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Elliott Gue  

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  • American Midstream Partners LP: Be Cautious, Yield Moths! [View article]
    We do expect more consolidation in the midstream space, in the near term focusing on the greatest pain points: gathering and processing and exploration and production companies looking to raise cash by monetizing their midstream assets.

    Comments from likely consolidators suggest better values will emerge once the market has a better understanding of the volumetric risk at play. Brookfield Infrastructure Partners (NYSE: BIP), which reported has raised about $8 billion to deploy in energy assets, asserted that the market has yet to price in the risk associated with gathering and processing names that have acreage dedications but lack firm, take-or-pay agreements.

    Williams Partners' management team highlighted the volumetric risk in basins that rely heavily on natural gas liquids to bolster rates of returns.

    As for DPM shining light on the health and direction of the midstream space, much of the attention will focus on the restructuring of its general partner, which holds assets that entail significant commodity risk. At least for now, less attention will be paid to DPM's hedge position, which declines dramatically in 2016.

    I don't make a habit of responding to questions on Seeking Alpha because I'm usually doing research or writing for my newsletters; I post excerpts from our content on this site to raise awareness of our products. You can draw your own conclusions based on what you see here.
    Feb 24, 2015. 08:31 AM | 3 Likes Like |Link to Comment
  • Linn Energy, LLC: Why There's More Downside To Come [View article]
    No, they aren't impacted. Linn hasn't even yet done its first deal using the Blackstone financing.
    Jan 17, 2015. 10:29 AM | Likes Like |Link to Comment
  • Linn Energy, LLC: Why There's More Downside To Come [View article]
    Linn has hedged 100% of its gas production for 2015 and 2016; however, this excludes some volumes of gas produced in Califonia that it does not hedge. This California gas isn't sold but is used internally by Linn to produce steam that is used in its heavy oil production in the Golden State (steam flooding).

    So, they're producing 650, hedging roughly 525 and using the difference for steam flooding.

    I hope that helps.
    Jan 17, 2015. 10:27 AM | 10 Likes Like |Link to Comment
  • Drilling Into Transocean Partners LLC And Seadrill Partners LLC [View article]
    Russia may wish to drill their Arctic acreage but it's going to be expensive and probably doesn't make sense at current oil prices.

    Also, keep in mind that most of the world's deepwater drilling activity (and hence demand for floating rigs) is focused on what's called the "Deepwater Golden Triangle," which includes offshore Brazil, the US GoM and offshore West Africa.

    I really don't see Russia bailing out the floater market over the next 2 to 3 years.
    Nov 13, 2014. 05:39 PM | Likes Like |Link to Comment
  • Drilling Into Transocean Partners LLC And Seadrill Partners LLC [View article]
    Hi Rob,

    Thanks for the comment and question. Yes, that's a risk but it wouldn't make much sense for Seadrill to do that.

    Seadrill continues to own more than a third of Seadrill Partners. In addition, like most MLPs, Seadrill (as the general partner to the MLP) receives what are known as Incentive Distribution Rights (IDRs) from the MLP. To make a long story short, IDRs are calculated based on distributions paid to LP unitholders so they offer an incentive for Seadrill take actions that result in steady growth in distributions to LP unitholders.

    If you pay attention to the IDR structure for MLPs it gives you a pretty good idea how quickly the partnership's distributions are likely to grow.

    I hope that helps.
    Nov 13, 2014. 05:36 PM | 1 Like Like |Link to Comment
  • Drilling Into Transocean Partners LLC And Seadrill Partners LLC [View article]
    I have never seen this website nor do I post articles to it. The company affiliation listed there is incorrect.

    I have been recommending investors sell Seadrill for over a year now.
    Nov 11, 2014. 02:48 PM | 2 Likes Like |Link to Comment
  • Drilling Into Transocean Partners LLC And Seadrill Partners LLC [View article]
    Thanks for the comments. Whenever you write a bearish article on a stock, you'll get more than your fair share of negative comments (and some personal attacks) as was the case with my two previous articles on parent Seadrill (SDRL) linked in the article above.

    I welcome negative comments and different opinions. In fact, I addressed many of the comments on my September Seadrill article in a follow up piece on the same stock in October.

    You'll find that knowing which stocks to avoid can do as much or more to help your overall returns than knowing which stocks to buy.

    Just to reiterate and remove any ambiguity, I do NOT think Seadrill (SDRL) is a good buy here. Seadrill, like most deepwater drillers, topped out more than a year ago and many investors don't understand the fundamental drivers of the downturn.

    I covered the headwinds facing the industry at length in the two Seadrill articles on Seeking Alpha referenced in this article. Just to review, the major integrated oil companies -- firms like Total, Shell, BP and Exxon -- are the main drivers of deepwater drilling activity and investment. Towards the end of 2013, these firms began to announce plans to rein in or, at least, slow the growth of their CAPEX budgets for 2014.

    Deepwater CAPEX boomed coming out of the financial crisis and a shortage of rigs pushed up day-rates to the extent that it was impacting the profitability of deepwater projects. The big oils appear to be taking a pause to evaluate the success of their deepwater programs and focus on cash flow rather than production growth.

    This decision had little to do with oil prices as budgets were coming down long before the recent drop in crude. It also had nothing to do with Russia or sanctions.

