by Travis Johnson, Stock Gumshoe | January 12, 2015 4:03 pm
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The distribution, announced after the close yesterday, was a little bit higher than I expected this last time around (on track with the previous four distributions, no real cut yet) but this isn’t the troubled distribution — their oil profits will have fallen a bit, but this distribution reflects oil sales through November so they didn’t fall that much, and oil is only about 25% of their distribution. Gas prices have fallen as well, but gas impact on the distribution is delayed by an extra month… so the real revenue fall will hit next quarter, and I don’t have a great sense of how dramatic the drop will be. I’ll be curious to see how the market reacts over the next couple weeks, the company does not provide any commentary or forecasts so I don’t know when investors will begin to expect the large distribution cut that has to be coming. It could drag out for a while, given the brief spike for natural gas in November that will help to keep next quarter’s distribution from falling too harshly, but sustained low prices should be really rough for DMLP at some point in the first half of 2015 and investors seem likely to absorb that news at some point. We’ll see. If natural gas is back at $4 later this Winter, my sale will likely have been a mistake.