Surprisingly, These MLPs Still Have Hidden Upside

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Both BreitBurn Energy Partners and Vanguard Energy Partners have surprisingly hidden upside to the Permian Basin.

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  • https://www.flickr.com/photos/royluck/11216184716/in/photolist-bBU3sB-8Lf7cH-fUJ3Gv-8Pepz6-kSeXn-hK4ht2-cHRqko-8bSwEM-8EwQbD-9tutzp-6R82MT-5bErEj-6n1mUV-9t5St3-i69oP8-i68SX7-i69rVZ-9t5SP5-9t5SWy-5ujViY-9t2SoK-9t2SAn-6T526q-8mCnrp-96ehFV-5c5DX5-6wELvh-dF7SWZ-8JVSWy-6wELGq-6wEGkN-6wEGPb-6wABcM-6n5wcC-6wAAKp-832LE3-82YC5g-7qpdNT-92GvSZ-6n1mDc-3x2mEz-i69fD2-i69s3q-6c4Ejt-i67UfY-a47QeL-dnRAMX-6X5VNZ-6wAAoT-2gP3T
  • http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/permian-basin/ and https://www.flickr.com/photos/royluck/7807293884/in/photolist-ecWksZ-7FMLC1-5VjV7W-8Liea3-dyw71d-dy7Q6b-9L1vjc-b3yY7r-8Qt9W3-dxW5FJ-6ZTg2X-9L4AY5-5dMXSL-biaDjc-aBkJr3-bfA1LT-kdHQLL-gcH3P2-6BkRwu-cobCBU-aYuFDk-fTEQEV-fTEQEp-cobCsq-cTUqtf-eyS46o-ecWkw8-7QLnRv-ecWkpz-ecWkrk-7JnSaX-4PfzTG-8LhYoW-8Qi2kD-bqnjkU-dgQ8FS-cobCM5-i6amBv-8mz6NK-8Lf7cH-8qXkGs-bnaidD-8Pepz6-bF455B-an8jsG-bCiKkW-4Xcd3e-c1KiSN-fVngXW-bvZ9Ps
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  • http://files.shareholder.com/downloads/AMDA-1AK3IX/2953063731x0x735855/17D2F0F8-8C7A-48F3-98FB-2516EA305B7A/DiamondBack_Investor_Presentation_Mar_14.pdf
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  • https://www.flickr.com/photos/glenbledsoe/6316755358/in/photolist-62ovuK-728A7K-qKfjm-dx8m8Z-9qUCVU-9VE8JS-8ismfA-6K9Xb-7qGj18-dAn1qk-9kJLk6-769w63-4e5gsE-9qUDLU-aCc2i9-7XGFqk-a322kA-9VB2vZ-7Nn4rF-8vEuaj-5JyfDe-7CiUV9-6bx2BV-dK2osL-9VDBVU-a31VGs-CrMsN-78kp4r-8n4yhv-5B5sHV-9kMzLQ-8ip74r-3ctegq-dKVptQ-9VC7U9-cEJfZA-8BwCSj-dwSojb-9VAVRg-2HnQNF-65QW4o-bUVSpp-9NMdUj-azQAHx-9Fd5nz-fEK5uJ-8ip6Xv-9VDjH3-qD6v-6Tu72g
  • http://files.shareholder.com/downloads/BBEP/3154414982x0x765332/3b27b88c-bd05-4ba6-8e41-00dfc06bc4e8/Breitburn_Presentation%206.25.14.pdf
  • https://www.flickr.com/photos/glenbledsoe/6316755358/in/photolist-62ovuK-728A7K-qKfjm-dx8m8Z-9qUCVU-9VE8JS-8ismfA-6K9Xb-7qGj18-dAn1qk-9kJLk6-769w63-4e5gsE-9qUDLU-aCc2i9-7XGFqk-a322kA-9VB2vZ-7Nn4rF-8vEuaj-5JyfDe-7CiUV9-6bx2BV-dK2osL-9VDBVU-a31VGs-CrMsN-78kp4r-8n4yhv-5B5sHV-9kMzLQ-8ip74r-3ctegq-dKVptQ-9VC7U9-cEJfZA-8BwCSj-dwSojb-9VAVRg-2HnQNF-65QW4o-bUVSpp-9NMdUj-azQAHx-9Fd5nz-fEK5uJ-8ip6Xv-9VDjH3-qD6v-6Tu72g
