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Roger Conrad

8:04

Kinder Morgan is not an MLP but is a strong recommendation up to 22 and a CUI Aggressive Portfolio member. Also ETE has been merged into ET, Energy Transfer LP. But I would say these four names along with TRP, PBA, OKE and PAA represent the creme of North American midstream.

Lawman

8:05

Do you have any thoughts on dividend paying big pharma companies such as BMY?

Roger Conrad

8:05

We do recommend some of these stocks in CUI Plus. I don't have an opinion for you today on BMY.

ron

8:05

As to your comments on ET. The stock seems very inexpensive. Would you still be a buyer at this point.

Roger Conrad

8:05

I agree and please see my answers on other questions about Energy Transfer LP in this chat.

Lawman

8:12

With the price of Canadian nat gas so low, what are the prospects for AETUF? I bought AETUF, on your recommendation, at a much higher price. Should I cut my losses, hold, or buy more?

Roger Conrad

8:12

We're still rating this one a hold in EIA, though it's on the Endangered Dividends List precisely because of those low natural gas prices. This is still a very well managed E&P with great reserves, low costs, low debt (1.3X debt to FFO) and still nearly 3-to-1 distribution coverage> It's running hard to stand still like the rest of its industry on both sides of the border but it has plenty of levers to pull to weather this cycle and ride the eventual recovery higher. Not excited about buying now but willing to hang in.

maureen brunner

8:17

I'm joining late because I had issues with my password. Just want to know if EnerPlus has a future. I have a large holding and have owned it for years. Essentially no dividend.

Roger Conrad

8:17

I have basically the same comment for Enerplus as I do for ARC. One difference is that it's in a slightly better cash position (debt to FFO just 0.7 times)--and is therefore able to buy back up to 10% of its shares. Another is it's primary production isn't in Canada but the Bakken of the US, where it enjoys much better access to pipelines than Canadian producers do. That's the result of a conscious management strategy over several years that's paid off. The company still has a big natural gas presence in the Marcellus that hasn't fared as well due to very weak pricing. But it has cut unit costs 7% sequentially from Q2. The stock is also a hold--not excited to buy but OK to hang in there.

Guest

8:21

Roger: Price action for EPD lately has been quite weak. Is this a general trend for midstream or idiosynchratic to EPD? If so,why? It's my only MLP now and I'm considering booking the losses for tax purposes. Thanks.

Roger Conrad

8:21

No actually Enterprise has outperformed the Alerian MLP Index by nearly 15 percentage points year to date--which is really saying something since it appears to be close to 20% of the index on its own. I think if one was just going to hold one MLP, this would still be it and in fact it's conservative enough for pretty much anyone. That doesn't mean share price is immune when MLPs go into a tailspin and energy is sold off. But their business is growing very reliably as is their dividend every quarter. It's not one I'd be considering a candidate for tax selling--also anyone planning to do so should check carefully on what taxes they might owe, especially if you've held it a long time.

Tom

8:27

Roger, I am using MINT as my cash alternative, largely because I can sell shares and use the money immediately to take advantage of fleeting price disconnects for my watch list stocks. Do you have any other thoughts on MINT?

Roger Conrad

8:27

My first thought would be to make sure you're in a commission free account that won't charge you to sell or buy--otherwise there's not a lot of flexibility for using the cash to make investments. Second, the monthly distribution appears to be somewhat volatile--26 cents in February to 21 cents on October. Finally, this fund appears to be the polar opposite of simple, and I would really be concerned about how it might perform in say another 2008. And finally, it has a very high expense ratio for a cash alternative of 42 basis points. Bottom line, I really prefer the Vanguard fund (VWITX) for my purposes.

Lawman

8:28

What is going on with the MLP space? What would it take to change the sentiment, and how likely is this to happen, and when? Are there any MLP's that you consider to be worth picking up at these depressed prices?

Roger Conrad

8:28

I think the better companies are just going to have to prove they've made adjustments the past five years to weather ups and downs in drilling activity in North America. I think they will, but it's going to take time. As for what to pick up, I've mentioned several names during the chat like EPD, ET, MMP etc. But I really would suggest tuning into the EIA chat on Tuesday for a full discussion.

Jeff b

8:29

Hi Roger, could you give me your opinion on NGL. I own their preferreds

Roger Conrad

8:29

Please see my answer on the company to a question earlier in the chat. The preferreds should be OK so long as NGL keeps paying a common dividend--though note that the company is currently on our EIA Endangered Dividends List.

8:32

I have AM & AR keep thinking they can't go any lower and then they do. What is your take on holding these further?

Roger Conrad

8:32

They can always go lower. The key though is whether Antero Resources can meet its production targets and thereby provide the needed throughput for Antero Midstream to meet its cash needs. The Q3 numbers were adequate if uninspiring for this purpose. The next set of numbers is due out in mid-February. We're holding the AM position for now, pending an end year decision. We would not be doubling down on it or any other single stock or stocks. For more discussion, tune into the EIA chat Tuesday.

Jeff b

8:32

Roger, do you have an opinion on NGL. I own their preferreds.

Roger Conrad

8:32

Please see may answers to NGL questions earlier in the chat.

Denny H.

