To Energy IPO or Not to Energy IPO

 | Dec 13, 2012 | 9:54 AM EST  | Comments
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One of my best trades for 2012 was Chesapeake Midstream (CHK), now Access Midstream (ACMP), which I recommended on an IPO and exited above $36, all while paying over 6%. Williams (WMB) completed yesterday buying the partnership of this MLP from Chesapeake (CHK) with secondary offerings from both companies. It's a major win/win.

I don't see the changeover stopping ACMP from bidding and winning on dropdowns from CHK, and secondary might deliver some pressure to ACMP and drop its price closer to $30, where I would pick it up again fast, despite budget deal implications.

The Keystone pipeline is again slowed, this time sidelined in Texas, as a local resident has received a legal stop on action on the pipeline's builder, Trans-Canada.  In an apparent change of heart, one resident on whose land the pipe is being built now is claiming that what will come through this pipe is not crude oil, but oil sands oil and is therefore hazardous material. The judge apparently agreed with him enough to stop building and await an assessment from a higher authority. The slowdowns of the Keystone XL pipeline (which will ultimately be built) continue and often not from Federal sources. 

The IPO of Carlyle-owned PBF, the refinery company, will open today at $26.  While PBF owns three refineries, the most important is the recently bought Sunoco refinery in Philadelphia (and a lesser Sunoco asset in Toledo). While I missed the refinery rally for most of 2012 and now am trying to find an entry point into the trade, this is not the opportunity I want. Basically it's a PE firm doing what it does best, restructuring some other business to turnaround into a financial profit when it comes back to the public. In this case, the turnaround was super speedy and I won't pay out my money for Blackstone's still amazing financial access abilities to cash themselves out first in this IPO. Other opportunities into the refinery space will emerge. I'm not jumping at this one. 

Finally, NY's AG Eric Schneiderman is suing the EPA under the Clean Air act, claiming that they have failed to regulate correctly the amounts of leaking methane from fracked natural gas wells all around the country. Leaking methane, one of the most powerful greenhouse gasses, is one of the many environmental concerns surrounding fracking and well drilling is still for the most part under the regulatory arm of the separate state EPA"s where they are being drilled. Is this action from the NY AG an attempt to force the Federal EPA into taking a bigger role in regulation of fracked wells on a Federal level?

We'll see.

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