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Linn Energy, LLC (LINE) Message Board

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  • rrb1981 rrb1981 Mar 31, 2012 9:52 AM Flag

    LINE Increasing 2016 NG Hedges

    That is about 13% lower than 2015 and about 16% lower than today's average hedged prices. As always, this appears to include the uplift of the NGLs.

    Looks like margins per mcf will stay at around $1.5-$2 as long as Linn can keep lifting cost/SG&A/LOE around $2.00-$2.50 an mcf as they have been doing for some time.

    It appears that Linn is plugging the DCF hole with greater production at lower realized prices. This can't be good for the R/P, but again, with gas only being part of the equiation, it isn't as bad as it appears. Oil margins are staying solid (thanks Obama for the $4/gal gas). Oil is carrying the company from a stability standpoint. In fact, oil probably has the room to run to $110-120/bbl (WTI). That would give Linn opportunity to start hedging out the outlying years, since they are not hedged up on the 5 yr program on the liquids side. I think most investors would like to see them complete the 5 yr hedging on the oil side. The last thing investors want to see if another $30-$40 slide in oil prices leaving Linn with yet another hole to plug.

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    • I have never seen an American president that has the power to control the prices of energy or gasoline as you attribute to Obama.

      Now if you had said the King of Saudi Arabia or the leader of Russia when it comes to supplying pipelines to Europe, I would agree, but I think you need a lesson on U.S. history and the power of Congress and the President.

      If you are talking energy or interest rates, the U.S. President, no matter who he is impotent to effect prices or rates.

    • The last time we had $4 gas, Bush was president and the Dems were blaming him for it.

      The other posters are right, whoever is on office does not have the power to control current fuel prices. Future prices, a little, if permits are issued to allow for more drilling and exploration, but the results are years down the road and who knows what other factors may come into play by then.

      • 1 Reply to rlp2451
      • 100% incorrect. Ethanol is complelely avoidible $0.50 a gallon Obama added.

        Most certainl his 40% ethanol mandates were the ignition source for all the revolution in the ME and could have been avoided. We now know it is no democracy movement.,

        Every Obama Policy has an influeance in this outcome. Blocking pipe lines. Even allowing the EPA to wave it dishonest wand make our coal disappear has an impact. Most certaily blocking drilling of the peoples land. Most certaintly allowing the EPA to disgrace itself three times attacking fracturing.

        This is nonsense. DO Presidents have 100% control? NO! But over 3 years they do have power and influeance. OH yea - selling AMericans wind mill and solar panel drugs is primarily influeance on American two generation inability to deal with importing oil from crazy people.

        Mindless political spin. Obama might have had some bad luck but claiming no responsibility while attepting to sell more wind mill and solar panel drugs is unworthy of our highest office.

    • "(thanks Obama for the $4/gal gas)"

      Do you actually believe that the president of a capitalist country can control the price of gas, which is subject to the global price of oil and the vicissitudes of private refinery operations? Or are you fundamentally a socialist who believes in the nationalization of the energy industry so govt. can run it at a loss to keep prices down? You seem too bright to have fallen for either of the above. Surely what you're doing is just echoing campaign silliness. Or maybe you think that Gingrich's magic wand can change the world's supply, demand, and geopolitics to instantly produce $2.50 gasoline. . . . Nah. I think you're really aware of market forces and the limits of presidential power. Humbuggery is what it is.

    • "That is about 13% lower than 2015 and about 16% lower than today's average hedged prices. As always, this appears to include the uplift of the NGLs."

      ? Would you like to explain hoe the NGL is contributing to realized hedge prices?

      , "since they are not hedged up on the 5 yr program on the liquids side"

      .I agree the superior grades of oil LINE is producing will in time catch a superior price to lower grade Brent and heavier Canadian.
      You can never tell what the House of Saud’s real geopolitical interests are. However, a Europe unable to grow or worse on deleveraging is not in their interest. For all their self whipping on energy Europe has old antiquated plant and equipment, old housing with old fittings, plus the burden of alternative energy corruption which makes them remarkably energy inefficient both physically and economically.
      Americans facing Obama $4 gasoline will support domestic development on Federal Lands and Offshore.
      Natural gas and to a lesser but still important degree NGL are economically cyclical fuels.
      I would expect the cost inflation in natural gas infrastructure is now more or less gone as active production shrinks. So I would expect cost from the existing dry gas assets to actually decline a bit in the whole mix.
      Maybe a happier question would be if American usage broke through the associated gas production and restoration of supply is at the real cost of marginal production.
      I am missing something in you analysis.

      • 2 Replies to norrishappy
      • GM Norris

        I think there is something to be said about your post that is written between the lines that is worth bringing to the surface. Our Gov't has systematically failed to establish a boney-fide energy plan for a number of yrs now, and we are confronting the consequences of failed leadership.

        A thorough plan coupled with our recent technology that has opened up the vast resources that this nation has been blessed with could have weaned this nation off of foreign crude dependency, or nearly so by this time.

        A prez may not have very much leverage indeed to control crude prices, but prez's are elected to lead and maintain our dominance in the world mkt place. The current admin has taken a totally negative view on fossil fuels, and this indeed has been a factor in overall gas prices at the pump. Attacking major oil co's with rhetoric about $4b subsidies is twisted lies. Favoring futuristic pipe dreams on solar/wind/pond scum with Billions of dollars we do not have exasperates the entire issue further.

        Obama does not bear the faults of anything but the past 6 yrs or so....his votes in congress and his admin is worsening our energy issues. There are others who shoulder the blame as well. But the current tom foolery being played out by obama lifts his overall degree of fault to a new high.

        Nov is nigh time to correct our foolishness of the past!

      • norrishappy,

        Ummm, if you look at the presentation, it gives a btu breakdown on the uplift of the liquids. They do not go into detail on how they are hedging the NGLs. The market for NGL hedges is not as fluid as the market for oil and gas, but it has gotten much much better over the past 3 years. The need for dirty hedges is rapidly diminishing. I think it was around 50% of the total volumes hedged in '16.

        Without the uplift of the liquids, which I might add, is significant, Linn's natural gas hedging program would be facing sub $1/mcf margins.

 
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