There's excitement in the air surrounding NGL Land, to be sure. And in no small way am I enjoying it as well, rest assured. We committed NGL longs have been experiencing great portfolio gains over the past month. Some of this, of course, arises in part from the December meltdown. But January's re-correction, if you will, more than compensates for any irrationality on record.
Having been around the block more times than my aging brain can recall (not really, lol), I remember how disappointed board friends and friends-in-the-flesh were when adding up things disclosed or not disclosed in conference call contextual references. These calls used to be largely confirmations of things previously disclosed throughout the most recent quarter of business. In time, analysts and interested parties were invited to participate. This helped to assuage angst among shareholders.
I recall more than one instance that had Sheriff deputies armed and positioned at the exit doors to annual meetings. Holding executive office myself as such times, I knew in advance of such safety concerns. In one such instance, I sold my entire position DURING the meeting! I had to go out to the hotel lobby and access a public computer to effect the transactions (covering several accounts). I did not let on what I had done as it could have erupted into a massive riot. I was being guided by what I'd finally perceived as disreputable behavior by senior management and couldn't accept myself as part of that ugly process. Fortunately for all here and including myself, I have only the deepest respect and regard for NGL management so there's no need to read between the lines. And, for what it may be worth, the other company in question declared bankruptcy just this past year. May it rest in pieces!
So, then, let me say this:
Conference calls are not fair grounds. There will be nobody flying through the air performing acrobatics. No elephants trumpeting, no fife & drum corps tooting fanfares to sexy and curvaceous ladies in metallic swimsuits full of sequins and flashing lights.
Formality is key to such meetings whether they be quarterly or annual. Questions will arise from analysts and unitholders when the quarter contains happenings raising questions yet to be fully explored. Seated to the side of senior management's table will be legals with eyebrows and head-nods or hand signals acting in the role of the catcher crouched behind a hitter, advising the pitcher.
Here are a couple of things I brought up to a board friend favorite several weeks ago. This was well before news of this week's disclosure of the wholesale propane acquisition. And it does most certainly fly in the face of my warnings that we not expect too much of the pending conference/earnings call. However, I think I'm on solid ground because the week's public disclosure left many issues unanswered and I'm positive analysts will probe deeply as they search for information not yet exchanged:
My friend had asked where I see NGL going from here to which I replied that I see two paths that I'd very much like to see unfold:
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1. Horizontal drilling on the 122,000 acres of recently acquired ranchlands in New Mexico---drilling for oil and/or gas or both. It's
Permian-based, of course. I'd be expecting NGL to farm out the opportunity to area players (drillers) already onsite and with their own seismic already in hand and lusting for additional royalty deals.
2. Moving into freighting of NGLs---liquids and possibly even LNG containers. There are limits as to how much NGL Partners can accomplish if limited to domestic supply routes exclusively. Without accessing off-shore (European and Asian emerging market opportunities), we build in our eventual self-destruction for we live in a global environment. The jungle will always represent doves and prettily plumaged birds alongside tigers and lions searching for the next kill. This is natural.
None of this should surprise anybody, I know that. And maybe I just got lucky in coming up with the same sort of conclusion Mike and Trey found---if I did. I don't know. But the Chesapeake Virginia terminal acquisition is the most interesting development within the company's moves that I've seen in my five years as an NGL investor, save for the decision to remove seasonal vulnerability arising from nursing the retail propane division now gone and smartly so, in my opinion.
I see NGL moving into several turn-key operations with arrangements resembling leasebacks and collecting "rental fees" from established shippers hungry for the ideal U.S. east coast location and coastal privileges already cleared and free of monstrously expensive security issues.
And I see at least part of the above as providing the bottom line changes we all want to experience at the CC.
Hope to hear back from others!
