BlueKnight Energy Partners (BKEP) Update - Dec 23

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

BlueKnight Energy Partners (BKEP) Update - Dec 23

Post by dan_s »

I spend several hours yesterday and this morning working on BKEP.

My valuation increases to $3.65 for the common units (BKEP), which is more than 50% upside from where it is trading today. In addition to the unit price upside, it also pays a dividend with ~7.4% annual yield based on the most recent quarterly dividend of $0.04/quarter. If their 2021 guidance confirms my forecast, there is a good chance that they double the quarterly distributions on the common units. If so, my valuation will increase to $5.00.

The Series A Preferred Units (BKEPP) offer a high yield (~10.5%), but they have much less upside. Quarterly distributions on BKEPP are locked in and must be up-to-date before any distributions can be made to the common unit holders.

In case you missed it, BlueKnight announced a HUGE asset sale with proceeds that are double their current market-cap. The "Transformative Sale" will make the Company a pure play on the Asphalt Terminalling Services business. Not a "sexy" business, but it is profitable, steady and "pandemic resistant". Their operating cash flow went up more than 10% YOY this year. Cash proceeds from the sale will wipe out half of their net debt.
Dan Steffens
Energy Prospectus Group
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