Alpha Wolf • 44 Comments
Aug. 26, 2015, 12:45 PM
Aug. 21, 2015, 11:57 AM
- Linn Energy (LINE -7.9%) is leading the upstream MLPs lower, with Hedgeye's Kevin Kaiser trying to get confirmation on chatter CFO Kolja Rockov is facing financial difficulties and had to cancel an $8M house he was building.
- LinnCo (LNCO -5.6%)
- Breitburn Energy (BBEP -1.3%), Memorial Production (MEMP -5.2%), LRR Energy (LRE -5.9%), Eagle Rock Energy (EROC -5.3%), Vanguard Natural Resource (VNR -7.4%).
Jun. 15, 2015, 12:30 PM
- Wunderlich analyst Jay Dobson finds a few worthwhile investments in an otherwise weak upstream energy exploration MLP sector that has too much debt on average and has suffered from the dramatic decline in oil, natural gas and natural gas liquids prices since late 2014.
- Also, a lack of hedging discipline has left the industry more exposed to the declining prices and, in some cases, with very limited financial flexibility, Dobson says.
- But four Buy-rated MLPs are best positioned for the current energy environment, sharing the attributes of solid liquidity, a runway for improvement, and aggressive action, Dobson says: Memorial Production Partners (MEMP +0.3%), Vanguard Natural Resources (VNR +1.8%), LRR Energy (LRE +3.5%) and Legacy Reserves (LGCY +0.4%).
- Rated Hold: ARP, BBEP, MCEP, NSLP, EVEP
Apr. 21, 2015, 9:22 AM
Apr. 21, 2015, 7:48 AM
- Vanguard Natural Resources (NASDAQ:VNR) agrees to acquire LRR Energy (NYSE:LRE) in a cash and stock deal totaling $539M.
- The deal will be a tax-free unit-for-unit transaction with an exchange ratio of 0.55 VNR common units per LRE common unit.
- VNR says LRE's long-life, low-decline, mature assets are well-suited for its upstream MLP model, the assets add additional scale to its existing Permian and Arkoma Basins, and production of ~40MM cfe/day will increase its current production by 10%.
- VNR +3.2%, LRE +7.9% premarket.
Mar. 25, 2015, 10:58 AM
- LRR Energy (LRE -3.2%) is downgraded to Sell from Neutral with a $5 price target, cut from $7, at UBS, which notes concerns about leverage and liquidity.
- LRE recently said that with the upcoming debt re-determination, there is potential for a cut to its borrowing base; the company has a $1MM capital budget for 2015 and $20M of debt available before the re-determination, and the firm wonders why a distribution cut is not at the top of management's list of alternatives.
- While UBS believes there could be some impacts to debt facilities during the spring re-determination, it is even more apprehensive about the fall if prices remain weak, and the oil price swoon highlights these concerns.
Mar. 10, 2015, 2:38 PM
- LRR Energy (LRE -2.6%) may suffer a “significant" distribution cut in 2015, perhaps as much as a 66% cut in Q1, as the company is "simply incapable of conducting business with a yield approaching 28%," Oppenheimer analyst Bernard Colson writes.
- LRE may be overdrawn on its borrowing base soon, which may lead to expensive second-lien financing from its bank group, Colson adds.
- LRE is known to be experiencing tight liquidity, which would be further limited in May when its borrowing base gets re-determined.
Jan. 28, 2015, 12:44 PM
Dec. 23, 2014, 12:49 PM
- Stifel downgrades Breitburn Energy Partners (BBEP -1.7%), LRR Energy (LRE -4.4%) and New Source Energy Partners (NSLP -1.4%) to Hold from Buy due to pressure in the commodity markets and near-term concerns over credit facilities.
- The firm believes BBEP's ability to fund its reduced organic spending while funding the near-term shortfall in DPU coverage will be challenged, but it continues to believe the long-term outlook is attractive because of BBEP’s diversified geographic footprint.
