I like Oil

[Ed_The_Gypsy]

Doggies!

T. Boone got out of oil: http://finance.yahoo.com/news/tycoon-pickens-cashes-oil-awaits-144838273.html

Only a few months after I did.

He talks about going back. I ain't.

 

[audreyh1]

Doggies!

T. Boone got out of oil: http://finance.yahoo.com/news/tycoon-pickens-cashes-oil-awaits-144838273.html

Only a few months after I did.

He talks about going back. I ain't.

Wow, he sure changed his tune! Guess he was selling the whole time he was claiming higher oil prices.

Now he claims the bottom is in, but he's gonna wait.

 

[Running_Man]

Doggies!

T. Boone got out of oil: http://finance.yahoo.com/news/tycoon-pickens-cashes-oil-awaits-144838273.html

Only a few months after I did.

He talks about going back. I ain't.

So he started selling in July-Oct timeframe and sounds like he got out by the end of the year, he probably finished selling around Jan 6 when he said oil would be 70 by year end. He needs to sell so when this story is told he can say when oil hit it's bottom he wasn't in the oil stocks and so he "knows" the market.

I think he is an embarrassment, but I like hearing from him to see if what he is saying makes sense, which it has not to me for over a year and a half.

 

[haha]

Wow, he sure changed his tune! Guess he was selling the whole time he was claiming higher oil prices.

Now he claims the bottom is in, but he's gonna wait.

This obviously makes no sense. If the "bottom is in", and he sells knowing this, all he will have done is to drop the hammer on his draw-down, turning it into definite loss.

Also, this strategy is not without risk. Does anyone think that all the Saudis that might be or become important in policy-making definitely agree that this price drop strategy is the best way?

I very strongly doubt that. All it would take is an internal power shift to get prices back up in the hurry. Just like Mr Boone doesn't always or maybe even often tell the truth, I doubt the Saudis feel that the Yankee Devil needs to know their true situation, or that anyone can even be said to be sure to be in charge of these decisions. Al Naimi, who seems to be the public face of Saudi oil strategy, is 80 years old.

Ha

 

[explanade]

Pickens seems to be 88?

What is he doing still trading?

He must really want to leave a bundle to the grandkids and great grandkids.

Because his public pronouncements certainly invite some interpretations of motives.

 

[aja8888]

I think he is an embarrassment, but I like hearing from him to see if what he is saying makes sense, which it has not to me for over a year and a half.

Agree. He's the last of the old guard and still living in the past. The rest of the old guard are dead, in assisted living or have dementia.

I suspect CNBC and other talking heads like to get him on the air for an interview and he obliges for the ego trip.

 

[hesperus]

I sort of hold an 'AMLP style' mix of individual MLP positions, and have ridden them up and down for five years now. Currently, my positions in order of percentages (highest to lowest):

EPD
MMP
PAA
GEL
EEP
SEP
MPLX

MMP and EPD have actually held gains (130% and 20% respectively) since I acquired them in 2011. The rest went from huge gains to losses over the last year. I've been selling some to harvest long term losses, then buying them back later at a reduced basis. I'm still very heavy in oil (15% of portfolio) so I've taken it on the chin the last year

 

[ESRwannabe]

There should be a dividend coming soon from AMLP in a week or so which I will reinvest. So far, I've been able to reduce my cost per share on AMLP from $14.65 to $13.96. It will be interesting to see what the dividend payout is since every company in AMLP is either raising or staying flat.

Also adding to my list from before SEP is raising by +2%.

Dividend list for AMLP for 2016 Q-1, as of 2-3-16.

SHLX = +7.3%
MPLX = +6.4%
EQM = +5.2%
SXL = +4.6%
TLLP = +4%
WES = +3.2%
MMP = +3%
SEP = +2%
WPZ /ETP /EEP /ENLK /OKS /TCP /PAA = flat

Also EPD stated last quarter that they would be raising by 5% in 2016. If you add them in that is around 75% of the companies in AMLP.

 

[aja8888]

There should be a dividend coming soon from AMLP in a week or so which I will reinvest. So far, I've been able to reduce my cost per share on AMLP from $14.65 to $13.96. It will be interesting to see what the dividend payout is since every company in AMLP is either raising or staying flat.

Also adding to my list from before SEP is raising by +2%.

Dividend list for AMLP for 2016 Q-1, as of 2-3-16.

