The recent announcement of Penn Virginia L.P.’s (PVE) merger with its general partner is expected to reap profits in the long term, benefiting from the partnership s lower cost of capital.
This would place the company in a better position to compete for acquisitions, increasing returns on future transactions. However, this transaction would, in our opinion, be dilutive to the partnership s distributions in the near term, affecting investor sentiments.
Based on expectations for lower distributions, we have moved our recommendation on the stock to Underperform. Furthermore, we expect the partnership s future results to be affected by the instability in the capital markets and fluctuation in commodity prices.
PENN VA RESRC (PVR): Free Stock Analysis Report
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