|Bid||22.50 x 2200|
|Ask||22.51 x 3000|
|Day's range||22.01 - 22.85|
|52-week range||19.72 - 35.39|
|Beta (3Y monthly)||2.35|
|PE ratio (TTM)||6.80|
|Earnings date||17 Feb 2020 - 21 Feb 2020|
|Forward dividend & yield||0.36 (1.65%)|
|1y target est||31.50|
(Bloomberg Opinion) -- When a stock goes into free fall, one hope is that some acquirer out there will catch it. Sometimes, though, suitors come with their own complications. That brings us to EnLink Midstream LLC.EnLink operates gathering and processing pipelines and other oil and gas infrastructure across several onshore U.S. basins. In the summer of 2018, Devon Energy Corp., an exploration and production company, sold its stakes in various EnLink entities to Global Infrastructure Partners for just over $3.1 billion. After a subsequent simplification of EnLink, GIP owns 46% of the common units, now worth $1.2 billion.EnLink has been undone by weaker commodity prices. Earlier this month, Devon announced it had dropped the number of rigs operating in one of Oklahoma’s shale basins to precisely zero (how’s that for a coda to last year’s deal?). This confirmed a trend evident already in permitting and drilling data for the Anadarko basin, where just four companies account for the majority of activity; and, crucially, they have operations in other basins that are more competitive in terms of breakeven costs.The distribution yield on EnLink’s stock now scrapes 20% — on a par with the current yield on long-dated bonds of Chesapeake Energy Corp., which just issued a going-concern notice. There’s being paid to wait, as they say, and then there’s being paid to wait in that trash compactor from Star Wars.EnLink’s cash flow math is tight. Consensus forecasts — which have now had time to digest cost savings pledged on the latest earnings call — put Ebitda at $1.1 billion in 2020. Take off around $500-$550 million for cash interest and (much-reduced) capital expenditure, and that leaves about $550-$600 million versus current distributions of about $550 million. With Ebitda forecast to grow at just 1% a year through 2022, that tight squeeze won’t ease up. Wells Fargo & Co.’s analysts estimated in a recent report that, absent a change in distribution policy, current leverage of 4.2 times adjusted Ebitda could reach almost 6 times by 2025. By any rational measure, the distribution should be cut.The complicating issue is that EnLink’s leverage is compounded by more leverage at the GIP level in the form of a $1 billion term loan. Technically, it is separate from EnLink’s own finances. But as the company acknowledges in its own 10K filing, debt owed by an entity owning almost half the company plus its managing partner, and which is serviced by EnLink’s own distributions, is very much a risk factor. By my calculations, the loan requires roughly $80 million a year of EnLink distributions (GIP didn’t respond to requests for comment)(1). As of now, distributions amount to about $255 million. So, in theory, EnLink could slash its payout by about two-thirds and GIP could still service the loan.In practice, that would be a bitter pill to swallow. As it is, GIP’s common units in EnLink are now worth not much more than the value of the loan and way below the original investment. Cutting distributions would certainly help EnLink’s balance sheet; all else equal, a 67% cut would save enough cash to take leverage below 4 times adjusted Ebitda, in line with long-term targets. But this would almost certainly push the value of GIP’s stake even lower, at least in the near term. As Ethan Bellamy, analyst at Robert W. Baird & Co. Inc., put it to me:Does GIP leverage prevent EnLink from cutting the distribution and right sizing the ship? It wouldn’t be the first time we’ve seen parental leverage from a private equity sponsor lead to sub-optimal outcomes for the subsidiary public entity.On the other hand, if EnLink cuts and its price falls further, then GIP might be tempted to make an offer for the rest of the company in an effort to salvage things out of the public eye. Needless to say, a takeover premium on an even lower EnLink price would do very little to make up for the losses suffered to date. We are seeing this play out with Blackstone Group Inc.’s offer for another midstream company, Tallgrass Energy LP, although the pain there is compounded by an agreement between the buyer and Tallgrass’s executives that effectively shields the latter from losses (see this).EnLink captures so much of what has gone wrong in America’s pipelines business. There’s the misalignment of interest between ordinary investors and the sponsors steering the company’s destiny. There’s the exposure to commodity markets from which, in theory, midstream companies were supposed to be insulated. Above all, there’s the overcapitalization of this sector, with obligations piled onto assets (largely to fund outsize payouts to controlling sponsors) that ultimately couldn’t generate the profits to service them (largely because too much stuff got built).Almost exactly four years ago, Kinder Morgan Inc. presaged the midstream reckoning to come by slashing its dividend. The stock has been listless for much of the period since then; even with the cut, chipping away at debts in a post-boom environment is a laborious process. As this decade of nominal success for America’s shale boom draws to a close, EnLink’s predicament shows the hangover remains very much a work in progress.(1) This assumes the full $1 billion remains outstanding. Interest is charged at Libor plus 4.25%, equating to 6.15%, or about $62 million. A debt-service covenant ratio of 1.1 times takes this to $68 million. Mandatory annual amortization of 1% of the loan plus assumed G&A costs results in an estimated minimum requirement of about $80 million to service the debt. Details derived from Moody's Corp.'s initial rating report from July 2018.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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While the commodity pricing scenario continues to be challenging, both EOG Resources (EOG) and Occidental Petroleum (OXY) benefited from higher year-over-year production.
