Saturday, August 25, 2012

Good Dividend Payer BreitBurn Energy Partners Brightens Its Future With New Oil Asset Purchases

The newest addition to the COT Fund, BreitBurn Energy Partners, is getting some well deserved attention. With some new acquisitions complete and blow out EPS numbers BBEP is sure to keep gathering new investors.

From guest blogger David White......

BreitBurn Energy Partners LP (BBEP) is an oil and gas E & P company. It seemed to right the boat in the last earnings report with adjusted EPS of $1.29 versus an estimate of $0.21, a beat of $1.08. Net production increased 18% year over year, and adjusted EBITDA increased 28%. Logically good results should continue next quarter as natural gas prices, NGLs prices, and oil prices have rebounded from their Q2 lows recently. There is no reason to believe production will shrink. Rather BreitBurn's recent purchases ensure that production will increase.

On June 28, 2012, BreitBurn completed the acquisition of oil properties in Park County in the Big Horn Basin of Wyoming from NiMin energy Corp. for approximately $93 million. On July 2, 2012 BreitBurn completed the acquisitions of two largely oil properties in the Permian Basin in Texas from Element Petroleum LP and CrownRock LP for approximately $150 million and $70 million respectively. Production from all of the above will be accretive to BreitBurn's Q3 production and earnings.

Further BreitBurn at its Q2 earnings announced that it was increasing its 2012 capital program by $50 million. This expands the total 2012 capital program to $137 million, and it will be allocated mostly to oil development activities on the newly acquired assets and the legacy partnership assets. This is good news for the future because natural gas prices have fallen much further than oil prices in the past few years (even in the last year).

BreitBurn does have good hedges on both natural gas and oil, and these have largely saved the company with the recent fall in natural gas prices. These charts specifically delineates the hedging..... Here's the charts and the entire article.

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