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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (169484)	3/14/2021 11:19:07 AM
From: Lee Lichterman III	2 Recommendations Recommended By bull_dozer SirWalterRalegh Read Replies (2) \| Respond to of 218836

High debt. Midstreams went on a spending spree right up until January 2020 trying to get growth at all costs. When the price of oil collapsed and rigs were shut down, use rates went down with them and many of the smaller drillers went under leaving bills for pipeline use unpaid.

To: carranza2 who wrote (169484)	3/14/2021 2:13:54 PM
From: carranza2	Respond to of 218836

I wonder if the ones backed by any of the majors (Shell, BP, etc.) might not be worthwhile.

To: carranza2 who wrote (169484)	3/14/2021 5:08:34 PM
From: sense	Read Replies (1) \| Respond to of 218836

I've been a fan of them since they were first split out of integrated oil companies. In the first major market decline following their... intermediation... as toll takers and monitors of the flows... the risks included lack of awareness in the market paired with concern over the level of debt... they do tend to be highly leveraged... That fact was the reason for their being restructured outside the upstream exploration and production businesses,... to reallocate the capital with more rational divisions tied to very different performance requirements in the different segments. The first cycle, when they were new, most people hadn't figured that out... didn't trust the idea of the carve out... and were fearful of the debt. I bought them instead after the market crashed... dimes on the dollar or better... and when the market recovered, they were fairly quickly restored... and improved over time with dividend growth tied to the recovery and rising prices. Big VC and Goldman had funded the carve outs without anticipating the market crash... so the opportunity was obvious it you paid attention. Few do. Since then, its replayed as an opportunity with each new market decline... the leverage over time tied to the cost of dividends at the market bottom, versus the dividend flow at the subsequent market peak. They are the current markets most reliable performers in the booms and busts in dividend plays that used to be a play tied to the shipping stocks... bought for pennies on the dollar in downturns... literally for pennies and dimes per share in bankruptcy... for share prices and yields in dollars when busts turned to booms. That play doesn't really work the same way now... as market structures have changed... but, the mid-streamers tend to carry on as long as they can to sustain the payout. If they do cut... they get radically cheaper... while cutting engenders huge internal flows to repair balance sheets if done timely... so, if they can survive the debt...or if you buy them post BK... they can see huge leaps when the re-captured flows fix things well enough to restore prior divvie flows. So, there is a "two step" timing issue in the play that requires work in the second step to exploit picking survivors vs first round "winners"... leverage vs reliability in picks also being a timing issue... re-floating boats during rising tides working better than re-floating them at other times... the re-floated boat increasing in value more than the already floating fleet on a rising tide. Risk and return linked... but risk v timing and risk taking v risk avoiding... a source of leverage inherent in the market structure of its division in the market v particular issues and particular investors. There are new risks on the horizon now... as flows in pipes and sustained or growing dividends do depend on sustained growth in production as well as price growth in energy. So the current cycle has new risks tied to the market expectations re forced transitions to green energy... which will do nothing in the short term to alter the flows in the pipes now... or the growth of dividends tied to price increases in energy markets. That growth potential is still tied to expectations in sustained or better economic performance and growth in demand driving demand driven price growth. Working with OPEC to gain price stability is an advantage relative to gold in working against the Fed and the banks in undermining it... as monitoring deviations in the gold / oil ratio with policy changes should show... as they either track in parallel or diverge... If you think the economy is improving in a sustainable way... relative to March 2020 being an exogenous Covid driven market event... then, long oil makes sense... given monetary policy seems it is an inevitable driver of inflation, from here... paired with declining production lagging the bust... and OPEC throttling production to support prices... and as oil is a better inflation hedge than gold due to its economic role and its positive vs negative price control influence in the market manipulations that do exist. Oil at $90 or $180 should be predictive of future performance.... As is being addressed by some expecting that now not just in the mid-streamers. However, if what you are expecting is that the wheels are going to come off the market soon... accelerating our ongoing deflationary depression... and causing another event like March 2020... or worse ? Both outcomes are possible... or even likely... you can believe in both at the same time... that just meaning a need for a finger on the pulse that informs your expectations re sequences in events that are likely... trading well always meaning getting the timing more right than wrong...