Noble Energy's (NBL) Q3 loss is narrower than expected. The company lowers its 2019 capital expenditure guidance, indicating that its important projects are close to completion.
QL Capital Partners, LP (“QLCP”) and Devon Energy Corporation (DVN) (“Devon”, “DVN” or “the Company”) have entered into an agreement to create a new partnership to fund selected gas gathering and compression assets owned by Devon in the Company’s highly productive “Cotton Draw” development area within the Delaware Basin. As part of the transaction, Devon will contribute its existing gas gathering and compression infrastructure within an area of mutual interest to Cotton Draw Midstream, LLC (“the Partnership”), a newly formed partnership which Devon will continue to operate pursuant to a management services agreement. Devon will dedicate to the Partnership approximately 24,000 gross upstream acres for gathering and compression on the Partnership’s system.
Devon Energy's (DVN) Q3 earnings are better than expected on the back of strong production from its U.S. assets and cost-cutting initiatives.
Devon Energy (DVN) delivered earnings and revenue surprises of 36.84% and 17.87%, respectively, for the quarter ended September 2019. Do the numbers hold clues to what lies ahead for the stock?
OKLAHOMA CITY, Nov. 05, 2019 -- Devon Energy Corp. (NYSE: DVN) today reported operational and financial results for the third quarter of 2019. The company’s earnings release,.
Devon Energy (DVN) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
Today we'll evaluate Devon Energy Corporation (NYSE:DVN) to determine whether it could have potential as an investment...
(Bloomberg) -- The prospect of Elizabeth Warren becoming the 2020 Democratic presidential nominee, or the 46th president of the U.S., has energy investors worrying about risks to hydraulic fracturing.“What happens if Elizabeth Warren becomes president and bans fraccing?” was the most common question Sanford C. Bernstein received during recent marketing, analysts led by Bob Brackett said in note Tuesday. They don’t currently have a good answer.Concern on Wall Street has been rising along with Warren’s poll numbers, with sectors such as financials, health care and industrials as well as energy identified among those at risk from her policy proposals.In early September, Warren tweeted that she would ban fracking “everywhere” if she becomes president:READ MORE: The 2020 Democrats Agree on 7 Ways to Fight Climate ChangeThe former part of Warren’s plan would have a modest longer-term impact given the “mature state” of areas such as onshore Alaska or the federal Gulf of Mexico, according to Bernstein. However, a fracking ban would offer “much more immediate consequences,” and be “incredibly bullish for both global oil prices and U.S. natural gas prices.”Federal leasing changes could have the most impact on shale drillers such as EOG Resources Inc. and Devon Energy Corp., Brackett said. Kosmos Energy, Hess Corp., Apache Corp. and ConocoPhillips may have little to worry about from a fracking ban, however.Still, any impact from a Warren win may be short-lived. “We have a government with checks and balances,” Brackett noted, pointing to processes which have caused executive orders to be moderated. He also highlighted the ability of E&Ps to re-allocate capital to mitigate effects.And, as RBC Capital Markets wrote earlier this week, most of the sectors seen to be at high risk “are already deeply undervalued versus the broader market.”Canada ImplicationsThere may also be some beneficiaries. UBS analyst Lloyd Byrne recently identified Canadian producers such as Canadian Natural Resources Ltd. and Suncor Energy Inc. as likely to gain from curbs on drilling in U.S. federal acreage.Though at least one investment bank isn’t so certain Canada’s oil-patch will benefit from a Warren victory, given her and fellow presidential candidate Bernie Sanders haven’t been so friendly on their stance for pipeline projects. Energy investment bank Tudor Pickering Holt & Co. cited Warren’s opposition to Enbridge Inc.’s Line 3 oil pipeline replacement and expansion project, along with the mention of permits being revoked for TC Energy Corp.’s long-delayed Keystone XL oil pipeline.Also, Sanders is opposed to Enbridge’s Line 5 pipeline. “We’d caution the enthusiasm,” analysts from Tudor told clients in a note Wednesday.(Updates section on Canadian energy impact, adds tweet)To contact the reporter on this story: Michael Bellusci in Toronto at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Morwenna Coniam, Jeremy R. CookeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Noble Energy (NBL) announces an upward revision in the projection of volumes of natural gas to be supplied from Leviathan and Tamar fields located offshore Israel.
OKLAHOMA CITY, Sept. 25, 2019 -- Devon Energy Corp. (NYSE: DVN) today announced plans to announce third-quarter 2019 results on Tuesday, Nov. 5, after the close of U.S..
Devon Energy Corp. (DVN) announced today that David Harris has been appointed to the position of executive vice president, exploration and production. Tony Vaughn previously served in this role and will retire from Devon after 20 years of service. “We are proud to announce David’s promotion to executive vice president, exploration and production,” said Dave Hager, president and chief executive officer.
While the tally of oil rigs in Permian fell for five consecutive weeks, crude drillers in Cana Woodford removed rigs for two successive weeks.
OKLAHOMA CITY, Sept. 11, 2019 -- Devon Energy Corp. (NYSE: DVN) announced today that its board of directors has declared a quarterly cash dividend on Devon’s common stock for.