You mean *if*.
The company guided to expecting $1B in undrawn capacity after the redetermination in Oct. down from $1.5B. They are living within cash flow (and expect to generate $14M in cash for the Q) so I don't see a crisis there as likely.
1. Would have to pay tax and penalty (depending on age) for with drawl from 401k.
2. However, if planning to buy low, open a Roth and transfer cash or LNCO stock to hopefully make massive gains in the future. Better than a race track (maybe) or lottery ticket and can be torn up just as easily.
when either SA and Russia cut production or A big war breaks out in the ME.
Venezuela unrest could also see a cut of 2+ million BPD.
the oil glut is mostly fantasy just like 200 dollar oil was a farce. if you were a refinery and knew oil was going to 20 why would you be loading up tanks at 40 something. if you were china why would you fill your coffer with 40 dollar oil when you could buy it at 20. lets say this 2 million barrel a day overage has been going on for say 600 days that 1.2 billion barrels of oil sitting some where. im not sure the world has that much storage. not to mention thats about 50 billion dollars of loans that are being held. some of that oil over those 600 days were bought in the 100s and 90s so some companies are already bankrupt. where are the losses. these investment channels think it is wondeful that they can go fill their cadys and suburbans for 2 dollars a gallon and that everybody is spending all this money leftover. all the millions and billions must be going to new iphones. i own a high yeild bond fund that has less than 2 percent exposure to oil related assets and is down more that 22 percent. when the excuses for selling oil stocks and related run out and the cheesy investment houses have loaded up then oil will turn and all the new excuses why oil is going back to 100 will begin then we will all make money again.
Couple things I have been thinking about with LNCO. First, if oil does continue lower, LNCO could buy back their hedges with cash and monetize their positions.
If oil goes to $20.00 per bbl I think they could buy the oil to cover production losses and then shutoff and shutdown activities related to production. These would be the variable and production costs. Taxes also would go to zero on the production loss because they would have separation taxes just capital gains.
I would think there would be quite a bit of value in the book to monetize it. It would decrease output but then again, you need less debt and production.
TDN, I don't see how either one of these impact Q3 cash flow or earnings. Moreover, any debt retirement (if there is any) is minuscule compared to Linn's debt, and the derivative "gains" are meaningless as they're hedges for production sales, not trading vehicles. (Having read your posts I'm becoming convinced that you need to do more research on MLP finance.)
with the turmoil in the oil sectors (over supply etc) could linn energy plan be to help depress its own stock price(short it ).as a tool like the announcement of dividend suspension adding to the panic driving there stock and bonds down so they can buy back there debt at fire sale prices just a thought maybe that's illegal don't know. watch them surprise with earnings.
If you look at when the discrepancy began, it was days after the most recent quarterly conference call when details about debt retirement were made public. My guess is that it has more to do with someone unwinding a long LNCO, short LINE or Long LNCO-Short LINE combination beginning in late August/early September.
I think LNCO is only attractive to a niche audience. Mainly those who hold it in a tax deferred account. Without the distribution, why hold them there?
But what happens when the credit line is reduced by more than the credit that they've already used. A fire-sale of some assets? Moreover, Berry isn't looking too hot either. So Linn, of necessity, may be conserving cash and not buying any of its discounted bonds at all. The company certainly doesn't want to find itself insolvent.
I just sold all my shares in LINE for a tax loss and bought 18% more shares of LNCO for the same price.
Still trying to figure out the price spread between LINE $3 and LYNO $2.44. I can not believe that the market is simply mis-pricing the shares. Any suggestions would be appreciated.
The oil glut will end when tree huggers become patriotic and decide to get off this green house gas kick and go back to driving powerful gas guzzling cars that are a joy to drive!
No Relief From Saudis
Saudi Arabia hasn't backed down and on Friday said it doesn't support holding an emergency OPEC meeting to prop up prices, sources told Reuters. Venezuela had asked for a meeting as the country struggles to generate revenue amid cheap oil.
This past week, venerable Wall Street investment management firm Goldman Sachs issued its latest oil price forecast. It noted that "[t]he oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016." Because of this, the price of oil could plunge to as low as $20 per barrel over the next year. While that's not necessarily what it expects to happen, it is bracing for more downside to oil prices.
Why it's so bearish
What it is concerned with is the fact that oil supplies aren't coming down fast enough to ease the glut, which has oil continuing to pile up in storage facilities. This past week, for example, oil inventories climbed more than 2.6 million barrels, which is more than double the expectation for an inventory build of 933,000 barrels. This was the second straight week inventories increased as supplies remained strong.
One of the reasons why supplies remain more robust than expected is because OPEC continues to flood the market with oil.
And the Divy has expired!!!