It is a mystery why Linn has not participated as much as others have in the MLP sector the last two weeks. I still think we should see a rise entering the ex-distribution date; perhaps if there isn't, there won't be as much of a drop post-distribution. Certainly Linn has NGL exposure, but so do many others.
No mystery whatsoever. Nearly 20% of Linn's volumes are NGLs. None of those volumes are hedged directly and only the BP Hugoton volumes are heged via dirty proxy hedges.
Additionally, Linn already has a lower yield than just about any of the E&P MLPs. Additionally, they have allowed their balance sheet to get too bloated. Their debt/ebitda ratio is approaching 4.0x, much higher than the 3.0x they target. This deleveraging will mean the next transactions they make will need to be heavily financed via equity..to the tune of perhaps $1 to $1.5 billion.
Amazingly simple minded but not surprising so for RRB.
MLPs are valued on the EBITDA multiple which has nothing to do with the yield. Although given some of the MLP structures being brought to market individual investors are clearly being taken advantage of.
I don't know how you get the 4.0x ratio, but I am quite certain the NGL production has dropped in the fourth quarter from prior levels. And, depending on the mix, NGL revenues may not have been a total disaster.