Monday, December 12, 2011

Niska Gas Storage Partners LLC, near 12-month low, yields 14.39 percent

Since Niska Gas Storage Partners LLC (NYSE: NKA) went public in May 2010, it has fallen on hard times.

Niska priced its initial public offering in 2010 of 17,500,000 common units at $20.50 per unit.

Niska bills itself as the largest independent owner and operator of natural gas storage in North America, with assets in Canada and the U.S. Niska owns and operates the AECO Hub™ in Alberta, Canada; Wild Goose in Northern California; and Salt Plains in Oklahoma.  Niska also contracts 8.5 Bcf of gas storage capacity on the Natural Gas Pipeline Company of America system. In total, Niska owns or contracts approximately 185.5 Bcf of gas storage capacity.

The company's stock remained in the $20-$22 range up to June 2011, when it began a gradual decline to a 12-month low of $8.76. It closed at $9.69 on Dec. 7, down $0.04. At that price, its $1.40 annual dividend was yielding 14.39 percent.

The decline in unit price is attributed to a steady stream of bad news including:

·         S&P says Niska Moves Haven't Been Sufficient To Maintain Cash Flow Protection Metrics

·         Weak Natural Gas Prices, Narrow Seasonal Spreads Hurt Niska's Ability To Generate Meaningful Rev   

·         S&P Sees Niska Gas Storage Partners LLC Outlook Negative

·         Niska Rating Outlook Changed To Negative From Stable 

·         Moody's Downgrades Niska's Cfr To B1 From Ba3 >NKA 

·         Niska Gas Storage Cut To Underperform From Equalweight By Barclays Capital

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