals in the US than it is in the Middle East.
    Feb 18, 2012. 05:46 PM | 3 Likes Like |Link to Comment
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