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Linn Energy, LLC (LINE) Message Board

  • norrishappy norrishappy Aug 14, 2012 9:59 AM Flag

    'Climate Consensus' Data Need a More Careful Look

    In his Aug. 6 op-ed, "A New Climate-Change Consensus," Environmental Defense Fund President Fred Krupp speaks of "the trend—a decades-long march toward hotter and wilder weather." We have seen quite a few such claims this summer season, and Mr. Krupp insists that we accept them as "true." Only with Lewis Carroll's famous definition of truth, "What I tell you three times is true," is this the case.

    But repetition of a fib does not make it true. As one of many pieces of evidence that our climate is doing what it always does, consider the National Oceanic and Atmospheric Administration's year-by-year data for wet and dry years in the continental U.S.

    From 1900 to the present, there are only irregular, chaotic variations from year to year, but no change in the trend or in the frequency of dry years or wet years. Sometimes there are clusters of dry years, the most significant being the dry Dust Bowl years of the 1930s. These tend to be followed by clusters of wet years.

    Despite shrill claims of new record highs, when we look at record highs for temperature measurement stations that have existed long enough to have a meaningful history, there is no trend in the number of extreme high temperatures, neither regionally nor continentally. We do see the Dust Bowl years of the 1930s setting the largest number of record highs, at a time when it is acknowledged that humans had negligible effect on climate.

    What about strong tornadoes? Again there is no trend. Last year was an unusually active season, and unfortunately some of those storms ravaged population centers. We were told that these disasters were the result of human CO2 emissions. Yet 2011 was only the sixth worst for strong tornadoes since 1950 and far from a record. And have any of us heard about this tornado year? Why not? Because 2012 has been unusually quiet. Most of the tornado season is behind us, and so far the tornado count is mired in the lowest quintile of historical activity. As for hurricanes, again there is no discernible trend. Regarding wildfires, past western fires burned far more acreage than today. Any climate effect on wildfires is complicated by the controversial fire suppression practices of the past hundred years.

    Lurid media reporting and advocates' claims aside, even the last comprehensive Intergovernmental Panel on Climate Change report noted that "archived data sets are not yet sufficient for determining long-term trends in [weather] extremes." Yet this has not stopped global warming advocates from using hot summer weather as a tool to dramatize a supposedly impending climate Armageddon.

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    • That is wrong and you know why it is wrong because we discussed it here before with some details and proof by examination of the hedge prices from only one year's change.


      So, I guess we need to do it all over again.



      The numbers you posted are not in dispute.
      Your conclusions are wrong since the hedges change and they do not stay at the numbers that you posted.


      If you need to hear it explained directly from Linn then call Clay at IR, or, feel free to copy this post and email it to him and ask.


      The claims you made are incorrect BECAUSE you illustrate the numbers as if they are fixed, and they are not.

      That is for several reasons, including more hedges as they add production organically, as they roll forward hedges, and as they add more acquisitions and than add hedges to those expected productions.


      This will clearly show why you are wrong.


      This is the Enercom presentation from yesterday....see slide 15 and look at the price for OIL which I used as an example last time and we can look at all years but only that for now....It says
      $97.09 is the average hedge price for 2012.

      #http://ir.linnenergy.com/common/download/download.cfm?companyid=LINE&fileid=591973&filekey=87198CA0-48F2-43A1-B9D6-F6F5C0E3059E&filename=EnerComOilandGasConference_FINAL.pdf


      Then look back one year ago at the 2012 average hedge price listed on the Enercom slide from the 2011 Enercom presentation.

      It says (on slide #11) that the price for the average hedge price for OIL for 2012 was: $90.33......right!

      http://ir.linnenergy.com/common/download/download.cfm?companyid=LINE&fileid=492710&filekey=AE8ADAEF-BA5E-433D-B31D-5DD0BCAD5ECB&filename=EnerCom_Oil_Gas_Presentation_FINAL.pdf



      So, what was the difference in only ONE year?

      The OIL hedges INCREASED from $90.33 to $97.09 in ONLY one year. What might it be in two or three years?....they get adjusted.


      The same kind of non-static adjustments go on for gas. They also go on for each outer year for oil and for gas.



      The problem with your post is that you already knew all of this because we discussed it at length before and you again posted incorrect info about it.....and then even "patted yourself on the back" with that comment about what you have been saying for several years.

      Why don't you tell the whole story instead of listing some numbers and trying to call it some trend that you spotted several years ago... Who are you trying to fool?

    • yes this posted right on their web page how the hedge prices decrease from year to year.

    • I am glad you finally see the light.

      A quick look at the recent presentation continues to show the same theme I have been noting for several years.

      Linn is facing reduced natural gas margins.

      2013 - $5.31/mcf
      2014 - $5.14/mcf
      2015 - $5.12/mcf
      2016 - $4.48/mcf
      2017 - $4.48/mcf

    • "Hence why I said it was a sort of perverse way of looking at it. "

      Yea you got something correct.

      True LINE had trouble with not accepting backwardization premiums to forward sell ngl. BUt line unlike other EPs is specifically a margin lock in business.

      LINE has put additional cost improvement into their guidance. There are two components to a cash contribution margin. If prices stay down it is most likely LINE will be able to leverage costs as they continue to increase production.

    • I said it was ironic, because you have E&P MLPs with hedges well below Linn, and they are maintaining aa 1.0x or better coverage ratio. Linn has much higher hedges and couldn't manage to maintain a 1,0x coverage ratio.

      The point is crystal clear. Those E&P MLPs that are hedged at lower prices have much higher upside if gas prices rise (as their hedges expire). Linn on the other hand, can only hope to be able to hedge at comparable prices because their hedges are already so high.

      Hence why I said it was a sort of perverse way of looking at it.

      I think in summary, Linn was overly aggressive in relying on strong NGL prices that it couldn't adequately hedge.

    • RRB, how does having hedged gas at a lower price put them in a better position than Linn?

    • "The irony of all of this is that there are now E&P MLPs that have gas hedged at lower prices and they are, in a perverse sort of way, in a better position. They can maintain a 1.0x coverage ratio at lower prices and have the potential of upside..whereas Linn has to hope for huge upticks in natural gas prices for upside."

      How many simple ways do you screw it up? Let us just take this one. LIKE is hedged on oil and natural gas. What is it 5+ years for natural gas?

      What deluded point are you trying to express?

    • Well it is refreshing to see people finally waking up and realizing that Linn is "struggling" with shrinking margins.

      These guys have made billions and billions of dollars in acquisitions, yet, due to shrinking natural gas margins, they couldn't even manage a 1.0x coverage ratio.

      This was obvious 2 or 3 yrs ago when high dollar natural gas hedges started rolling off the books and they had to scramble to make accretive deals to plug the gaps.

      Now, "low risk" Linn is being forced into drilling oil prospects feverishly to try and get back above 1.0x.

      The irony of all of this is that there are now E&P MLPs that have gas hedged at lower prices and they are, in a perverse sort of way, in a better position. They can maintain a 1.0x coverage ratio at lower prices and have the potential of upside..whereas Linn has to hope for huge upticks in natural gas prices for upside.

    • "because i am much wiser and adverse then you ever will be. Everything i have said has been correct about ng and oil drop, As well the stocks i recommended are all up".

      gosh ops...you are soooo content in your ignorance. have another toot...LOL

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