Energy Prospectus

Dan - I think you were a little more conservative, expecting them to hold serve at 15c until the second half. This is good news for those of us who hold HCLP. BTW, I would expect them to raise again next quarter, to 25c, that's my guess (I had the 20c dialed in for this Q). Let's see what happens. Q4 numbers should be fantastic, they'll report in a few weeks.

Hi-Crush Partners increases distribution to 20c per unit for Q4
Hi-Crush Partners announced that the boardof its general partner has declared a quarterly cash distribution of 20c per unit on all common units, or 80c on an annualized basis, for the fourth quarter of 2017. Hi-Crush previously announced that it had repurchased 2,030,163 common units in the fourth quarter of 2017, representing $20M of unit repurchases since announcing its unit buyback program of up to $100M in October 2017. This represents the previous maximum amount of unit repurchases allowed for under the Partnership's previous Term Loan Credit Facility and Revolving Credit Agreement. The Partnership's new $200M Senior Secured Term Loan Credit Agreement and new $125M Revolving Credit Agreement permit unlimited repurchases of common units, allowing for execution up to the remaining $80M authorized by the Board of Directors. The repurchase program does not obligate the Partnership to repurchase any specific dollar amount or number of units, and may be suspended, modified or discontinued by the Board of Directors at any time, in its sole discretion and without notice. "The increase in our fourth quarter distribution, combined with opportunistic purchases on our unit repurchase program, reflects a healthy balance of sustainable capital return that is consistent with our goal of returning value to unitholders over the near and long-term," said Robert E. Rasmus, Chief Executive Officer of Hi-Crush. "We remain committed to disciplined capital allocation and are laser-focused on executing our Mine. Move. Manage. strategy to enable continued growth in our business and unitholder returns." The distribution will be paid on February 13 to all common unitholders of record on February 1

Take a hard look at the cash flow from operations at the bottom of my forecast model for HCLP and you will see that they will generate more than enough DCF to raise distributions quarter-after-quarter. I think HCLP will move quickly toward my valuation after they release Q4 results and guidance for 2018.

You can find HCLP's forecast under the new "High Yield" tab on the EPG website.

For our High Yield Income Portfolio we are primarily focused on companies that have solid balance sheets and strong cash flow from operations. We want companies that can sustain their current dividend payout rate and increase it in the near future. Potential for capital appreciation is a close second on our list of desires. Within this group are common and preferred stocks that pay regular dividends and Master Limited Partnerships (“MLP”).

MLPs are publicly traded Limited Partnerships or Limited Liability Companies (“LLC”) that have elected to be treated as partnerships for Federal Income Tax purposes. Their shares are called “Units” and they trade on major exchanges just like common and preferred stock. The MLP structure is a good fit for midstream companies that generate steady cash flow.

Entire PR is below. Noteworthy because of CFO's statement re "strengthening demand for" both " Northern White and in-basin frac sand," "strong market fundamentals," and (regarding the distribution) "expecting increases of approximately 10% per quarter for the foreseeable future ...."

Her statement implicitly addresses concern about supply/demand (note addresses both in-basin and NW), and it gives guidance re their expectation re distribution increases (10% per quarter for the foreseeable future). I expect Q1 dist. will be .22, Q2 .25, etc. With Q4 at .30, that would be $1.20 annualized, which should support a ppu above $15 imo, especially if their operations generate sufficient DCF also to meaningfully continue executing the buyback.

HOUSTON, Jan. 18, 2018 (GLOBE NEWSWIRE) -- Hi-Crush Partners LP (NYSE:HCLP), or “Hi-Crush” or the “Partnership”, announced today that the Board of Directors of its general partner has declared a quarterly cash distribution of $0.20 per unit on all common units, or $0.80 on an annualized basis, for the fourth quarter of 2017.

“Our business continues to benefit from a steady strengthening of demand for Northern White and in-basin frac sand,” said Laura C. Fulton, Chief Financial Officer of Hi-Crush. “These strong market fundamentals and encouraging outlook establish the backdrop needed for our management team and the Board of Directors to increase the fourth quarter distribution to $0.20 per unit, up from $0.15 per unit in the prior quarter. Following the resumption of our distribution last quarter, we are pleased to deliver on our objective of sustainable and meaningful growth in our distribution, and are expecting increases of approximately 10% per quarter for the foreseeable future, subject to periodic review. Our capital strategy will remain responsive to the market throughout 2018, and the balance between additional distribution growth and unit repurchases will reflect this flexibility.”

Hi-Crush previously announced that it had repurchased 2,030,163 common units in the fourth quarter of 2017, representing $20 million of unit repurchases since announcing its unit buyback program of up to $100 million in October 2017. This represents the previous maximum amount of unit repurchases allowed for under the Partnership’s previous Term Loan Credit Facility and Revolving Credit Agreement. The Partnership’s new $200 million Senior Secured Term Loan Credit Agreement and new $125 million Revolving Credit Agreement permit unlimited repurchases of common units, allowing for execution up to the remaining $80 million authorized by the Board of Directors. The repurchase program does not obligate the Partnership to repurchase any specific dollar amount or number of units, and may be suspended, modified or discontinued by the Board of Directors at any time, in its sole discretion and without notice.

“The increase in our fourth quarter distribution, combined with opportunistic purchases on our unit repurchase program, reflects a healthy balance of sustainable capital return that is consistent with our goal of returning value to unitholders over the near and long-term,” said Robert E. Rasmus, Chief Executive Officer of Hi-Crush. “We remain committed to disciplined capital allocation and are laser-focused on executing our Mine. Move. Manage. strategy to enable continued growth in our business and unitholder returns.”

The distribution will be paid on February 13, 2018 to all common unitholders of record on February 1, 2018.

I have updated my forecast/valuation model for HCLP and posted it to the EPG website.

In 2017, Hi-Crush generated approximately $117 million of cash flow from operations. < Over $80 million of "Distributable Cash Flow".

In 2018, Hi-Crush should generate approximately $240 million of cash flow from operations. < This compares to their 2018 capital expenditure program of $45 million.

Hi-Crush should have more than enough free cash flow to complete their unit repurchase program by mid-year and continue raising their distributions. If actual revenues (row 8) come in close to my forecast, distributions in the back half of 2018 should go up a lot more than 10%.