Came to the same conclusion. I suspect holders were looking for something more concrete than "significant," but that will sort itself out soon enough.
It's an okay, not great price, but it basically resets the company with more liquidity and a new narrative, after they'd hamstrung themselves with commitment to a high payout that the market gave limited credit for (for the reasons you outline above). Now they have scale and can grow, for good or ill.
I think this is moderately good news priced as bad news.
Yeah this could close the discount, so I don't get the hate at all. Dividend investors have tunnel vision sometimes, caring way too much about their precious dividend.
In the S-1 they were targeting $65MM in annual distributions. Obv already a different environment now, but if we can take this as new management's stance, that'd be ~$85-90 million for newco, or a ~50% cut (all very approx), so I can see angst over that. The "philosophically aligned" comment in the CC makes me think it might be a bit higher, though. Plus might be some initial cashing out once deal goes through. But a 6%+ yield that's growing is attractive (now if only I could figure out why people love Brigham so...).
Yeah it kind of depends on how attractive acquisitions are going to be. If they overpay there and don't pay a distribution, this probably won't work out well. But I am not too worried about that.
They did pay about $20-24k per NRA in 2019 and 2020. Current valuation is $11k per NRA.
VNOM is trading at $20k per NRA (assuming 213k NRA) and MNRL at $14k/NRA.
DMLP hard to say, since they got a lot of trash acres. Actually MNRL is probably closest comparison to FLMN right now, and looks attractive as well.
Edit: Actually MNRL has a lot of trashy assets as well, only 38% of their NRA are in Permian.
I'm trying to square the fact that the P/E is 33x yet it offers a 13% dividend yield on reported numbers. In a run-off mode, will operators be able to continue production at the current rate for another 10 years? Or why do accountants want to amortise the assets faster, which I presume it's what's happening with earnings?
Yeah PE is a meaningless metric with royalties, unless they have fully amortized. Also LTM numbers take Q4 2020 as well, when oil prices were much lower. I think metric to look at is drilling inventory.
Then new techniques allow drillers to revisit areas as well. All of this is not fully taken into account in depreciation figures. Only a relatively small percentage of oil is recovered from an area before they move on.
Came to the same conclusion. I suspect holders were looking for something more concrete than "significant," but that will sort itself out soon enough.
It's an okay, not great price, but it basically resets the company with more liquidity and a new narrative, after they'd hamstrung themselves with commitment to a high payout that the market gave limited credit for (for the reasons you outline above). Now they have scale and can grow, for good or ill.
I think this is moderately good news priced as bad news.
Yeah this could close the discount, so I don't get the hate at all. Dividend investors have tunnel vision sometimes, caring way too much about their precious dividend.
In the S-1 they were targeting $65MM in annual distributions. Obv already a different environment now, but if we can take this as new management's stance, that'd be ~$85-90 million for newco, or a ~50% cut (all very approx), so I can see angst over that. The "philosophically aligned" comment in the CC makes me think it might be a bit higher, though. Plus might be some initial cashing out once deal goes through. But a 6%+ yield that's growing is attractive (now if only I could figure out why people love Brigham so...).
Yeah it kind of depends on how attractive acquisitions are going to be. If they overpay there and don't pay a distribution, this probably won't work out well. But I am not too worried about that.
They did pay about $20-24k per NRA in 2019 and 2020. Current valuation is $11k per NRA.
VNOM is trading at $20k per NRA (assuming 213k NRA) and MNRL at $14k/NRA.
DMLP hard to say, since they got a lot of trash acres. Actually MNRL is probably closest comparison to FLMN right now, and looks attractive as well.
Edit: Actually MNRL has a lot of trashy assets as well, only 38% of their NRA are in Permian.
I'm trying to square the fact that the P/E is 33x yet it offers a 13% dividend yield on reported numbers. In a run-off mode, will operators be able to continue production at the current rate for another 10 years? Or why do accountants want to amortise the assets faster, which I presume it's what's happening with earnings?
Yeah PE is a meaningless metric with royalties, unless they have fully amortized. Also LTM numbers take Q4 2020 as well, when oil prices were much lower. I think metric to look at is drilling inventory.
Then new techniques allow drillers to revisit areas as well. All of this is not fully taken into account in depreciation figures. Only a relatively small percentage of oil is recovered from an area before they move on.