  • http://files.shareholder.com/downloads/BBEP/3154414982x0x765332/3b27b88c-bd05-4ba6-8e41-00dfc06bc4e8/Breitburn_Presentation%206.25.14.pdf
  • https://www.flickr.com/photos/glenbledsoe/6316755358/in/photolist-62ovuK-728A7K-qKfjm-dx8m8Z-9qUCVU-9VE8JS-8ismfA-6K9Xb-7qGj18-dAn1qk-9kJLk6-769w63-4e5gsE-9qUDLU-aCc2i9-7XGFqk-a322kA-9VB2vZ-7Nn4rF-8vEuaj-5JyfDe-7CiUV9-6bx2BV-dK2osL-9VDBVU-a31VGs-CrMsN-78kp4r-8n4yhv-5B5sHV-9kMzLQ-8ip74r-3ctegq-dKVptQ-9VC7U9-cEJfZA-8BwCSj-dwSojb-9VAVRg-2HnQNF-65QW4o-bUVSpp-9NMdUj-azQAHx-9Fd5nz-fEK5uJ-8ip6Xv-9VDjH3-qD6v-6Tu72g
  • http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTQ3NTg4fENoaWxkSUQ9MjM5Njk3fFR5cGU9MQ==&t=1
  • https://www.flickr.com/photos/glenbledsoe/6316755358/in/photolist-62ovuK-728A7K-qKfjm-dx8m8Z-9qUCVU-9VE8JS-8ismfA-6K9Xb-7qGj18-dAn1qk-9kJLk6-769w63-4e5gsE-9qUDLU-aCc2i9-7XGFqk-a322kA-9VB2vZ-7Nn4rF-8vEuaj-5JyfDe-7CiUV9-6bx2BV-dK2osL-9VDBVU-a31VGs-CrMsN-78kp4r-8n4yhv-5B5sHV-9kMzLQ-8ip74r-3ctegq-dKVptQ-9VC7U9-cEJfZA-8BwCSj-dwSojb-9VAVRg-2HnQNF-65QW4o-bUVSpp-9NMdUj-azQAHx-9Fd5nz-fEK5uJ-8ip6Xv-9VDjH3-qD6v-6Tu72g
  • https://www.flickr.com/photos/glenbledsoe/6316755358/in/photolist-62ovuK-728A7K-qKfjm-dx8m8Z-9qUCVU-9VE8JS-8ismfA-6K9Xb-7qGj18-dAn1qk-9kJLk6-769w63-4e5gsE-9qUDLU-aCc2i9-7XGFqk-a322kA-9VB2vZ-7Nn4rF-8vEuaj-5JyfDe-7CiUV9-6bx2BV-dK2osL-9VDBVU-a31VGs-CrMsN-78kp4r-8n4yhv-5B5sHV-9kMzLQ-8ip74r-3ctegq-dKVptQ-9VC7U9-cEJfZA-8BwCSj-dwSojb-9VAVRg-2HnQNF-65QW4o-bUVSpp-9NMdUj-azQAHx-9Fd5nz-fEK5uJ-8ip6Xv-9VDjH3-qD6v-6Tu72g
  • https://www.flickr.com/photos/76657755@N04/6881485010/in/photolist-bu6pKh-knHgd-9htwiK-9VwVc2-9htwN2-8HWvej-62LEPx-7HedAv-kyBTGB-bH1eiH-f54gtt-9qRF8r-6QFDYU-4BfaUm-7987Vs-bH1gac-ght8m7-62QVb5-62LD8Z-6hSkjK-5KQyH9-chEaLb-5WEQZB-4sUYDb-aB7uKh-9PSLHY-fKKcRD-bxDiow-dSXXyh-9VADkr-9gYtwj-6c6Q6r-cEHZc1-bi1bhM-9qREU2-9KU6T1-8ip71R-9qUEUf-4e5gDL-8ip6YF-a32J27-8ddtDt-8PWifN-bZwdFC-9kNSHL-9kMUQb-4e1gT8-oh2EL-fEHuLF-5yL49b
  • Surprisingly, These MLPs Still Have Hidden Upside

    1. 1. Surprisingly, These MLPs Still Have Hidden Upside Photo credit: Flickr/Roy Luck
    2. 2. Legacy Oil Field Texas’ Permian Basin has been producing oil since the 1920’s. To date the basin has produced nearly 28.5 billion barrels of oil. However, its best days appear to be ahead of it as horizontal drilling is unlocking an incredible amount of oil.