SHLX = +7.3%
MPLX = +6.4%
EQM = +5.2%
SXL = +4.6%
TLLP = +4%
WES = +3.2%
MMP = +3%
SEP = +2%
WPZ /ETP /EEP /ENLK /OKS /TCP /PAA = flat

Also EPD stated last quarter that they would be raising by 5% in 2016. If you add them in that is around 75% of the companies in AMLP.

You may wish to read this SA article about DCF for EPD. Note that the author does not mention debt coming due in the next couple of years. That's about $6 billion and EPD may have to issue equity or go to the bond market for it. Not a good thing at the moment. The debt issue is in the comments to the article.

Enterprise Products Partners - Key Facts And Trends Revealed By Q4 2015 Earnings - Enterprise Products Partners L.P (NYSE:EPD) | Seeking Alpha

I am long several hundred shares in EPD after selling 2/3 of my position early in 2015. If it drops under $20, I may add to what I have. Even though EPD has several new capital projects coming on line in 2016 which should add new revenue, their gas liquids export sales may be underestimated going forward.

AMLP may be a better bet for now for those seeking dividends seeing that it is under $10/share and not an MLP for a tax perspective.

 

[papadad111]

AMLP is down another 8.5% today ... I have a buy order in at $9, $8.50 and $8.

CHK was just halted down 40% today so far.

Maybe some capitulation.

 

[Mulligan]

AMLP is down another 8.5% today ... I have a buy order in at $9, $8.50 and $8.

CHK was just halted down 40% today so far.

Maybe some capitulation.

Im feeling better today after talking you out of CHK, a few weeks ago when it went up the day after we were discussing it. Im just glad you didnt say you were loading up on it to fund family generational trust fund.


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[Running_Man]

And the first chink in the "we are MLP gatekeepers we get paid no matter what" armor is occurring today. Rumor is CHK cannot make their bond payments and is looking to restructure. So all the contracts they have with MLP's probably just become common liabilities behind bonds which have fallen below 70 cents on the dollar. CHK is a victim of the low interest rate and low natural rate environment as last week Nat Gas fell 10 percent to $2.06.

The capitulation is not that necessarily of the stock market but of major players now running out of hedges and having the losses pour into their balance sheets and bankrupting them. CHK is going to have a huge impact if they file, it is hard to pay a dividend when your tolls are sitting on the balance sheet of a bankrupt company.....

 

[Mulligan]

And the first chink in the "we are MLP gatekeepers we get paid no matter what" armor is occurring today. Rumor is CHK cannot make their bond payments and is looking to restructure. So all the contracts they have with MLP's probably just become common liabilities behind bonds which have fallen below 70 cents on the dollar. CHK is a victim of the low interest rate and low natural rate environment as last week Nat Gas fell 10 percent to $2.06.

The capitulation is not that necessarily of the stock market but of major players now running out of hedges and having the losses pour into their balance sheets and bankrupting them. CHK is going to have a huge impact if they file, it is hard to pay a dividend when your tolls are sitting on the balance sheet of a bankrupt company.....

You and I have pretty much been in agreement in all this. The odd thing is it really took no cerebral intellect to figure this chain reaction out. If it did, I would not have figured it out. The debt load on CHK is just monumental. And everything has a chain reaction...MLP's who lose contracts in bankruptcy lose their premium payments. They are also heavily indebted type companies. New lower contracts will put stress on their capital structure and dividend payouts. Then throw in market mayhem and things could still turn worse.


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[Running_Man]

CHK is now denying they are planning on filing for bankruptcy, so there should be a rebound

 

[Running_Man]

You and I have pretty much been in agreement in all this. The odd thing is it really took no cerebral intellect to figure this chain reaction out. If it did, I would not have figured it out. The debt load on CHK is just monumental. And everything has a chain reaction...MLP's who lose contracts in bankruptcy lose their premium payments. They are also heavily indebted type companies. New lower contracts will put stress on their capital structure and dividend payouts. Then throw in market mayhem and things could still turn worse.


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But I still see this as the big risk for OIL MLP's and agree with this

 

[Mulligan]

But I still see this as the big risk for OIL MLP's and agree with this

Yes, and since I am not a trader, this stuff is way beyond me. Take CHK, and their no bankruptcy action. Usually what happens here is a bunch of debt holders will get the squeeze put on them to roll some into equity. Then equity holders get diluted also, but stave off bankruptcy. Way beyond my skill and fear level!


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[ESRwannabe]

And the first chink in the "we are MLP gatekeepers we get paid no matter what" armor is occurring today. Rumor is CHK cannot make their bond payments and is looking to restructure. So all the contracts they have with MLP's probably just become common liabilities behind bonds which have fallen below 70 cents on the dollar. CHK is a victim of the low interest rate and low natural rate environment as last week Nat Gas fell 10 percent to $2.06.

