https://www.zerohedge.com/news/2018-03-15/mlps-crash-after-ferc-rule-changes
please explain. am i going bankrupt with my MLPs?
I don’t know fully all of the details behind the “income tax allowance cost recovery”, but it sounds like they are allowed to pass through to their customers a portion of their income tax, and now they won’t be able to pass it through anymore. This is going to affect revenue and profitability to some point, but I don’t know how. I deal mainly in the personal income tax realm, and all the associated problems associated with that. (Estate tax, gift tax, pass thru entities, etc.)
As a side note–I hate MLP’s, mainly because they issue K-1’s. Too often I see brokers buying $500 worth of Memorial Production Partners, saying, “They’re paying an 8% dividend? Where can you find 8%? Not in bonds! And definitely not in equities!” (They ignore the fact that there is a capital appreciation component of the security. But I digress.)
So Memorial Production Partners gives them a $40 yield. And I charge the client $50 just to figure out the K-1. Not a good investment.
yea i stay away from K-1s, dont want to deal with them.
there are a few MLPs that are organized as c-corps though.
im reading this only affect interstate MLPs intrastate should be fine.
Another reason I don’t like MLP’s: Almost all of them are oil and gas related. Not a problem for 95% of the world. But I live in West Texas, where our economy is 100% dependent on oil and gas. So I encourage people to diversify against their human capital, and not invest in oil and gas (at least not in their securities portfolios).
Got some nice paper losses on some real estate K-1s this year. I think it reduces taxable income.
Hopefully djt does something about this. Maga
back then by becoming mlps, they can avoid paying corporate tax since its a pass through entity. much like reits.
since they got FERCed (haha) gas line are now required to pay that corporate tax, and oil line are under review for 2020. also keep in midn these affects regulated rates not market rate or negotiated rate!
if mlps have to pay corporate tax, then whats the point of remaining as an mlp. if you remove the mlp designation, you take away the need to distribute cash to ivnestors. and ultimately, it makes the world a better place, so that they dont have another debt crisis.
i feel like a good business article headline should be
“what the Ferc!?”
this is almost as funny as einhorn’s presentation
“Mother Frackers”
Looks like most mlps will not be affected much based on their pr releases yesterday
i bought more at the open. not skured
you should be. that industry is not poppin! high levels of debt. high capex needs for growth. and pipelines have limited life. there is also the rise of renewables which have brought cost down significantly, and are finding ways to store excess capacity.
have u been following the midstream industry?
debt levels are going down, cash flow stable/increasing.
midstreams are like tolls. someone needs to transport gas/oil.
slow and steady wins the race
yes sir! midstream prolly the safest compared to the up/down. they have guaranteed minimum for the projects they undertake. but consider what they are doing, every dollar they receive they distribute most. so unless you were there in the beginning, buying when the price was low, and the life of the project was long, those minimums might not even benefit you. sort of like a ponzi scheme almost. the people who own it in the end are fooked!
in terms of valuation they are definitely better than they were historically. in that regard they are cheap. cash flow is growing slowly but surely, but debt as a whole is still rising for most. now if you are looking at a multiple of debt/ebitda then it is definitely falling, but i have issues with that metric and it is the industry standard.
i hate it when ppl say midstream are like road talls. they are not. roads can be used forever. the minute oil runs out for your location, you are fooked! that is what i mean by finite life!secondly, renewable enerfy costs are still declining and are already pretty close in terms of cost. this is definitely the biggest issue, that will kill the majority of pipeline life.
http://www.businessinsider.com/renewable-energy-will-be-cheaper-than-fossil-fuels-by-2020-2018-1
https://www.lazard.com/perspective/levelized-cost-of-energy-2017/
how is oil going to run out can you give me time frame here?
they also transport NatGas, can you tel me when that runs out?
i dont see renewables doing much in the next 20-30 years you will still need oil and gas.
the big guys are slowly accumulating large positions (Blackstone, etc) i guess they might not think pipelines are a bad business.
how about all the exporting the US does to other countries, will these companies ship oil;natgas to the terminals on drones?
i mean im not saying oil and nat gas will die or i know when it will die. im saying that it will get more expensive to drill them as time continueso n hte older projects. the newer projects are protected with 10 to 20 year cotnracts, so they will at least last that much, but they will probably become more rare as renewables continue to take market share (renewables went from 7% in 2000 to 18% today). I would not be surprised if they exceed 50% by 2040. essentially over time your pipes will become more useless.
dont know what going on with blackstone. are they in debt or equity side? also keep in mind even the sauds are planning for an ipo to diversify their risk away, and are drilling with 0 fucks at the price of oil.
us is exporting more, cuz us tech increased supply, but what i am saying is us is spending too much. renewables is getting to a point where it will be cheaper even without the subsidies.
ok get back to me in 20 years. lots of ifs in your thesis.
not sure what the saudis have to do with anything.
let me know when factories and business will be running on renewables.
https://oilprice.com/Energy/Crude-Oil/Why-US-Oil-Exports-Are-Surging.html
long-term oil and gas demand has everything to do with the electrification of vehicles. if self-driving disrupts transportation, expect oil prices to plummet and never really recover. if self-driving takes a decade or so, oil demand will remain robust. there will always be some level of demand so the pipes connected to the most efficient oil basins will always be carrying product.
yo dont talk about my pipes like that.
btw what energy do factories use to create EVs?