8:38

What's your take on O&G MLPs ET, MPLX, AM, EPD? Are they worthwhile buying now?
You have a sell on LMRK --- What about the preferred LMRKN?
Thanks

Roger Conrad

8:38

I won't repeat my answers from earlier in the chat regarding oil and gas MLPs. We will be discussing all of these further in the EIA chat on Tuesday. Regarding Landmark, my worst case and the reason it's on the CUI Endangered Dividends List is a payout cut of about one-third. That will not affect the distribution paid on the preferreds. I liked the Q3 numbers generally for the company. But it still doesn't look any closer to covering the payout with cash flow and is essentially borrowing to cover the shortfall, as well as to fund CAPEX. Management will probably resist a distribution cut to the end. But that seems to me to be the best way for them to resolve a lot of problems at once. I do think the shares would drop on a cut, which is why I have it a sell. But I would be interested in the company again as a potential buy if that did happen, depending on where the share price ended up.

Don

8:40

Thoughts on MLP's that don't seem to be participating in the chase for yield.
ET
MPLX
EPD

Roger Conrad

8:40

Don, I won't repeat what I said about these earlier in the chat and we'll discuss them in more detail Tuesday. But suffice to say, all three covered distributions very handily in Q3 and look set to going forward as well. MPLX is a special situation in that there's still some uncertainty about what Marathon is going to do with its ownership stake. But business still looks pretty solid and the share price is low enough to reflect any headwinds to the business and from Marathon, and then some. Looks cheap.

Jim C.

8:43

Dear Roger,
Can you provide an update on ENBL? They raised their dividend over the summer and are paying it again next week. Why is the stock price seemingly in free fall?

Also, you had indicated you were going to add ENBL to the list of tracked stocks owning to its partially being owned by CNP and OKE. Can you add for December issue?

Kind regards,

Roger Conrad

8:43

I've addressed Enable several times during the chat. To summarize, I think the distributions are going to keep flowing because the business will support them and the primary owners CNP and OGE want them. I don't see this drop in share price as permanent. The company is just going to have to prove it can weather the reduction in drilling in Oklahoma. Again, I'll have more to say in the EIA chat.

Gary L.

8:43

Hi Roger,
Bought this stock last summer on your recommendation for $14.21. It's now trading for about $11.50. Please explain what happened, and whether it is still a good stock to hold.
Thanks.

Roger Conrad

8:43

I assume you're talking about Energy Transfer LP--which I really don't have anything more to add to what I've already said earlier in this chat. It's still a buy for anyone who doesn't already own it.

Frank B.

8:47

Why are MLPs taking such a beating since August?

Roger Conrad

8:47

I've addressed this already in the chat and will do so in more detail in the EIA chat on Tuesday. But basically, people are concerned about MLPs and midstreams ability to weather what appears to be an emerging reduction in North American oil and gas production in 2020, as more producers idle more rigs. We believe the best midstreams have done what they need to to weather this normal cyclical change by streamlining and cutting debt the last five years.

Roger Conrad

8:47

In contrast, the market is pricing these stocks and MLPs like they're headed for another 2014-16. We think our favorites will prove their resilience in their results the next few quarters. That will steady their share prices and we'll see a strong recovery.

Mr. G.

8:51

Roger

I'm getting killed owning AM at $14.27 in an IRA, so, no tax loss possible - what to do?

How about ENBL at $14.90?

WES at $29.75?

Roger Conrad

8:51

We'll be talking about these and other fallen MLPs in greater detail on Tuesday during the EIA live chat, starting at 2 pm--and I really hope all of you asking these energy questions will join us then, when we'll when also have the expertise of my partner Elliott Gue in the house.

We'll also have the benefit of another EIA issue in your hands. For now, no changes in any of these three positions. Western Midstream by way of a comment is mostly being hit because of uncertainty of about Occidental its primary owner is going to do. Had a great Q3 in contrast. More to come at the EIA chat. Please attend!

Lou G.

8:56

Roger,

Many thanks for all your work over the years. My question regards two midstream companies that have been recommended in the past in EIA. What are your current thoughts on Enable (ENBL) and Enlink (ENLC)? They have been in-and-out of favor over the years. Thanks again. Lou

Roger Conrad

8:56

Thanks Lou. I hope you'll join us as well next week. I've said a lot about Enable and won't repeat. As for EnLink, it looks beat up well out of proportion to the weakness they alluded to with Q3 results and guidance earlier this month. People are obviously concerned about their exposure in Oklahoma--where their territory apparently has seen a mass exodus of rigs in the second half of the year. They're still covering the payout and management is guiding to higher coverage going forward, which is a positive. But it's hard not to see at least some distribution cut coming, particularly if we do see a big drop off in volumes. I will say this is a name we're looking at coming into the end of the year to make sure we want to still own. But again, if you want more discussion, please come out for next week's EIA chat.

Jeff b

8:59

Roger do you think TELL can be a Chenire someday? Ichan ran the founder out of Chenire and he started Tell.

Roger Conrad

8:59

It's possible, though I have to say I prefer larger companies that already have a critical mass in this business. The small names have too much exposure to financial pressures now, and potentially to natural gas price pressures at some point in the future. This is a capital intensive business that will be dominated by large capital rich companies.

9:02

MPLX has done particularly poorly compared to MLP's. Do you still see this company as an upper tier MLP?

Roger Conrad

9:02

As I noted above, operations are very solid and the Andeavor merger brings a lot of opportunities for streamlining and debt reduction. What's really hurt the shares is uncertainty about Marathon's intentions with Elliott Management breathing down its neck. I think people are pricing in too much speculation results will be shareholder destructive and are ignoring the probability that we'll see the opposite. And in that context MPLX sure looks like a high quality name selling very cheap.

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