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Personally I’d like to see them become a dividend grower. Adding 4-6% to the dividend each quarter as earnings grow. I think it would promote slow unit price growth and help minimize volatility.
Thought I should follow up on this post as well Pete.
It looks like Oaktree/Highstar paid about $12.03 on each of the preferred A's. "In connection with the closing of the transactions contemplated by the Purchase Agreement, as amended, on June 24, 2016, the Purchasers acquired 19,942,169 Preferred Units and 4,375,112 Warrants for approximately $240 million."
Thus the one-to-one conversion as long as the trading price is over $12.035. "On June 13, 2017, NGL Energy Holdings LLC, a Delaware limited liability company and the general partner of the Issuer, executed the Fourth Amended and Restated Agreement of Limited Partnership of the Issuer (the “Partnership Agreement”). Pursuant to the Partnership Agreement, at any time after May 11, 2019, the Purchasers and NGL Blocker have the right to convert any Preferred Units held by them for a number of Common Units equal to the product of the number of Preferred Units converted and the conversion ratio then in effect. If the Common Units are trading at or above $12.035 (the “initial conversion price”), the Preferred Units will be converted on a one-to-one basis."
Pete,
Here are a few cuts from the 13d and the more recent 13d/a that I am basing my thoughts on.
"Also on April 5, 2019, Highstar Prism, Highstar Main, NGL CIV and NGL Blocker exercised warrants to purchase 412,237, 286,567, 607,654 and 151,913 Common Units, respectively, in accordance with the warrant terms at an exercise price of $0.01 per Common Unit." On the same day of the amended 13d filing they filed form 4 to reflect this new ownership of all 1,458,371 common shares.
As for the Preferred A's.......they originally filed that the preferred units could convert to 20,549,824 common units on 5/13/2019. "On June 13, 2017, NGL Energy Holdings LLC, a Delaware limited liability company and the general partner of the Issuer, executed the Fourth Amended and Restated Agreement of Limited Partnership of the Issuer (the “Partnership Agreement”). Pursuant to the Partnership Agreement, at any time after May 11, 2019, the Purchasers and NGL Blocker have the right to convert any Preferred Units held by them for a number of Common Units equal to the product of the number of Preferred Units converted and the conversion ratio then in effect. If the Common Units are trading at or above $12.035 (the “initial conversion price”), the Preferred Units will be converted on a one-to-one basis. However, if the Common Units are trading below the initial conversion price, then the conversion ratio will be equal to the quotient of the initial conversion price and the greater of (i) the adjusted volume weighted average price of the Common Units for the 15 trading days immediately preceding May 11, 2019 or (ii) $5.00. Any conversion of the Preferred Units may be settled in common units, cash or a combination. The Preferred Units do not become convertible until May 13, 2019 and are currently redeemable by the Issuer for cash."
However, since the original 13d filing NGL bought back 7,468,874 of the preferred units. This leaves 13,931,666 preferred units outstanding that could convert on a one-to-one basis May 13th of this year.
Maybe I'm missing something, but this is what I'm basing my thoughts on. Definitely not trying to be negative.
So, I have a thought that may not be so popular. NGL was unable to eliminate all the Preferred Convertible A’s. That is a fact via the recent SEC filings. They are going to continue to unload those converted units. (End of Day today- that was a sell of converted units).
We will have to eat these for quite some time. (They converted the whole preferred share position.) However, it becomes advantageous because NGL didn’t have to add more debt to settle the remainder of the balance.
My one hope is that management is using their buyback funds to eat up the remainder of converted shares. They have the ability.
Once again, just my thoughts.
I’d take either one. As I’m sure all of us would.
Was very surprised by the 13 cap purchase of Anadarko. Just got curious what NGL would look like at a similar valuation.
Dare to dream right?
So Anadarko just sold for a little over 13x their T12 EBITA. If NGL would go for the same 13 cap, we would be looking at a unit price of a bit over $47.
Just a little something to dream about on this fine Friday.
From CNBC:
“Sentiment was also boosted on Friday by a massive deal in the energy sector. Dow member Chevron announced plans to acquire Anadarko Petroleum for $33 billion in cash and stock. The deal values Anadarko at a 37% premium from the stock's close on Thursday. Anadarko shares jumped 32% while Chevron fell 5%.
"Investors have been clamoring for consolidation of the US oil patch in recent years (especially within the last year), so this very well may kick-start M&A activity in the space on a larger scale," wrote Capital One Securities analyst Phillips Johnston. "We think the deal has positive implications for other Permian players with a large acreage footprint."
Very true in regards to buying up NGL compared to Anadarko.
They will all need water assets. Period!!
Yep. The big dogs are seeing the value in the Permian and are starting to eat up the small dogs. Makes you wonder if NGL could be on the lunch menu anytime soon.
Here you go Jugs:
Chevron Paying 39% Premium in Anadarko Deal
Source: Dow Jones News
By Colin Kellaher
Chevron Corp. (CVX) is paying a roughly 39% premium in its $33 billion acquisition of Anadarko Petroleum Corp. (APC).
