This is my last comment. You can twist it as you wish. A bond is a promise to pay. Line's promise is their distribution every quarter based on their hedges and consistant oil and ng revenues. It is really a royalty trust. Let me say that 10 yr treasuries past couple years has been around 1.50% very recently moved towards 1.80% when Line hit 35's Even royalty trusts move up in price when oil rises. The price for line is in reality set by increase in rate of/and distribution increase . I for one love the Line action. Buy at 35 sell at 36 CC July 40's. Two results in July either 18% for 6 mos
or a 8-13% bond like effect if between 35 and 40 price
norris, it seems that the comments about that incorrect claim center around the fact that Linn hedges 100% of their oil production and 100% of their gas production.....so they seem to incorrectly imply that if it is 100% hedged then how can Linn add more profit if the price of gas or oil goes up?
They seem to falsely assume that Linn hedges like most others AND THEY DO NOT.....and unless you take the time to understand how Linn actually hedges differently and can still benefit from rising gas or oil prices as they move up above the average hedge prices .....which will add profit and result in share price appreciation....etc....then their fallacious arguement seems credible at first glance......
But we know the details about how Linn hedges differently.
It should be of noted that those who refuse to address simple investment math; which is not a matter of opinion or the repeated and repeatable academic research believe *voting* imposes their cave dweller ignorance upon other Americans.
The first most wanton fallacy they attempt to spread does not account for the projected organic growth from existing assets. This is where the 13% annual growth the analysts project is coming from. Bot just current production volume but planned increases are hedged out.
As you note as well LINE could make large pricing gains on their puts. This is not just the pricing but also that LINE has positioned itself as a low cost producer with long lived reserves. So unlike most other EPs line should be able to increase production without increasing FD costs.
Honestly I am expecting further improvements in costs this next quarter. Better infrastructure, lower drilling costs along with drilling efficiency. First it was ngl exposure and then it was cost inflation so it will take a some time for management to prove to the analysts they have both under control.
I read the LINE 2019 is trading at about par with a YTM of 6.29% and a duration of 5.5 years.
On LINE equity the duration is 12.7 years. Actually a little less due to tax deferment.
So if we are going to think of the equity as a bond then the risk is twice as great.
Not to mention the bond is protected by the equities distribution so the coverage ratio is radically different. Precisely why the bond and equity do not have a high correlation of returns. Wildly different interest and credit risk.
I see the Lisa is back with another round of short attention span occult investment theory mental shadow puppet show.
Common sense is enough for average Americans to do well managing their own money. But the moment they stray into the occult stuff they are prey items. As the OLB posts for their Progressive Political religion which is emotions rather than rationality they need to spread completely irrational ideas about investing. They are purposeful attempting to prey on fellow Americans in support of their politics so they do not care to learn and become informed.