- On LRE, Stifel says it is moving to the sidelines given near-term financing issues, even though LRE does not pose operational risk and the firm thinks the market likely is pricing in at least a DPU cut.
Dec. 1, 2014, 12:46 PM
Dec. 1, 2014, 12:21 PM
- Oil prices are rebounding, with both WTI and Brent crude up ~2%, but only a handful of energy stocks are rising.
- Exxon Mobil (XOM +1.4%) and Chevron (CVX +1.3%) are both up more than 1%, but the vast majority of energy stocks - led by Denbury Resources (DNR -8.9%), Newfield Exploration (NFX -7.6%) and Goodrich Petroleum (GDP -22.3%) - are seeing heavy selling.
- The SPDR Energy Select Sector ETF (XLE -1.2%) is lower despite gains in XOM and CVX, XLE’s two most heavily weighted stocks, as 38 of its 43 equity components trade lower; the ETF has now lost 7.5% since OPEC sent oil prices plunging by agreeing last Thursday not to cut production.
- Among XLE’s most actively traded components, Kinder Morgan (KMI -3.3%), Halliburton (HAL -3.4%), Transocean (RIG -6.1%) and Schlumberger (SLB -2.1%) are sharply lower.
- Other big decliners include BBEP -17.8%, SD -12.1%, SN -13%, CWEI -8.8%, CPE -14.6%, EXXI -18.9%, LRE -22.8%, REI -16.9%, SSE -15.3%.
- Other ETFs: ERX, VDE, OIH, XOP, ERY, DIG, DUG, IYE, XES, IEO, IEZ, PXE, FENY, PXJ, RYE, FXN, DDG
Nov. 3, 2014, 1:28 PM
- Oppenheimer downgrades LRR Energy (LRE -5.7%) to Perform from Outperform at Oppenheimer and withdraws its $20 price target, believing the company is in a difficult predicament as it enters a period of weaker oil prices with falling distribution coverage, limited capacity on the credit facility, and a rising cost of capital.
- While the firm is not concerned about distribution safety in 2015, the period up to 2016 is pivotal to distribution sustainability; the current negatives are balanced by a high current yield (12.3%), which keeps the firm from issuing an Underperform rating.
Sep. 29, 2014, 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.
Sep. 4, 2013, 10:48 AM
- Oppenheimer restarts coverage of energy MLPs, bullish on the asset class as a whole; the firm shows a bias in favor of investing in higher distribution growth, even if the yields are lower, and for owning general partners due to their incentive distribution rights structure.
- Started at Outperform: EQT Midstream (EQM +2.1%), Seadrill Partners (SDLP +0.7%), Tesoro Logistics (TLLP +1.6%), Memorial Production Partners (MEMP +2.4%), Western Gas Partners (WES +0.4%), Western Gas Equity Partners (WGP +0.7%).
- Started at Market Perform: Williams Partners (WPZ), Crosstex Energy (XTEX), ONEOK Partners (OKS), Genesis Energy (GEL).
- Also: New Source Energy (NSLP), Breitbrun Energy Partners (BBEP), LRR Energy (LRE), Mid-Con Energy Partners (MCEP).
Jul. 5, 2013, 11:32 AM
BreitBurn Energy (BBEP -4.7%) is off its worst lows after CEO Halbert Washburn discloses buying 30K shares on July 3 at an average $14.92, worth ~$447K. Shares have dropped 20% since Linn Energy's SEC inquiry news, which prompted Hedgeye to dub BBEP "Linn Energy junior." Other upstream MLPs also are lower: VNR -5.6%, QRE -6.5%, LRE -7%.| Jul. 5, 2013, 11:32 AM | 4 Comments
Jun. 6, 2013, 10:47 AM
LRR Energy (LRE +7.9%) is surging after issuing a Q2 operating update: LRE estimates average net production for the two months ended May 31 was ~6,450 boe/day, and reaffirms FY 2013 operating guidance of 6,250-6,550 boe/day. Wells Fargo upgrades shares to Outperform with a $17 price target.| Jun. 6, 2013, 10:47 AM | 1 Comment