The capitulation is not that necessarily of the stock market but of major players now running out of hedges and having the losses pour into their balance sheets and bankrupting them. CHK is going to have a huge impact if they file, it is hard to pay a dividend when your tolls are sitting on the balance sheet of a bankrupt company.....

The rates that MLPs charge are regulated by the Federal Energy Regulatory Commission (FERC). I'm not sure that there is much room for negotiation.

Some upstream companies will probably go bankrupt, but there will be a limit to it. This is an election year... too many companies go out of business and it will become a problem. lol

I think its a good time to buy provided you buy into sectors and not single companies.

 

[dalekeener]

Buying During Chaos

I am today starting to buy little by little etf RYE. No commission and for me a better way to play the oil patch right now.....

 

[Mulligan]

The rates that MLPs charge are regulated by the Federal Energy Regulatory Commission (FERC). I'm not sure that there is much room for negotiation.

Some upstream companies will probably go bankrupt, but there will be a limit to it. This is an election year... too many companies go out of business and it will become a problem. lol

I think its a good time to buy provided you buy into sectors and not single companies.

I think there may be more to it than that. A gas/oil expert was just on tv discussing troubled companies like CHK. He said future investors that may come to table for troubled companies, will want clean balance sheets over troubled legacy debts. They will want their "midstream obligations eliminated". That sounds to me anyways that if prices don't improve this could cause problems for midstreams.


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[Running_Man]

The rates that MLPs charge are regulated by the Federal Energy Regulatory Commission (FERC). I'm not sure that there is much room for negotiation.

.

Simply not true, CHK already last fall renegotiated rates with Williams Companies
http://www.chk.com/Documents/investors/20150908_Latest_IR_Presentation.pdf The effect of renegotiated rates with Williams was to cut the gathering fees from .88mcf to .65mcf a 26% reduction.

From the INGAA website
"Once an interstate natural gas pipeline is built, the FERC has the authority to ensure that pipeline rates are “just and reasonable.” These rates include operating and maintenance expenses and an allowed return on investment set as a percentage of the capital invested in facilities used to serve customers. Pipelines must go through a lengthy, public process whenever they request rate increases, regardless of the supply/demand balance in the underlying commodity. The FERC sets rates on a pipeline-by-pipeline basis, and approves for each pipeline what amounts to a maximum allowable rate, or a rate cap. However, pipelines customers can and often do demand discounts from these maximum rates, with the net outcome being that many pipeline customers pay less than the maximum rate a pipeline has been given permission to charge by the FERC."

Deflation in pricing was never thought of as a potential issue, everything is aimed at maximum rates and the idea that since pipelines are a monopoly they (midstream MLP's) would always aim contracts at the maximum giving the impression that rates are set by FERC, however these are caps on earnings not what the rate per unit should be....

 

[aja8888]

Pipelines won't sit empty, especially at low gas prices. If CHK goes belly up, there are other producers that will take the capacity. There is more gas shut in that can't get to market because of full pipeline capacity. I see this all the time when I am in the field at client operations.

As far as CHK, many of the people I know in the OK City, south Texas and West Virginia offices are unemployed. Best guess is belly up soon. Thank you Aubry!

 

[papadad111]

CHK fell to 1.50 and rebounded ...was a great oppy for a fast 33 percent trade

Diamond offshore suspended their dividend today too

Interesting ... COP and XOM rallied.

 

[ESRwannabe]

CHK only has a market cap of $1.27 billion.

In AMLP, just EPD alone has a market cap of $40.77 billion.

Seems odd to me that bankruptcy fears of one tiny company should affect $200+ billion of pipeline companies (just looked it up and it is $215 billion).

MLPs have been around for over 30 years. I think the idea that MLPs get all of their business from shale, which is a phenomenon of the last five years, is illogical.

All companies in AMLP are raising or keeping dividends flat. I guess they are all clueless about the soundness of their customers...

Anyway, good time to buy.

 

[papadad111]

Yep. Price action on AMLP was interesting today trading down to $8.97

Got some today at 9 .... I'm guessing we will have chance to buy more at 8.50 in next few days

 

[ESRwannabe]

Yep. Price action on AMLP was interesting today trading down to $8.97

Got some today at 9 .... I'm guessing we will have chance to buy more at 8.50 in next few days

It appears that the historical low was $8.31.

There will be dividend issued in a week or so. That should push the share price down momentarily. That might get it to a new low.