Norris's post got me thinking about running the numbers on Antrim.
They paid $330 million for 30,000 mcf/d of production (99% dry gas).
They financed the deal with 12.5 million units, which, if you look at the price at the time was around $26/unit so the 12.5 million units essentially financed the deal.
Those 12.5 million units are eating $2.90/yr in distributions. The Antrim properties need to be generating at LEAST $36 million DCF annually to cover the deal.
We know Linn receives $5.47/mcf for its production (Linn is basically 100% hedged and that is the '12 values on the most recent presentaion).
We also know the Antrim is 99% dry gas, so no uplift from liquids.
We also know that decline is about 6% per year (from press release).
With Linn's lifting costs at $2/mcf they are netting $3.47/mcf on 30,000 mcf/day which over 365 days a year, nets them about $38 million.
So, they are covering the distribution on the 12.5 million units issued and have a couple of million left to put back into the field to keep production flat. Not much accretion from that deal on the look back. Granted, you can see they paid $11,000 per flowing mcf, whereas the E Texas deal, they paid around $7,200 per flowing mcf.
You are the one that shows how little you actually know about the industry.
I understand decline curves and IRR quite well.
I have no clue what new technology you are referring to in your post.
I can only assume you are talking in general about frac'ing horizontal wells vs conventional vertical wells. The technology and techniques aren't really new. Not sure why you are hung up on decline curves. Not sure what you disagree on regarding the curves. We know essentially what the decline curves are, and for the Bakken and GW, which is essentially where about 90% of Linn's drilling capital is going, we have plenty of datapoints. The declines are well know and are changing as completion techniques are refined to fit the specific basins (number of frac stages, type of proppant etc).
You like to attack, but then fail to give us lifting costs for the Antrim.
You guys continue to get hung up about trivial items such as three decimal place cost of capital, yet when questioned, refuse to give your best guess as to what you believe Linn's cost of capital is at the time.
We are waiting on you to deliver your analysis on Linn's cost of capital. Shall we start the stopwatch?
We are still awaiting an explanation of your modeling failure by using corporate averages of a low cost asset.
We are Still awaiting explanation of your failure to understand efficient market valuation and how a new acquisition could be dilutive.
This is new technology and new techniques. It is cute to pull out the jargon and make pretend to other posters you understand.
I am not a geologist or a petroleum engineer so I have the common sense not to pretend to be one.
The analysts ask about decline rates because it is so new. The analysts asked about what they were using to IRR not whether or not it was a ‘standard’ or expected. He was trying to gage by how much management was low balling which accounts do under the concept of conservatism.
Why can you not just man up and admit a mistake instead of digging another brand new hole?
Maybe you can cry some more about hurt feelings to avoid acting with some integrity?
Funny how when all his efforts fail, norris tries to include me in his phantom occupy linn board troop.
He somehow is trying to link Obama suppoters to people that disagree with investments. I am not, have never been, nor never will be a supporter of Barack Obama. He does not represent the American Dream.
Sorry norris, I guess you'll have to split your OLB legion into pro and anti Obama supporters.
Your random attacks are pointless.
You made general characterizations. You reference asset class without context.
It must agitate you something awful when I post given you seem compelled to immediately try and discredit it regardless of what topic it is that I am discussing.
Why don't you try and stay on topic and if you wish to correct something, then post what it is you disagree with, state why, show your proof and then allow rebuttal in a professional manner...otherwise, I can continue to fight fire with fire sonny.
You are getting desparate now aren't you norris.
You don't like it when others agree with me..it works against your effort to try and discredit me.
You like to attack, but when asked, you never back up with facts. You claim mistakes, but never supply the correction.
Your methods are transparent, juvenile and futile.
You aren't going to flush me off the board because you think it belongs to you and your cohorts. You can attack all you want. You are wasting your time and it will only serve reinforce my interest in posting my opinions.