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- Master Limited Partnerships (MLPs) have sold off in the recent market correction.
- Oil has also sold off, creating a double blow particularly among upstream MLPs.
- For investors comfortable with the risks and hungry for yield, Legacy Reserves appears to offer an attractive entry point.
Legacy Reserves: RBC Capital's Top High Yield Upstream Play
- RBC Capital made Legacy Reserves their top pick in the oil & gas upstream space on Monday.
- Legacy has a proven record of production growth through strategic acquisitions that the company integrates efficiently to drive a consistent history of impressive growth.
- For investors comfortable with the tax complexities of master limited partnerships, Legacy's record of growth and over 8% yield are worth considering.
Legacy Reserves Makes A Bet To Change The High-Yield Upstream MLP Model
- Over the last few years, upstream MLPs have struggled to grow distribution rates.
- Legacy Reserves already stands apart with a history of quarterly distribution increases.
- The IDRs for production assets strategy may allow LGCY to double distribution growth to 6.5% per year, on top of the current 8.4% yield.
Legacy Reserves And Southcross Energy: 2 High-Yielders To Avoid
- Legacy Reserves and Southcross Energy are both high-yielding stocks with current yields just under 10%.
- Both companies have seen increases in revenue, but have been unable to translate those increases into realized returns.
- Both companies have seen negative earnings, as well as significant long-term stock price decreases.
IPO Analysis: Legacy Reserves Shows Proved Reserves
Wed, Oct. 29, 4:44 PM
Sat, Oct. 11, 8:25 AM
- Energy MLPs have been subject to indiscriminate selling this week as crude oil prices plunge, and while RBC Capital analyst John Ragozzino would not step into the sector in a big way right now, he thinks investors already in the group should ride out the storm - depending on their oil price exposure.
- Many energy MLPs, especially pipelines, are less correlated to commodity prices than other energy investments, but more MLPs with cyclical oil and gas price exposure are now part of the mix, and some investors have been selling without regard for the relative quality of specific stocks, Ragozzino says.
- The analyst believes there is minimal risk to reduction in 2015 distributions; with commodity price hedging, he thinks MLPs on average will feel some pain, but can handle oil prices as low as $80/bbl.
- Ragozzino says the MLPs most highly levered to a sustained drop in crude prices are MidCon Energy Partners (NASDAQ:MCEP), LRR Energy (NYSE:LRE) and Legacy Reserves (NASDAQ:LGCY); names least exposed include Atlas Resource Partners (NYSE:ARP), Vanguard Natural Resources (NASDAQ:VNR) and EV Energy Partners (NASDAQ:EVEP).
- ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP, MLPW, IMLP
Fri, Oct. 10, 10:55 AM
- In what's looking like at least a short-term capitulation move, investors are bailing out of upstream MLPs.
- Linn Energy (LINE -7.1%), BreitBurn Energy (BBEP -8.8%), EV Energy (EVEP -7.8%), Eagle Rock Energy (EROC -4.7%), QR Energy (QRE -8.1%), Legacy Reserves (LGCY -6.5%), Vanguard Natural Resources (VNR -10.3%).
- The JPMorgan Alerian MLP ETN (AMJ -2.9%) is down 12.4% over the last month.
- ETFs: AMLP, AMJ, MLPL, MLPI, MLPA, MLPN, EMLP, MLPX, MLPS, AMU, ENFR, ATMP, MLPW, IMLP, AMZA, OSMS
- Previously: Breitburn Energy shelves $400M high-yield bond offering
Thu, Oct. 2, 5:38 PM
Thu, Oct. 2, 4:55 PM
- Legacy Resources (NASDAQ:LGCY) -4% AH on news it plans to sell 10M units in a public offering, with an underwriters option to purchase another 1.5M units.
- LGCY says it intends to use the proceeds for general partnership purposes, including funding future acquisitions or repaying a portion of the borrowings outstanding under its revolving credit facility.
Mon, Sep. 29, 2:59 PM
- Legacy Reserves (LGCY +2.2%) is ranked as a Top Pick among upstream MLPs at RBC after the firm met with management at the recent Independent Petroleum Association conference; LGCY has extensive properties in the liquids-rich Permian Basin, and it maintains a strong hedging strategy in place to mitigate cash flow volatility.
