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  • Will Memorial Production Partners Suspend Its Distribution? [View article]
    I don't get this article at all.

    MEMP has already said they can cover their distribution even if oil remains at the current level for the whole year.

    MEMP also has $1.1 billion availability on their credit facility. Why on earth would they be repaying debt at this point? If anything they should be acquiring some producing properties on the cheap.
    Dec 18, 2014. 10:35 AM | 2 Likes Like |Link to Comment
  • Penn West Cuts Dividend 80%, Now Yields 6% [View article]
    I am soooo glad I took a huge loss on this stock when it was at $10. At this point you'd think XOM would just buy PWE. It only costs a little more than a couple of ultra deepwater drilling rigs.
    Dec 18, 2014. 01:18 AM | 4 Likes Like |Link to Comment
  • Kinder Morgan And The Good, The Bad And The Ugly Truth Regarding Falling Oil Prices [View article]
    Josh has it right. Kinder is the second largest OIL producer in the state of Texas. It accounts for around 20% of their margins. It is not minute or inconsequential. The NGL exposure is on top of that.
    Dec 16, 2014. 11:37 PM | Likes Like |Link to Comment
  • Oil & Gas Stocks: Pain, Then More Pain... When Is The Gain? [View article]
    "BrightBurn" energy partners. Very funny!
    Dec 14, 2014. 06:18 PM | 3 Likes Like |Link to Comment
  • Hedge Your Upstream MLPs By Shorting SRF [View article]
    Ford,

    It doesn't really matter when you got the NAV from Cushing. The PM or whoever you talked to you gave you the last publicly disclosed NAV, which was from 12/03.

    You can easily see on the CEFconnect site that $11.80 was the NAV on 12/03 not 12/05:

    "As of 12/5/2014. NAV as of 12/3/2014."

    So yeah there's a big "discount" if you use the NAV from almost a week ago. But guess what, the NAV is a whole lot lower today.
    Dec 8, 2014. 05:58 PM | Likes Like |Link to Comment
  • Hedge Your Upstream MLPs By Shorting SRF [View article]
    Ford,

    $11.80 was the NAV at the close on 12/3 not 12/5. Please read the article where I say that they only update the NAV once a week (on Wednesday)

    Also note the CEFConnect page

    http://bit.ly/1ypFSVW

    ("NAV as of 12/3/2014.")

    Do you know what the underlying stocks did between 12/3 and 12/5?
    MCEP dropped 18% (!), BBEP dropped 11%. LINE dropped 9%. And so on.

    So no, SRF is not trading at a discount at all. It's still trading at a premium, though that premium has declined significantly since I wrote this article. Again because SRF does not update the NAV daily like most responsible CEFs, it's hard to say. But I would guess the premium is still between 5-10%.
    Dec 6, 2014. 11:08 AM | Likes Like |Link to Comment
  • Hedge Your Upstream MLPs By Shorting SRF [View article]
    j0nx,

    I think that could work. However, you should note

    1) The SRV premium is chronically high -- its 5-year average is 21%. So the current premium may not be as stretched as you think

    2) SRV is a much, much older CEF (8 years vs. 2 for SRF). As CEFs age, the MLPs' deferred tax liability piles up and is deducted from their NAV. So for very old MLP CEFs, the NAV reflects a tax liability that will never be paid (or at least not for a long time). So the published NAV can greatly understate the actual asset value.
    Dec 4, 2014. 04:57 PM | Likes Like |Link to Comment
  • Memorial Production Partners A Stock Yielding 18% With Little Commodity Risk [View article]
    Elliot,

    In the last webcast (BAML, Nov 13), I heard him say 1X coverage down to $62 oil (it was in the QA near the end). I did not hear a gas price.

    It would be a little silly to discuss a $60 oil and $4 NG price deck, since the oil would be at the very bottom of the consensus price range and the NG near the top. $60/$3 makes more sense, since it describes a worst case for both.
    Dec 3, 2014. 03:52 PM | Likes Like |Link to Comment
  • Hedge Your Upstream MLPs By Shorting SRF [View article]

    "However, it contanis oil producers, not the midstream MLPs."

    Please look at the title of the article again. I proposed SRF as a hedge for UPSTREAM MLPS (i.e. oil producers) not midstream MLPs. It is an excellent hedge since it contains precisely the companies that I want to hedge for, just at a premium of 20%.

    Actually, the premiums is now less than 20% because SRF is down 7-8% while most of the constituent companies (MEMP, LINE, etc.) have jumped -- 5-10% just today.
    Dec 3, 2014. 02:34 PM | Likes Like |Link to Comment
  • Hedge Your Upstream MLPs By Shorting SRF [View article]
    You're only on the hook for that distribution if you hold past the ex-div date. But even that's a pretty good bet, because every time it has paid a dividend the stock has dropped by the dividend amount or more.

    In any case, I will only short while it sports a substantial premium.
    Dec 2, 2014. 05:20 PM | Likes Like |Link to Comment
  • Memorial Production Partners A Stock Yielding 18% With Little Commodity Risk [View article]
    What do you base that on? DCF is projected to cover distribution by 1.05 or better at current oil prices in 2015.
    Dec 2, 2014. 12:21 PM | 3 Likes Like |Link to Comment
  • Memorial Production Partners A Stock Yielding 18% With Little Commodity Risk [View article]
    From the 10K:

    "All of our derivative contracts are with major financial institutions who are also lenders under our revolving credit facility. We have rights of offset against the borrowings under our revolving credit facility."

    In other words, if the counterparty defaults on the hedge, MEMP doesn't have to pay back the money they've borrowed.

    In any case, I only know of one case of default on MLP hedges, and that was Lehman/LINE. As it turned out, LINE actually got a lot of the money back anyhow.
    Dec 2, 2014. 09:17 AM | 4 Likes Like |Link to Comment
  • Memorial Production Partners A Stock Yielding 18% With Little Commodity Risk [View article]
    I heard the statement about maintaining full coverage at $60 oil. But it's actually much better than that, because their analysis doesn't factor in the lower costs and taxes associated with lower oil prices. One major brokerage analyst thinks they could have full coverage with $55 oil if you factor those in.

    I think the stock will make it back to $17 long before the next quarter is "under their belt." In fact, there are two things that could send it well beyond that in short order:

    1) Production update
    2) Switch from quarterly to monthly distributions

    I think both of these are likely. #2 shouldn't really make a difference in the stock price. But somehow it has a psychological effect on investors -- giving them peace of mind between quarterly reports.
    Dec 2, 2014. 09:04 AM | 3 Likes Like |Link to Comment
  • Sell Linn Energy, The Distribution Is Unsustainable [View article]
    No they don't exactly ring a bell. Rather, a certain James K. writes an article about how it's a Ponzi scheme and its going to go down even further. From that point, it heads back up.
    Dec 1, 2014. 07:07 PM | 3 Likes Like |Link to Comment
  • Linn Energy: Cutting Distributions And Capex May Be A Wise Strategy [View article]
    Correction: the market cap is $2 billion for LNCO, not LINE. LINE has a market cap of around $6 billion. LNCO has 0 debt -- it actually has net cash.
    Dec 1, 2014. 06:03 PM | 5 Likes Like |Link to Comment
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