WPZ - Williams Partners LP

[netnet]

Is anyone looking at WPZ Williams Partners LP, a midstream MLP? With some absolutely key pipeline assets.

 

It is highly rated on VIC see here:http://valueinvestorsclub.com/idea/WILLIAMS_PARTNERS_LP/137709

It seems to me that its 'hair' comes from five factors

• The market, obviously. 20% of its revenues come from Chesapeake, but even with a 30% cut on those numbers their EBITDA is still strong
  
• 20% of its revenues come from Chesapeake, but even with a 30% cut on those numbers their EBITDA is still strong
  
• The current deal with ETE family may fall through
  
• Reducing payout.  This is kind of a positive.  If they do, they do not have to access the capital markets
  
• Some past capital raises were shall we say poorly timed.
  

 

Thoughts

[Spekulatius]

I bought some WPZ yesterday at $13 and change. This MLP has become very cheap, and it seems that they can go without accessing the equity markets for a year.

Biggest concern is that CHK may renegotiate contract once in bankruptcy (I regard this. Pretty much inevitable).

I also think that a CHK bankruptcy may trigger a WPZ debt downgrade to junk. FWIW, a distribution cut similar to KMI may actually be a positive, but would absolutely hammer WMB, the GP.

 

I am not concerned about the WMB/ETE merger failing at all, it should be positive for WPZ.

[wachtwoord]

I own it at an average price of $40 (I remember selling my position roughly a year ago at 58 before buying back in. I could have bought so much cheaper).