BreitBurn Energy suspends distributions

[Wolfdog2]

BBEP--BreitBurn Energy suspends distribution for common units Breitburn Energy Partners announced that it has elected to suspend the distribution on its Common Units, effective immediately. Halbert Washburn, Breitburn's CEO said: "In light of the ongoing weakness in commodity prices, and crude oil prices in particular, and after careful consideration, Breitburn has decided to suspend cash distributions on its Common Units. Since December of last year we have taken a series of proactive steps to address the ongoing challenges in the commodity markets. These included: 1) reducing our capital budget by over $360M from BBEP and QR Energy's combined 2014 levels, to only $200M this year; 2) strengthening our balance sheet in April by raising $1B in long-term debt and convertible preferred stock, the proceeds of which were used to reduce short term borrowings; 3) implementing a companywide workforce reduction plan resulting in significant savings of general and administrative expenses; and 4) reducing Common Unit distributions in both January and April to conserve cash and improve financial and operating flexibility. While the decision to suspend Common Unit distributions at this time is a difficult one, we believe it is in the long-term best interest of the company and will allow us to save approximately $111M annually, which we can redirect to reduce debt or invest in the business and better position Breitburn for the future." :theflyonthewall.com

[dan_s]

A surprising move since they had such strong DCF coverage. Using the money to reduce debt is probably the better move in the long run.