THIS MONTH’S ISSUE
Scarcity Drives Midstream Values and Mergers
› Please join us Tuesday, April 30 starting at 2 pm for this month’s live webchat. Thanks for reading!—EG, RC. Canada’s CAD34 billion Trans Mountain Pipeline Expansion project seems unlikely to start shipping oil from Alberta to the Pacific Coast by a projected in service date of May 1. And startup of the 303-mile Mountain Valley Pipeline (MVP) bringing Appalachian natural gas to Virginia and the Carolinas may push well past the current target of June 1. But after years of construction delays, repeated court challenges to permitting and billions of dollars in cost overruns, these pipelines are nearing the finish line. And by the second half of the year, both should be filled to full shipping capacity. The primary beneficiary of a functioning MVP will be EQT Corp (NYSE: EQT). By then, it will have completed the merger with its former unit Equitrans Midstream (NYSE: ETRN), which owns almost 49 percent of the pipeline. EQT has contracted for roughly two-thirds of MVP’s capacity and is already pushing for expansion. That makes it also a candidate for buying the remaining ownership: NextEra Energy’s (NYSE: NEE) 30 percent, Altagas Ltd’s (TSX: ALA, OTC; ATGFF) 10 percent, Consolidated Edison’s (NYSE: ED) 10...
Live Chat
with Elliott Gue and Roger ConradOn 05/30/2024
Exxon Mobil Acquires Pioneer Natural Resources
Effective May 3rd, Exxon Mobil (NYSE: XOM) has closed its acquisition of Model Portfolio holding Pioneer Natural Resources (NYSE: PXD) in an all-stock deal. Pioneer shareholders received 2.324 shares of Exxon for every share of Pioneer. As we’ve explained in recent issues, our advice remains to hold shares of XOM acquired through this deal. In the Model Portfolio for Energy & Income Advisor, we recommended holding 30 shares of XOM and 18 shares of Pioneer Natural Resources. So, under the terms of this transaction you should have received 41.832 shares of XOM (2.324 x 18). For purposes of the portfolio...
The First Six Reporters—Favorable Portents for Second Half 2024 and Beyond.
In the Energy and Income Advisor issue earlier this month, we highlighted a fundamental fact about oil and gas in spring 2024: Investors have not yet woken up to the fact that energy is a growth business. The popular misconception that oil and gas are being rapidly phased out is at the core of energy stocks’ historically low valuations and therefore S&P 500 under-weightings. And the misperception is all the more remarkable considering we’re now about four years into the current up-cycle. In previous cycles at this stage of the game, producers have been starting to focus less on controlling...
Endangered Dividends List
Endangered Dividends List companies are vulnerable for one or more of the following reasons: Cash flow coverage of distributions is inadequate. Elevated debt levels with imminent refinancing needs. Revenue pressure triggered by weakness for at least one key asset. Inability to access the equity market on favorable terms to fund capital spending, forcing management to utilize more internally generated cash flow. Exposure to volatility in commodity margins from either rising or falling prices of raw materials. Aggressive general partners anxious to buy in limited partners’ cash flows at discounted prices. Regulatory reversals. Expiring contracts with little hope for renewals at...
Meet Our Editors
Elliott H. Gue
Founder and Chief Analyst
Since earning his bachelor’s and master’s degrees from the University of London, Elliott has dedicated himself to learning the ins and outs of this dynamic sector, scouring trade magazines, attending industry conferences, touring facilities and meeting with management teams.
Roger S. Conrad
Founder and Chief Analyst
Roger S. Conrad has successfully advised income investors since the 1980s, with a nationally acclaimed sector specialty in utilities, telecommunications and energy. He’s a managing partner of Capitalist Times author of Power Hungry, independent director of NYSE-listed Miller Howard High Income Equity Fund and contributing editor to Forbes.com.
