I must admit I’m a tiny bit worried that NRP doesn’t say more forcefully they intend to buy back their units when they get excess cash. As you point out, they trade at about 4x FCF. It should be a no brainer to buy back units with that kind of multiple.
Btw, have you noticed that NRP’s unit price rises a lot just before warrants are settled (usually for cash)? IIRC, the warrants settlement price is based on the average unit price over the past 20 days.
Thanks for the comment, Tian! On the possibility of buybacks, we’ve heard the management is concerned about decreasing liquidity. We heard they favor dividends. Dividends or buybacks, we’d be fine with either.
We haven’t noticed the stock price correlation with the warrants. We’ll pay attention. Thanks!
We called the trustee about this very question. What we found out surprised us.
Apparently there’s another entity involved that splits 49% of the capex with Blackbeard while PBT splits 51% of the capex with Blackbeard. You’ll note that 301 x 0.51 x 0.75 is close to 106. Not exact but close.
Thanks for the update! I will leave here my comments that maybe can be useful (let me know if it is not the case):
NRP: It is an amazing company, however, I discovered that this PTP security is heavily taxed for non USA buyers (10% on the enterprise value at the moment of selling, absurd....). So bad I cannot participate as shareholder because I really like the company and the management team!
PBT: I have already shared my thought with you about PBT but I want to iterate two other ideas I have matured after reading the recent report. (i) It seams that the production of both oil and gas is somewhat stalled in the last period of time. This has made me wonder: what is the current CAPEX is required to keep the current production? In other words, we can really expect a drastic reduction for "milk the rewards of its years of investment"? (ii) From the PBT website you can check the depreciation of the royalties due to oil and gas extraction. In 2023 there has been a depreciation of 13%! This is somewhat a very bad news, and, despite I am a shareholder in PBT, I still feel somewhat uneasy to the current situation and long-term perspective for the stock. I am not sure I can, so I ask here before you permission, but I have a spreadsheet with some case scenario where I have calculated the dividend yield expected for 2024 and 2025. Maybe it could be useful for someone.
GTX: I strongly share you prospective and I believe that the stock has a nice path head!
Regarding PBT what is the potential of the acreage in ward and peco counties which seem to be in the Delaware basin. The land above crane county are within the midland platform and probably has low potential.
Thank you for the update! I read it as soon as it came out. Very informative and definitely worth my time to read :-)
Thanks Haiyu!
Good update. Just received the K-1 from NRP. I found the following state requirements for filing. A little dated, but I found it helpful. https://eic.energy/uploads/state_tax_chart-2019-update.pdf
Thank you for the link!
Thanks Wes! That’s helpful.
SB, please keep these updates coming!
I must admit I’m a tiny bit worried that NRP doesn’t say more forcefully they intend to buy back their units when they get excess cash. As you point out, they trade at about 4x FCF. It should be a no brainer to buy back units with that kind of multiple.
Btw, have you noticed that NRP’s unit price rises a lot just before warrants are settled (usually for cash)? IIRC, the warrants settlement price is based on the average unit price over the past 20 days.
typos:
> shareholders could see there ownership
> factors to considered
They have stated there is some concern of their being enough liquidity for share buybacks.
Thanks JP!
Thanks for the comment, Tian! On the possibility of buybacks, we’ve heard the management is concerned about decreasing liquidity. We heard they favor dividends. Dividends or buybacks, we’d be fine with either.
We haven’t noticed the stock price correlation with the warrants. We’ll pay attention. Thanks!
Also, thanks for catching those typos! 🫡
PBT obtains a 75% royalty. I thought it also had to pay 75% capex. The $106.11 is 35.2% of the capex. What am I missing?
We called the trustee about this very question. What we found out surprised us.
Apparently there’s another entity involved that splits 49% of the capex with Blackbeard while PBT splits 51% of the capex with Blackbeard. You’ll note that 301 x 0.51 x 0.75 is close to 106. Not exact but close.
We are digging further into this new information.
Thx. Let us know the details if you learn them.
Will do.
Thanks for the update! I will leave here my comments that maybe can be useful (let me know if it is not the case):
NRP: It is an amazing company, however, I discovered that this PTP security is heavily taxed for non USA buyers (10% on the enterprise value at the moment of selling, absurd....). So bad I cannot participate as shareholder because I really like the company and the management team!
PBT: I have already shared my thought with you about PBT but I want to iterate two other ideas I have matured after reading the recent report. (i) It seams that the production of both oil and gas is somewhat stalled in the last period of time. This has made me wonder: what is the current CAPEX is required to keep the current production? In other words, we can really expect a drastic reduction for "milk the rewards of its years of investment"? (ii) From the PBT website you can check the depreciation of the royalties due to oil and gas extraction. In 2023 there has been a depreciation of 13%! This is somewhat a very bad news, and, despite I am a shareholder in PBT, I still feel somewhat uneasy to the current situation and long-term perspective for the stock. I am not sure I can, so I ask here before you permission, but I have a spreadsheet with some case scenario where I have calculated the dividend yield expected for 2024 and 2025. Maybe it could be useful for someone.
GTX: I strongly share you prospective and I believe that the stock has a nice path head!
Very nice write-up -- like always ;)
Ema
Regarding PBT what is the potential of the acreage in ward and peco counties which seem to be in the Delaware basin. The land above crane county are within the midland platform and probably has low potential.
At this point, we don’t know.
Please share your views on Sandridge Energy.
We apologize but we have no opinion.
I found the information on TPL informative. Iv’e known about that company for a few years, but was unaware of what it is they actually do. Thank you!
Glad to help, Justin!