EV Energy Partners, L.P. (EVEP) tried to sell its strong land position in the Ohio Utica shale, a sale which was expected to be completed by the end of 2012 and which still remains incomplete, leading investors to speculate on the reasons why and weighing down on the oil and gas MLP’s stock valuation, says Ethan Bellamy, Senior Analyst at Robert W. Baird & Co.
“[The sale] did not get completed, and there is widespread speculation about why that did not occur. We remain very positive on valuation on the expectation that ultimately those 150,000 net acres of royalty interest and a midstream investment that EV has in Ohio will bear fruit and will prove to be very valuable,” Bellamy said.
Bellamy says the sale of the unconventional shale acreage still cannot be determined, but EVEP‘s current stock price provides a point of entry for those interested in value, especially as the general MLP group’s valuation remains strong.
“The timing on a potential sale to another party is somewhat uncertain, and the stock has drifted lower this year as expectations around that sale have continued to falter in contrast to the rest of the MLP group, which is up pretty strongly this year. So that’s been disappointing, but we still like it, and we still think there’s pretty strong value there,” Bellamy said.
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