- The firm rates Linn Energy (LINE +1.1%) at Outperform after a second large asset swap with Exxon that will bring an additional 300 drilling locations and bolsters the existing inventory and attractive production results experienced during H1.
- LRR Energy (LRE +1.4%) is rated only Sector Perform, but investors are paid a hefty 11.2% distribution even if the shares don't move.
Wed, Jul. 30, 4:38 PM
Tue, Jul. 15, 10:31 AM
- RBC points out in a new report that hawkish Fed commentary has tapped the brakes on MLPs to start Q3 after a strong first half of 2014, but the firm continues to view the fundamental backdrop for MLPs as highly attractive for investment.
- RBC's MLPs rated Outperform or better with the highest distributions: ARP, BBEP, ETP, LGCY, LINE, MCEP, QRE.
- ETFs: AMLP, AMJ, AMU, MLPL, MLPI, MLPG, ENFR
Wed, May. 7, 12:57 PM
- Legacy Reserves (LGCY +6.2%) is upgraded to Outperform from Neutral with a $30 price target at Baird following news of its strategic alliance with WPX Energy in which LGCY will acquire mature gas-producing assets in exchange for $355M in cash and newly created incentive distribution rights.
- Baird models 20% accretion, but says the real value is in a long-term strategic partnership that is transformative to LGCY's acquisition strategy, and thus its distribution security and growth potential.
Tue, May. 6, 4:34 PM
- WPX Energy (WPX) +2.2% AH after agreeing to sell a working interest in certain of its existing Piceance Basin wells to Legacy Reserves (LGCY) for $355M plus a portion of LGCY's newly-created incentive distribution units.
- The working interests represent 279B cfe of reserves, or ~9% of WPXs year-end 2013 Piceance proved reserves.
Tue, May. 6, 4:22 PM
Mon, May. 5, 5:35 PM
- ACLS, AFG, AGU, ALL, AMTG, ARC, ARRS, ATVI, AVNR, AVNW, AWR, BEAT, BID, BIO, CENT, CHUY, CNVR, CODE, CPT, CSU, CYH, CYNI, DDR, DIS, DLR, DPM, DTLK, EA, EGAN, ENPH, ETE, ETP, EXTR, FEYE, FMC, FNGN, FRGI, FSLR, FST, FTR, GALE, GHDX, GNC, GNMK, GRPN, IAG, ICUI, IMI, JIVE, LBTYA, LGCY, LLNW, LYV, MCHP, MITT, MOVE, MPO, MRO, MTDR, MYGN, NYMT, OCLR, OKE, OKS, PBPB, PEGA, PSEC, PXD, PZZA, QGEN, QUAD, RDN, REGI, RGP, RLOC, RP, SAAS, SAPE, SGMO, SPA, SSNI, SXL, THOR, THRX, TRIP, TRMB, TRMR, TSRA, WES, WFM, WTI, ZAGG, ZU.
Wed, Mar. 26, 5:13 PM
- Legacy Reserves (LGCY) enters into separate agreements to purchase oil-weighted properties in New Mexico and Montana for a combined $112M.
- The properties produce ~890 boe/day, contain estimated proved reserves of ~9M boe, and are 95% oil.
- LGCY anticipates funding the transactions with borrowings under its revolver.
Thu, Feb. 20, 3:59 PM
- Legacy Reserves (LGCY -5%) is downgraded to Hold from Buy with a $26 price target, down from $31, at Wunderlich, which says risks to LGCY's valuation are skewed downward amid a flat production growth in the absence of acquisitions, widening differentials, and rising costs.
- High commodity prices and a competitive M&A market could make the year more challenging for LGCY as it continues to look for third party acquisitions in order to grow; the firm thinks the company offers lower total return prospects than peers.
Wed, Feb. 19, 4:58 PM
Wed, Feb. 19, 12:10 AM| 5 Comments
LGCY vs. ETF Alternatives
Legacy Reserves, LP, is engaged in the acquisition and development of oil and natural gas properties mainly located in the Permian Basin, Mid-continent and Rocky Mountain regions of the United States.
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