Energy Prospectus

One of my top interns worked up a profile on Vanguard Natural Resources, LLC (VNR) last week and I spent the afternoon working on it. Dividend yield is ~9.2% and cash flow looks sufficient to cover the distribution. I like the deal they closed with RRC, which will add production and be accretive to cash flows. I don't see a lot of upside in the unit price using my current oil & gas price deck of $85 for oil and $3.50 or Ngas, but the dividends look rock solid. 85% of 2013 production is hedged, so near-term VNR has very little commodity price risk. About 65% of production on a boe basis is Ngas, so if gas prices do improve VNR unit holders will look very smart.

I will send out the profile this week. Read it carefully if you are looking for high yield.