    At the same time, a number of new deepwater rigs are scheduled to come out of shipyards over the next two years and other rigs are due to come off long-term contracts. These rigs will likely have to accept lower day-rates to find work.

    The recent drop in oil prices happens to coincide with a period when many large integrated energy firms are working on their budgets so that's not going to help matters for the group.

    The outlook for deepwater drillers in 2015 already looks bad and the longer oil prices remain at current levels, the more likely it is the downturn will persist well into 2016.

    I don't recommend any of the deepwater drillers -- Seadrill, Ensco, Diamond, Transocean included -- until we see some signs of a stabilization in this market. That might include rigs being put into storage (coldstacked) or scrapped, helping to balance supply and demand. I'd also like to see investor sentiment turn on the group -- there are far too many people looking to buy the dip or that are attracted to Seadrill's sky-high yield.

    My opinion on this group has not changed and I do NOT rate Seadrill a buy anywhere. I've been advising investors to switch out of Seadrill into Seadrill Partners for the reasons I outlined in the article above; since the beginning of this year, Seadrill Partners has outperformed Seadrill by 23.8%.

    As I noted in the article above, investors tend to throw out the proverbial baby with the bathwater in the short-term, selling SDLP when SDRL gets hit. This is an opportunity.

    I've spilled a great deal of ink on Seadrill and the deepwater space in free articles on SeekingAlpha and elsewhere. I have addressed many of the bulls' key arguments on the stock. I believe my record on the deepwater drillers speaks for itself.
    Nov 11, 2014. 02:42 PM | 6 Likes Like |Link to Comment
  • Our Take On Enterprise Products Partners LP's Acquisition Of Oiltanking Partners LP [View article]
    NS is under new management. Former CEO Curtis Anastasio left (he's now CEO at GLOP). New management appears to have their heads screwed on straight and have a credible plan. Dock space makes NSH a potential takeover candidate. Investing is about looking at future, not past.
    Oct 6, 2014. 08:34 AM | 2 Likes Like |Link to Comment
  • 4 Key Takeaways From The Year's Biggest Acquisition In The Energy Patch [View article]
    The article makes no mention of holding ACMP. One rationale for doing so would be that the terms of the merger with WPZ might be sweetened.

    At this stage, we'd prefer to own WMB, which benefits whether or not the proposed WPZ-ACMP tie-up goes forward. We cover every energy-focused MLP at EnergyAndIncomeAdvisor...
    Jul 23, 2014. 10:05 AM | 1 Like Like |Link to Comment
  • Arc Logistics Partners: Near-Term Upside Catalysts, Longer-Term Questions [View article]
    Initial reaction: Move provides potential to move crude oil to West Coast refinery complex. Obviously, need to dig into this a bit more to develop a more nuanced opinion.
    Jan 23, 2014. 08:40 AM | Likes Like |Link to Comment
  • Dynagas LNG Partners LP: A Dynamite Investment? [View article]
    No, actually the webinar recording is free of charge.
    Dec 27, 2013. 04:12 PM | 3 Likes Like |Link to Comment
  • Icahn's Activism Prompts Transocean To Raise Dividend, But There Are Other Contract Drillers In The Sea [View article]
    One point I'd bring up is that Seadrill has actually been fairly innovative in its use of debt and asset sales so that it can continue to grow while still paying out a sector-leading dividend.

    Currently, roughly three-quarters of its outstanding debt is secured, basically a sort of mortgage on the company's rigs. This allows the firm to raise capital cheaply to fund expansion.

    I also like Seadrill's use of the MLP structure (SDLP) to essentially monetize the value of some of its rigs that are booked under long-term contracts.
    Nov 22, 2013. 10:34 AM | 4 Likes Like |Link to Comment
  • Updated Outlook For Crude Oil [View article]
    My colleague Roger Conrad is a real expert when it comes to the Canadian names. He just wrote an article on Seeking Alpha that covers PGH:
    Nov 18, 2013. 03:05 PM | Likes Like |Link to Comment
  • Salute Your Drillmasters: Gains In Drilling Efficiency A Boon For Oil-Field Service Providers And Oil And Gas Producers [View article]
    It's truly a revolution underway.

    I think it's also fascinating to think that the US has no need to import light, sweet crude oil into the US Gulf Coast as of the end of this year. Also, the US is likely to overtake Saudi Arabia and Russia later this decade to become the world's largest oil producer.

    And then there are the repercussions for other industries. For example, it's now cheaper to produce base chemicals and plastics in the US than the Middle East due to just how cheap US supplies of natural gas liquids are at this time.
    Nov 18, 2013. 02:30 PM | 4 Likes Like |Link to Comment
  • Salute Your Drillmasters: Gains In Drilling Efficiency A Boon For Oil-Field Service Providers And Oil And Gas Producers [View article]
    There's a link to a video of Patterson's walking rigs in the article above. If you look at the picture of a pad drilling operation in the article and then look down about three lines below that you will see the word "video" hyperlinked. Click there and it'll take you to the video on Patterson's site.

    It can be a bit difficult to see in the text above since video is a small word to be hyperlinked.

    Nov 18, 2013. 02:28 PM | Likes Like |Link to Comment