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Linn Energy, LLC (LINE) Message Board

  • mhibolt mhibolt Jan 12, 2013 12:45 AM Flag


    I am lloking to long next week. LINE is looking like a good buy. In the past though I have been burned by other MLP'S with secondary offerings smacking the stock price down. Any thoughts on whether LINE could be lining up for a secondary for futher acquistions. thanks in advance for any thoughts.

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    • Linn will almost certainly need to issue about $1-$1.5 billion in equity in 2013 to lower their leverage. They are at the high end of their limit and need to get back down to 3.0x. Presently they are one of the more highly leveraged E&P MLPs in terms of debt/ebitda ratio.

      But with equity issuance means money to deploy into acquisitions or development drilling. If it is deployed into can only hope they manage to improve their capital efficiency. They have been woefully inept over the past few years at converting $5 billion in acquisitions into a meager $.38 of distribution growth...for a...get this, a whopping accretion of less than 1 cent per unit per $100 million in acquisition price. Far below the 2 cents they target.

    • Undoubtedly they are. The question is when. Another question is whether they would use bonds or issue more units. Or issue additional shares of LNCO.

      Answer those questions and you'll know as much as anyone else does,

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