VNR announces $581 million acquisition

VNR announced yesterday that it was set to complete a $581 million acquisition in Wyoming in January.

The land is estimated to produce 113 million cubic feet everyday of which 80% is natural gas. This is estimated to increase VNR’s reserves by 80% and it’s daily production by 55%. It’s also noted that this involves working with Ultra Petroleum to develop new drilling options. This means that Ultra Petroleum will be fronting most of the cash for new drilling activities, allowing VNR to hedge the risk.

People have noted that in the past, VNR has been very conservative. Given that their distribution is paid out on a monthly basis instead of a quarterly one, it appears they have a strong focus on providing cash flow to unit holders. Given this big of an increase in production, I easily see another distribution increase coming soon. But I also predict that VNR will hedge things in order to produce a stable increase. They don’t want to increase things too fast and have to cut later on.

People are predicting that this will catapult VNR into the ranks of LINN Energy and BreitBurn Energy Partners. Those two are strong industry leaders in the MLP market space.

5 thoughts on “VNR announces $581 million acquisition”

    1. There are a handful of quality MLPs to pick from. I monitor several including Breitburn. After all, if VNR goes down, I want to move my money to a competitor. It’s good to hear Breitburn going to monthly distributions. Companies that do that seem to have a strong focus on solid distribution payouts which is encouraging to me.

    1. Not an issue. My CPA handles them easily. It was the second question I asked after finding out if he could handle cost segregation studies. I have my VNR holdings in a regular account instead of some IRA, so I don’t have to deal with any UBIT junk. I can’t comment on whether or not Turbo Tax handles them and is good enough, because my portfolio got too complex for self management.

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