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Expect These If You Are A MLP Investor

Apparently, investors in BreitBurn Energy Partners (NASDAQOTH: BBEPQ  ) didn't like the idea that the company will issue about 16 million common units this week, because the immediate reaction from the market was quite negative. If you are an investor in Breitburn or another MLP exploration and production company like LINN Energy (NASDAQOTH: LINEQ  ) or Vanguard Natural Resources (NASDAQ: VNR  ) , you need to know something: MLPs have to issue shares from time to time, and selling off shares because of an equity issuance is not the best reason to sell a company. 

The reason that MLPs like LINN and Breitburn have to issue shares to raise capital is because of the inherent structure of an MLP. Tune into the video below to find out why this is necessary and how it affects the distribution. 

Besides, we all know you are into LINN and BreitBurn for the distribution
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Read/Post Comments (4) | Recommend This Article (2)

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  • Report this Comment On November 15, 2013, at 10:39 AM, awallejr wrote:

    Actually we shareholders were expecting it and glad they did it sooner than later.

  • Report this Comment On November 15, 2013, at 11:06 AM, lrark wrote:

    Some worry about depletion of reserves, but shouldn't. Secondary ( water flooding) and terciary (co2 injection) can add a much longer life of wells than is projected by natural flow.

  • Report this Comment On November 15, 2013, at 3:02 PM, zorro6204 wrote:

    Awell, what is this Tyler fellow talking about? Jeesh, if you want to know about BBEP, ask people who KNOW the company.

    I can't recall a better market reaction to an MLP offering. It's up over 4% in two days. The offering, the pricing and the closing went super fast, and obviously the market feels as we do, that this offering, which EVERYONE knew was coming, clears that overhang and smashes the revised debt covenant.

    You should see the activity in the calls, I'm up 35% in two days. The expectation is that the cap on the unit price is off.

    Yes, MLP investors should expect offerings. And use them as buying opportunities.

  • Report this Comment On November 15, 2013, at 3:59 PM, awallejr wrote:

    I have to agree Zorro the market reaction has been great. I missed the first day on the drop but got in early next day with selling 17.50s puts. Market is seeing what many have been talking about over on the Yahoo message board. The secondary was needed to bring debt down after the Whiting buy and as the quarters go by people will see how that purcahse was great for the company.

    I always view secondaries as opportunities.

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