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NRG Energy Inc (NRG), American Electric Power Company Inc (AEP): Benefit From Millennium Management’s Top Holdings

In the Antelope Extension, a Three Forks well is producing 3,150 bpd of oil, in which the company has WI of 94%, and at another well, it has 100% WI. Looking at the strong performance from the Bakken region, it has planned to drill 53 new wells, using 26 rigs this year, mainly in 160 acre spacing.

The company is anticipating total crude oil production rate of 206 million bpd this year and 250 million bpd in 2014. This will result in year-over-year revenue growth of around 20% to around $13.91 billion in 2013 and $14.55 billion in 2014.

Debt restructuring and synergies from acquisition

In December 2012, NRG Energy Inc (NYSE:NRG) acquired U.S.-based energy company GenOn Energy for $1.7 billion to increase its presence in the U.S. GenOn is one of the largest power producers with a power generation capacity of more than 14,000 megawatts. With this acquisition, NRG Energy Inc (NYSE:NRG) became the largest U.S.-based competitive-rate power company. The company expects to generate total cost and operational synergy of around $200 million this year and $325 million per year from 2014 onward.

To improve its operating margin and to enhance its utility service, NRG Energy Inc (NYSE:NRG) has planned to raise additional funds and repricing previous loans. In June 2013, NRG Energy Inc (NYSE:NRG) repriced its $1.57 billion Term loan B, due in 2018. In this repricing, the company reduced its interest rate spread from 2.5% to 2%. It also raised an additional $450 million at the same interest rate. Now, the total loan liability has increased to $2.02 billion.

Furthermore, NRG Energy Inc (NYSE:NRG) has also repriced and extended the maturity of its $2.3 billion credit facility by two years to 2018, and reduced the spread from 2.75% to 2.25%. It has raised the credit facility an additional $200 million, taking it to a total of $2.5 billion. By the repricing of its term loan and credit facility, the company expects an annualized interest saving of $49 million from 2014 onward.


American Electric Power Company Inc (NYSE:AEP) is signing new PPAs and the Production Tax Credit will help the company enhance its footprint in renewable energy, which should generate strong long-term growth for it.

EOG Resources Inc (NYSE:EOG)’s expansion plan in Eagle Ford and Bakken oil fields will widen the scope for further growth of the company and these regions are expected to drive its revenue higher.

NRG, with the acquisition of GenOn, expects long-term synergies. Additionally, the repricing of its term loan will result in a higher net operating margin.

Due to these strategies, I recommend a buy on all three stocks.

Shweta Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Benefit From Millennium Management’s Top Holdings originally appeared on is written by Shweta Dubey.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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