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Linn Co, LLC Message Board

  • john2webster john2webster Apr 24, 2014 4:01 PM Flag


    We are going into the quarterly earnings and conference call with many investors feeling a great deal of anxiety. we will likely see continued volatility going into next Thursday. I think the two main worries are earnings and dividend.
    I think the dividend is still safe. I haven't heard any reports that it won't be. Some analyst have said they might have trouble if some disaster happens, but that hasn't been the case. I don't expect them to raise the dividend in May, but it's over 10% now, and I think it is safe because of a good earnings outlook.

    Earnings are the second worry. Part of that is weather related because people will worry about all of the cold weather. I haven't been hearing of weather causing any more problems than last quarter, and I think the main focus will be on expected earnings for next quarter which is not having the weather as a headwind, but as a tailwind instead. All of the cold weather has drop the gas stockpiles, and Oklahoma is low on oil. Oil and gas prices have remained high which is a good sign.

    I realize some of our prices are hedged, but Berry did not use hedges like LNCO. So we should get a boost from oil and NGL's. Also, with both gas and oil in great demand, we will be able to sell them as fast as we can produce. Lastly, we are getting into Summer, a time when demand for gas and oil will increase.

    Sentiment: Buy

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    • Weather wasn't a problem Q4, but Permian differentials "blew out" in the middle of this quarter, and that could be a problem, you can't hedge at the wellhead. Still, I expect a mild Q1 report, coverage maybe down a bit from Q4, but no big GAAP write-down presumably. Should be a non-event, but we'll see how the press spins it.

      Don't stress about the dividend, even if they missed coverage for a quarter or two, they'd still hold the line (heh heh), they know what's coming out of the Wolfcamp deal.

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