zorro6204

MLPs in Good Shape, Despite Credit Crisis

You stated what seems to be a popular misconception concerning distributions by BBEP. This is what they said in the press release:

"As we begin the 2010 planning process, our improved liquidity position will allow us the flexibility to further accelerate capital spending to levels that should enable us to hold production flat and subsequently re-establish distributions when leverage has been reduced to acceptable levels."

First will come the 2010 planning process, then an increase in capex, then a reduction in leverage and then (subsequently) distributions. The way I read that, we're talking the second half of 2010 at the earliest. If the market thinks that's "fairly soon", well . . . fair enough!

It's a good investment, at a fair price, but there are other MLP's paying what BBEP did before suspending that trade in the $16-17 area, LGCY and VNR for example. Logically speaking, even if BBEP did re-establish the distribution in the $2 area for Q3 2010, a cap for the current price should be in the $14-15 area. It closed today at $12.81.

Disclosure: long BBEP, LGCY and VNR.