WHERE TO FOR E&P MLPs?

摘要

In first-quarter 2009, in the heart of the economic downturn, Legacy Reserves LP, an E&P master limited partnership based in Midland, Texas, faced a difficult operating environment. Its spring bank borrowing-base redetermination had shrunk by $70 million to $340 million, reflecting current market prices in which West Texas Intermediate crude had hit a low of $32.60 per barrel during the quarter. Legacy was drawn to $300 million, a marginally comfortable spread, but the prospect for the fall redetermination was uncertain. Together with the lack of access to the debt and equity markets, which had seized up since year-end 2008, company management foresaw a real and present danger to its liquidity.