zorro6204

MLPs in Good Shape, Despite Credit Crisis

A loss he's trying to recoup? BBEP hasn't traded at $14 since the fall 2008 crash. Besides, you can argue that $14 is a fair value in relation to its peers, so what do you expect him to do, sell in the $12's?

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.

Constellation Energy: A Good Trade for a Natural Gas Rebound

The numbers are a bit confusing in their presentation of "adjusted" EBITDA. That does not equate to funds flow, because they backed out interest. If you subtract interest you get $34M - $6M for six months, or about $56M on an annual basis before capex. That is of course before whatever additions will be made from recent drilling efforts, and would be adjusted by unhedged production prices.

It's not clear what management means when they say "distributions will remain suspended until after such time that debt levels are reduced and market conditions again warrant resumption of capital spending at maintenance levels", but I think it's a safe bet their will be no distributions until the October, 2010 debt maturity is handled.

What might distributions going forward be? Difficult to say, but management initially reduced dividends after all the 2008 turmoil to match the 2009 guidance, and those numbers are pretty much on target. The distribution rate was 52 cents on an annual basis.

Constellation Energy: A Good Trade for a Natural Gas Rebound

We were just discussing CEP on the Yahoo boards, came to more or less similar conclusions, though I'm not as optimistic as this article or my friend (but we're not done with the discussion, and he may prove me wrong).

In any case, I advise you to perform this same analysis on EROC and XTEX, also natural gas related, also in the $3's, also suspended, and also screaming bargains.

MLPs in 2009: Fundamentals Remain Strong

Yes, and also several MLP's like MWE and APL are engaged in midstream businesses which move and process gas, rather than producing it. But their revenue streams are based on commodity prices nevertheless, due to being paid in NGL's or by buying and selling. You can't bunch these all together, each has its own characteristics. EROC is a hybrid, VNR is like a royalty trust, WPZ is primarily fee based, etc. etc.