Guide to Oil and Gas MLPs
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Transcript of Guide to Oil and Gas MLPs
An Investor’s Guide to Oil & Gas MLPs (Part I)
Photo credit: LINN Energy
Part I Will Look Closer at the Top 4
• Represent ~75% segment’s value
• Most aggressive acquirers• Geographically diverse• Secure and growing
distributions
LINN Energy LLC and LinnCo LLC
• $7.8 billion market cap
• 8.8% yield• Coverage ratio last
quarter: 1.0x• Distribution paid
monthly
Ticker: LINE/LNCO(All data LINE)
Photo credit: LINN Energy
Part I Will Look Closer at the Top 4
Source: LINN Energy Investor Presentation
The Information that Matters
• Total Proved Reserves: 1.1 Billion BOE• Liquids production: 54%• Reserve life-index: ~17 years• General Partner: None• Areas to watch: Recently completed Berry
Petroleum acquisition, natural gas prices and the Permian Basin development
BreitBurn Energy Partners L.P.
• $2.4 Billion market cap
• 9.6% yield• Coverage ratio last
quarter: 1.3x• Distribution paid
monthly
Ticker: BBEP
Photo credit: Flickr/Robert Ashworth
Part I Will Look Closer at the Top 4
Source: BreitBurn Energy Investor Presentation
The Information that Matters
• Total Proved Reserves: 190.8 million BOE• Liquids production: 62%• Reserve life-index: ~15 years• General Partner: None• Areas to watch: Oil prices and debt levels
Vanguard Natural Resources, LLC
• $2.4 billion market cap
• 8.3% yield• Coverage ratio last
quarter: 1.09x• Distribution paid
monthly
Ticker: VNR
Photo credit: Flickr/USFWS Mountain Prairie
Part I Will Look Closer at the Top 4
Source: Vanguard Investor Presentation
The Information that Matters
• Total Proved Reserves: 316 million BOE• Liquids production: 33%• Reserve life index: ~13 years• General Partner: None• Areas to watch: Natural gas prices and strategy
shift organically grow production
EV Energy Partners, L.P.
• $1.9 billion market cap
• 8.6% yield• Coverage ratio last
quarter: 0.7x• Distribution paid
quarterly
Ticker: EVEP
Photo credit: Flickr/Daniel X. O’Neil
Part I Will Look Closer at the Top 4
Source: EV Energy Investor Presentation
The Information that Matters
• Total Proved Reserves: 160.5 million BOE/d• Liquids production: 31%• Reserve life index: ~14 years• General Partner: EnerVest• Areas to watch: Utica Shale and natural gas
prices, distribution coverage ratio and midstream growth
Now Let’s See How Each Compares
• Scale• Reserves• Production• Hedging
Enterprise Value
Total Proved Reserves
Sources: Company investor presentations, SEC filings and author’s calculations
Where is the Cash Flowing From?
Sources: Company investor presentations, SEC filings and author’s calculations
How Secure is the Cash Flow?
Sources: Company investor presentations, SEC filings and author’s calculations
How Secure is the Cash Flow?
Sources: Company investor presentations, SEC filings and author’s calculations
Key Takeaways
LINN Energy – Top-dog, balanced production and very secure cash flowsBreitBurn – Oil heavy with less secure cash flowVanguard – Natural gas focused with secure gas cash flowEV Energy – Natural gas heavy with less secure cash flow
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