In an interview on CNBC last week, Continental Resources CEO Harold Hamm elegantly exposed the increasingly anachronistic ban on crude oil exports from the U.S. By noting that sanctions on Iran would soon be lifted, allowing that country to once again export oil, he characterized the U.S. export ban as a self-imposed sanction, benefiting other […]
Schlumberger (SLB) provides services worldwide in support of gas and oil exploration and production companies. They are at the sharp end of shifts in production, and as such have an interesting perspective on the upheaval in the crude oil market. A recent investor presentation highlighted that increased global demand of around 1 MMBD (million barrels […]
The other day someone was asking me for a simple explanation of how MLP General Partners (GPs) enjoy a superior position to those of the LP unitholders in the MLPs they operate. There are many ways to show that, but I thought I’d pull some information from the recent 10K filed by Plains All America […]
Exxon Mobil publishes a long term energy outlook (The Outlook for Energy: A View to 2040) which they update annually. It’s full of interesting facts and charts on energy use and is well worth reading. Integrated energy companies like Exxon Mobil commit capital to projects whose payoff can take decades, and so they are inevitably […]
Activist hedge funds can be a positive force. Although this isn’t always true (Keith Meister of Convergex so abused ADT investors that his actions caused us to apply the “Corvex Discount” to other stocks in his viewfinder), it’s probably more often than not beneficial to existing investors when a hedge fund shows up. The most recent […]
We’ve long advocated investing in the General Partners (GPs) of Master Limited Partnerships (MLPs) rather than the MLPs themselves. Most importantly, the GPs have preferential economics in the form of Incentive Distribution Rights (IDRs) which entitle them to up to 50% of the Distributable Cash Flow (DCF) the underlying MLP generates. This entitlement is immune […]
Master Limited Partnerships (MLPs) performed poorly last week, with the Alerian Index dropping 4.3%, bringing it to -7.7% YTD. The yield on the index is now around 6.4%, 4.3% above the ten year treasury which is historically an attractive level. There were a couple of unusual financing transactions undertaken by MLPs over the past week. […]
Tetra Technologies (TTI) is a small oil and gas services company. Small cap energy was perhaps the least pleasant place to be invested since last Summer, and TTI’s stock duly fell from $13 last Summer to $5 recently (it closed on Friday at $5.38). TTI owns 42% of Compressco LP (CCLP), an MLP that provides compression […]
Natural gas prices vary widely — not just seasonally (electricity generation for summer air conditioning and winter heat create a familiar wave pattern to prices) but also regionally. It’s well known that natural gas prices are higher in many parts of the world than in the U.S. Probably less well knownn is the regional differences that […]
You rarely see MLPs buying back their stock, by contrast to companies in most other industries. Buybacks provide a tax efficient way to return excess capital if the stock is undervalued. Because MLPs invest heavily in CapEx and generally distribute most of their free cashflow to LP unitholders there’s rarely any left over for buybacks. […]
