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BreitBurn Energy Partners: Why A Distribution Of $0.50 Per Unit Appears More Sustainable

BreitBurn Energy Partners (NASDAQ:BBEP) faces some significant challenges in maintaining its distribution if oil and natural gas prices remain below prior levels. BreitBurn is able to cover its current $1 per unit distribution from 2015's expected cash flow, although it will probably only have $50 million left over to repay borrowings. Beyond 2015, it appears difficult for BreitBurn to maintain a $1 per common unit distribution without additional borrowing. It needs $79 WTI oil and $3.75 natural gas to cover a $1 per unit distribution in 2016 and this increases to $86 WTI oil and $4.00 natural gas in 2017. This doesn't include the potential effect of increased interest payments if it needs to replace part of its credit line with higher-interest…