Chevron said it will issue 0.3869 shares and $16.25 in cash for each share of the Woodlands, Texas, exploration and production company.
Based on Thursday's closing stock prices, the deal values Anadarko at $65 a share, a 38.9% premium.
Anadarko shares, which closed Thursday at $46.80, surged 32% to $61.78 in premarket trading Friday, while Chevron shares slipped 2.8% to $122.50.
Write to Colin Kellaher at colin.kellaher@wsj.com
(END) Dow Jones Newswires
April 12, 2019 06:44 ET (10:44 GMT)
Copyright (c) 2019 Dow Jones & Compan
Thanks to the chevron buyout of Anadarko, other companies with a footprint in the Permian should start seeing their valuations rise. Let’s hope that’s the case for our beloved NGL.
Happy Friday everyone!
Issuing those class C preferred’s was a big step for NGL to take. Highstar and Oaktree were prepared to convert their preferred A’s into 20,500,000 common units on May 13th of this year. (13/d filing) Just imagine the impact selling all those unrestricted units would have had on the price. The newly minted class C’s are going to mitigate the conversion and pay them off in cash.
Smart, very smart!!
I find Tim to be enlightening as well. Both convey their thoughts well and seem to always be seeking the truth.
If you have the means, I think a well timed prompt to Rida would be very welcome.
I’d actually like to see Rida Morwa do a piece on the “new” NGL. He has been a supporter previously and I’d love to hear his current thoughts. He’s one of the few on the HC/SA site I respect and value.
Hey Jugs!! Even the Heaping Crappers are beginning to see the light. Lol
Thanks for posting Srains!
Yes, I rarely see Stifle go out on a limb. I think they are afraid it might break.
* NGL Energy Partners LP : Stifel raises target price to $13 from $9
That was a big trade. 400K units at $11.50.
We are right at the 45 day mark since they announced the South Pecos WD sale. Should close very soon.
Interesting that it also corresponds with ex-div day. Hmmm??
Makes no sense, does it?
Another article mentioning NGL:
https://marketrealist.com/2019/01/7-mlps-offering-a-yield-above-10
Nice! They added an additional 466,852 since their previous filing. They remain NGL’s largest institutional holder. Oppenheimer is a true believer.
Jugs- I don’t have PM ability on this site, but I do appreciate your message. Thank you!
It seems as if the “bar” has been raised for on-topic material here. :)
Today should provide a nice test of conviction with NGL and MLPs in general. Both oil and the market look to be down. Let’s see what happens.
Always in the lookout for info Jugs. I don’t like flying blind.
Have a great weekend!
Likewise. NGL and CEN for me.
Have a good weekend Pete!
Yep. Was great to see something that actually included some “inside” analyst notes. Especially from a respected firm like Raymond James.
Maybe we can see opinion shift finally. It would be great timing. Seems like MLPs are being recommended as a good place for money right now.
One of my favorite quotes from the article:
“Finally, in the capital allocation division, "buybacks are a large part of the conversation," indicated Jenkins, adding that, looking forward, NGL should see "incremental optionality for deploying capital."
A very Happy New Year to each of you on this board. I don’t post often, but appreciate what everyone brings to the table. May you all have a great 2019.
Huge volume this morning with some very large buys.
Wouldn’t surprise me if they are already buying back. It’s been one of the most consistent runs of volume over 1 mil we have seen all year.
IMO if you’re going to announce a share buyback, you do it first thing tomorrow morning. Just before you walk into Q&A sessions with the investment community.
Guggenheim initiated coverage on NGL yesterday with a buy and $16 PT.
From a geo-political standpoint you really couldn’t ask for a better setup than what is currently presenting itself. Most of the free world is now despising Iran, Saudi Arabia, and Russia. However, until just recently, there has been no legitimate alternative to their ‘evil’ oil.
Then comes along Trump and US O&G production. “Hey, maybe you should buy from us and quit supporting terrorism and murdering heads of state.”
Just saying.
Exactly! Well said my friend.
From Dow Jones News in regards to this weekend’s trade talks with China.
“China also agreed to purchase a "very substantial" amount of agricultural, ENERGY and industrial goods from the U.S., the White House said. “
I’ve long suspected Trump would use our now dominate O&G production as a way to close trade deficits and hurt the Middle East/Russia. It looks as if those wheels are being set in motion.
In my opinion, Trump’s moves to deflate oil prices is very calculated. Grant waivers to our allies in regards to Iranian oil, release inventory from the SOR, and continue saying oil is overpriced. Crush OPEC and Russia with low prices all the while making trade deals to sell US O&G. In one swift move he will make the US the new OPEC.
I’m sitting with 60% of my portfolio in midstreams. These bottom bargain prices are a gift that is going to pay off for years to come.
Just waiting for the wizard (Trump) to pull back the curtain and reveal his plan.
All in my opinion of course.
Considering my huge holding in NGL, the proper label for me may be radical instead of loyalist. Lol
Have a good one Jugs!