EKS,
I have not been able to find anything that calculates this, and im a pretty good digger - i am guessing this is a relatively new concept if there is such a thing in finance.
The thing for me that i have been trying to understand is what is the level that the companies can continue making distributions, while still issuing debt and equity to pay for it (and receiving 'drop downs'). If this makes any sense?
I'm trying to seek the truth in all this if there is one.
BWP was kind of an interesting case study, I spent my morning a few days ago reviewing it and going through the numbers.
2011-2013 they generated approx 1067, 1058, 1028 million in revenue
2011-2013 they generated approx 296, 380, 300 million in free cash flow to the firm (FCFF)
2011-2013 they generated approx 113, 220, 174 million in free cash flow to equity holders (FCFE)
2011-2013 they paid out distributions of 419, 478, 533 million.
2011-2013 they issued 585, 2135, 1128 mil. in new debt, while paying back 830, 2295, 1255 mil in debt, with net debt issuance of -245, -160, -127 respectively.
2011-2013 they issued 170, 847, 368 million in equity
2011-2013 the COROA ( Cash Operating Return on Assets) was 7%, 8%, and 7%
I suppose the one thing that stands out for me in the Boardwalk case is that they continued to make distributions while not only trying to pay down debt, by issuing new equity. Their returns on the assets already in place not only didn't yield any additional revenue, but also operating cash flow.
In boardwalks case they did not acquire any more assets or receive drop downs to filter through revenue and operating cash flow to continue to support the divy- if that makes any sense (cap ex been pretty steady).
I am not so sure if this is how i am suppose to be looking at it? please give thoughts if you differ in opinion. If the company does not increase revenue while others stay constant while paying more out than what can be generated, something has to give i would think. I'm just trying to follow the cash
I have discussed previously about the position they are in with assets that are not being utilize (such as storage, boardwalk, texas gas, a boardwalk field services system in eagle ford that has no gas in it) - they are probably up against non renewing contracts once the haynesville tport deals come off the books and are one of the few operators that i feel like are staring reality in the face - i actually like this btw. This is probably a little hindsight bias but its all i got. |