    3. 3. The Big Shift The move to horizontal drilling is expected to deliver strong oil production growth in the years ahead for basin focused drillers. It’s turning companies like Diamondback Energy into a growth story… Photo credit: Flickr/Adam Barhan
    4. 4. Source: Diamondback Energy Investor Presentation
    5. 5. Cashing in Because of this MLPs like BreitBurn Energy Partners and Vanguard Natural Resources are starting to realize that their legacy oil positions in the basin could be worth more money to someone else. Photo credit: Flickr/PhotoAtelier
    6. 6. Cashing in It’s something fellow MLP LINN Energy realized when it recently traded a portion of its position in the play. LINN Energy was able to add low decline natural gas assets in exchange for its inventory of prospective horizontal oil wells. It’s a move that should really help to stabilize LINN Energy’s distribution. Photo credit: LINN Energy
    7. 7. Follow the Leader Both BreitBurn Energy Partners and Vanguard Natural Resources have potential to unlock this same value in the Permian Basin. Both companies could sell or trade away acreage in order to acquire additional low decline oil and gas properties that would enhance their distributions. Photo credit: LINN Energy
    8. 8. Source: BreitBurn Energy Partners Investor Presentation BreitBurn Energy Partners
    9. 9. BreitBurn Energy Partners As the previous slide pointed out BreitBurn Energy Partners has a growing position in the Permian Basin. The company has more than 300 potential drilling locations, which it could drill or sell to a growth focused driller. Further, as the next slide points out, there are a lot of prospective horizontal oil targets underneath its acreage that could one day add value to the company. Photo credit: LINN Energy
    10. 10. Source: BreitBurn Energy Partners Investor Presentation BreitBurn Energy Partners
    11. 11. Vanguard Natural Resources Likewise, Vanguard Natural Resources has acreage in the Permian Basin. This acreage could hold more value than investors realize as it could be prospective for horizontal drilling as noted on the next slide. Photo credit: LINN Energy
    12. 12. Source: Vanguard Natural Resources Investor Presentation Vanguard Natural Resources:
    13. 13. Vanguard Natural Resources As the previous slide noted Vanguard Natural Resources has entered into a number of drilling ventures (including one with Diamondback Energy) to leverage its expertise to unlock the hidden value of its Permian Basin acreage. Photo credit: LINN Energy
    14. 14. Vanguard Natural Resources Currently, the company has no reserves tied to these development opportunities. However, as these drilling ventures find success Vanguard Natural Resources will reap the benefits. Eventually, it could join LINN Energy and monetize its horizontal assets. Photo credit: LINN Energy
    15. 15. Investor takeaway Both BreitBurn Energy Partners and Vanguard Natural Resources have unrealized value potential in the Permian Basin. So far, investors surprisingly don’t see this value. It’s creating an opportunity for additional upside to investors that see this hidden value before the rest of the market does. Photo credit: Flickr/TaxCredits.net
    16. 16. Do you know this energy tax “loophole”?

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