E&P vs. MLP (upstream) Value Drivers?
I am currently a reservoir engineer doing acq work. I have recently been working on modeling true E&Ps vs. MLPs. Any opinions on the true value drivers of E&Ps and (upstream) MLPs?
Examples
E&P: EBITDA growth, production growth, reserves growth
MLP: Maintenance capital, distribution growth, R/P, coverage ratio
Reserves reserves reserves while taking into account efficiency and profitability. That's my opinion.
When you say profitability do you mean from a cash flow or net income point of view. Most E&P companies only worry about cashflow. What metric/metrics would you use to account for efficiency and profitability? The problem with reserves in my mind is that it takes a long time (up to 40 years) to see if your reserve estimates are correct. In my experience reserves are often over estimated resulting in reserve writedowns thus increased DD&A rates and reduced net income.
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