Dividends to come..., page-18

Noibody's perfect, not even Macquarie. I will give Macquarie one thing on this analysis though: they are giving an "underperform" rating to a company with a share price that has gone up. An analyst "Sell" rating usually means that the share price has already gone down.

I'm absolutely not saying that Macquarie have got their analysis wrong, but a couple of things don't seem quite right:
1. They say BPT is priced for an oil price of US$78/bbl. Yet they argue that BPT’s oil exposure has fallen to ~45% and that earnings show little sensitivity to Brent. If earnings show little sensitivity to Brent, how can the share price be interpreted as priced for a particular oil price?
2. They say that Fixed price gas contracts are locked in at sub-market prices for three years, but then say that BPT have ~55% of production CPI linked in FY18 and FY19. That means that if gas production meets expectations, 55% of it provides a guaranteed income and 45% of it can be market priced. Sounds like a perfect management strategy to me. If the current market wobble doesn't translate into falling demand, then there could be some rather nice upside from the 45%?

I've seen BPT as primarily gas-focussed for a while now. Australian has appallingly badly mis-managed power generation (particularly SA and VIC), by piling into unreliable renewable energy with no thought for cost-effectiveness and reckless disregard for the need to meet demand and to have a stable grid. This is going to need fixing, fast. The federal government is pleading with the states to provide dispatchable energy, and probably the most attractive way of doing that right now is with gas. Way way more attractive than a squillion-dollar AA battery from Elon Musk. So to my mind, BPT are in the driver's seat, engine running, and ready to go.

PS. Winenut - thanks for the link.