Exiting Oil and Gas Issues
By: Tim McPartland,
We have exited oil and gas production shares today as we have continued to research the situation in the oil patch. Bottom line is we think that we have some ways to go–maybe another $5-$10 on West Texas. Additionally we think these low prices may last longer than we had initially anticipated resulting in substantial bankruptcies and many suspended distributions in the MLP upstream producers–in fact we think most all of the upstream MLP’s will eventually suspend distributions as their credit lines are reduced as lenders tighten the screws.
Fortunately we had only positions in LinnCo (ticker:LINE) and Callon Petroleum Preferreds (ticker:CPE-A) in the 2015 model and Escalera Resources Preferreds (ticker:ESCRP) and Gastar Preferred (ticker:GST-B) in the 2014 model.
For now we take the funds to cash and wait–maybe a long time, before jumping back into the oil patch.
When you are wrong – fix it. The risk outweighs the reward so we have fixed it.