Shareholders of Breitburn Energy Partners LP (NASDAQ:BBEP) are disappointed this morning after the company announced that they will be suspending the distribution on its Common Units. The move, which was announced last night, has already been put into effect.
The reason for this suspension has been blaimed on the fall in price of many valuable commodities, speificaly crude oil. In response to this news, analysts at Wunderlich have reduced their price objective from $4 to $2, and they currently have a “hold” rating on the stock.
“In light of the ongoing weakness in commodity prices, and crude oil prices in particular, and after careful consideration, Breitburn has decided to suspend cash distributions on its Common Units. Since December of last year we have taken a series of proactive steps to address the ongoing challenges in the commodity markets. These included: 1) reducing our capital budget by over $360 million from BBEP and QR Energy’s combined 2014 levels, to only $200 million this year; 2) strengthening our balance sheet in April by raising $1 billion in long-term debt and convertible preferred stock, the proceeds of which were used to reduce short term borrowings; 3) implementing a companywide workforce reduction plan resulting in significant savings of general and administrative expenses; and 4) reducing Common Unit distributions in both January and April to conserve cash and improve financial and operating flexibility. While the decision to suspend Common Unit distributions at this time is a difficult one, we believe it is in the long-term best interest of the company and will allow us to save approximately $111 million annually, which we can redirect to reduce debt or invest in the business and better position Breitburn for the future.”
The stock is down 19.00% or $0.38 after the news, hitting $1.62 per share. About 2.28 million shares traded hands or 45.22% up from the average. BBEP has declined 68.25% since April 28, 2015 and is downtrending. It has underperformed by 67.36% the S&P500.
Out of 8 analysts covering Breitburn Energy (NASDAQ:BBEP), 0 rate it “Buy”, 3 “Sell”, while 5 “Hold”. This means 0 are positive. $4 is the highest target while $2 is the lowest. The $2.79 average target is 72.22% above today’s ($1.62) stock price. Breitburn Energy was the topic in 11 analyst reports since August 7, 2015 according to StockzIntelligence Inc. FBR Capital maintained the stock on October 12 with “Market Perform” rating. Bank of America downgraded the shares of BBEP in a report on September 25 to “Underperform” rating. Finally, UBS downgraded the stock to “Sell” rating in a September 9 report.
The institutional sentiment increased to 0.77 in Q2 2015. Its up 0.07, from 0.7 in 2015Q1. The ratio increased, as 31 funds sold all Breitburn Energy Partners LP shares owned while 35 reduced positions. 17 funds bought stakes while 34 increased positions. They now own 13.57 million shares or 18.65% less from 16.68 million shares in 2015Q1.
Akanthos Capital Management Llc holds 4.77% of its portfolio in Breitburn Energy Partners LP for 500,000 shares. Lansdowne Partners Austria Gmbh owns 13,134 shares or 2.83% of their US portfolio. Moreover, Sfe Investment Counsel has 0.29% invested in the company for 149,610 shares. The Maryland-based Arrow Investment Advisors Llc has invested 0.24% in the stock. Albert D Mason Inc, a Massachusetts-based fund reported 71,199 shares.
Breitburn Energy Partners L.P. is an independent gas and oil partnership focused on the acquisition, exploitation and development of oil, NGL and natural gas properties in the United States. The company has a market cap of $346.68 million. The Company’s assets consist primarily of producing and non-producing oil, NGL and natural gas reserves located in seven producing areas, which include Ark-La-Tex ; Michigan, Indiana and Kentucky (MI/IN/KY); Permian Basin in Texas and New Mexico; Mid-Continent (Oklahoma, Kansas and the Texas Panhandle);Rockies (Wyoming); Florida (and Alabama) and California. It currently has negative earnings. The Company’s midstream assets include transmission and gathering pipelines, gas processing plants, NGL recovery plants, a controlling interest in a salt water disposal company, a 51-mile oil pipeline in Oklahoma and the 120-mile Transpetco Pipeline.