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Strategies & Market Trends : Value Investing

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Jim P.

To: gcrispin who wrote (52572)	10/23/2013 10:05:51 AM
From: Spekulatius	1 Recommendation Read Replies (2) of 78530

They left money on the table because the implied valuation of XTXI and XTEX is higher than justified, imo. XTEX/XTXI a mediocre MLP and almost imploded during the financial crises. It's mostly a gatherer and a lot of their contracts are commodity/spread sensitive, which makes their earnings volatile. I don't think that their management is the strongest either. DVN's MLP has everything that XTEX needs -fee based revenues (which is the way DVN structured the MLP), dropdown potential from their E&P operations, strong sponsor (GP), investment grade credit rating. The moderate scale gain through the combination does not justify the merger. I think DVN was disappointed by the initial reaction to their S1 filing, and then decided they needed to do something quick to unlock the value of their MLP (for which they were given very little credit for). I think they would have done better LT, if they had gone alone or found a better partner. I am not complaining, the shares now reflect the value of the midstream operations and i sold some of my shares at a decent profit. Besides, have you noticed that crude prices are going down quickly?

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