Even with miniscule blips of positive information, from where I sit, we are already in a recession (not to put a conspiracy spin on it, but I think some data has been manipulated - I don't know how or which data, just a gut feeling), so the question then becomes - how long will we stay in it? If oil prices go below $70 and stay there - as Jack states clearly - much current production will be halted. What does that do to income (regardless of hedges)? Are there guaranteed delivery amounts that will keep money coming in regardless of the price? If so I would think they would be minute amounts.
If oil drops to $60 - a possibility, although I don't think it would stay there long - even more production stops.
Not that long ago (December 2008) it dropped as low as $30 momentarily. What would that do to income streams?
"I believe Providence has place American energy independence in our grasp. Lower energy input cost along with secure supply is exactly what we require to explode out of the liquidity trap. I find it very interesting that to get this done we must treat God’s nature with care and respect rather than continuing to worship it."
Once again norris, you are absolutely correct...this nation is blessed, from sea to shining sea, providence gave us all we need, we just need leadership that engages the people with a sense of security and well being in making the proper decisions to churn on the great american tech/industrial power house....
this is a depression except for the heroine , we call stimulus , that has now run out as of july first , we will have a slow drift down until we get more stimulus , but we also could have a sharp correction at some point in OCT ,EATHER WAY ITS NOT PRETTY .ZACK
31.90 ish is my bet on low....line may be buying big though once we get to that level....I was holding off buying more at 34, but will go in at 32 or less for sure! bought back all my options yesterday, so i'm ready to buy again!
I think CURRENT production is nearly 100% hedged thru 2014 at >$85 and the counter party guarantors are on much firmer ground than in '08/09 - so I have very little worry about the distribution if oil falls to $60. (NEW production since the last CC may not be hedged) I also think that outlays for NEW production that exceeds depletion may be put on hold. Acquisitions - hummmmmm. I have lots of ammo.
With all the hedges that Linn has in place the risk,I believe,is in counterparty ability to pay when the swaps and puts expire. (There's also the problem of rolling over hedges if they expire when oil prices are especially low.) The upshot: no guarantees.