Credit Suisse Reiterates Underperform, Lowers PT On BreitBurn Energy Partners As High Leverage Remains

In a report published Wednesday, Credit Suisse analyst Abhiram Rajendran reiterated an Underperform rating on

, but lowered the price target from $9.00 to $8.00. In the report, Credit Suisse noted, "Mgmt. continues to expect $200mm in capital spend for FY15 and $80mm in excess cash after paying distributions and capex. FY15 production is expected to be 19.5-20.7MBoe (we estimate 20.2MBoe) and EBITDA of $650-700mm (we estimate $645mm). But we expect leverage for BBEP to stay around 5x through the year, and not improve as far as we can model (although they should still have some liquidity post spring re-determinations vs. ~$300mm at year end-2014). In terms of deals, we now expect $300mm of all-equity M&A each year from 2016 onwards (none this year). In terms of commodity assumptions, we assume FY15 natural gas/WTI crude prices of $2.9/$56 relative to BBEP's $3.5/$60 assumptions (we assume $4/$70 for 2016/17). BBEP has hedged 74%/61%/37% of its 2015/16/17 production." BreitBurn Energy Partners closed on Tuesday at $7.88.