Boonedoggle

11 January 2008 By Cyrus Sanati

The Texas billionaire s Exco Resources abandoned a planned $1.5bn master limited partnership IPO citing adverse market conditions . The shelving of the granddaddy of energy MLPs is a setback to a profit centre that Wall Street was banking on.

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Exco Resources, an energy exploration and production company, pulled its planned $1.5bn master limited partnership citing adverse market conditions. It would have been the largest MLP offering by an energy company. The deal was announced in September of last year and has suffered poor interest from institutional investors.

MLPs are exempt from taxes at the corporate level because they are expected to pay out most of their free cash flow to investors in the form of quarterly dividends. This allows them to capture a higher valuation compared to their CCorp counterparts.

T. Boone Pickens is the largest shareholder in Exco, holding 10.6% of the company's outstanding shares. He is also a member of the company's board of executives.

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