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Linn Energy, LLC Message Board

  • rlp2451 rlp2451 Feb 14, 2013 7:32 AM Flag

    Linn Buyout?

    Cramer says Linn may have trouble staying independent.

    "Two others that could make sense that have done nothing but right things, yet been given zero credit for their efforts, are Linn Energy (LINE_) and Carrizo (CRZO_). They might be hard pressed to stay independent.

    Linn's been a leader in developing properties cash off by others, including BP and then quickly bringing great returns to shareholders. I love that Linn offered Linn Co, with its bountiful 7% plus yield for non-taxable accounts. The company's growing its holdings like weeds, yet it stays at a ridiculously low $7 billion valuation."

    Maybe Exxon will come along and offer $50 for them.

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    • Warren Buffet paid $28B for Heinz. He could easily shell out $15B for Linn Energy.

      • 1 Reply to rlp2451
      • But he'd have no interest in buying Linn when he could buy any number of shale players and get much better returns.

        Linn is an income play...Warren isn't interested, plus, the deal would need to be structured in such a way that they preserve the tax advantaged nature of the LLC. When you look at the returns (the cash disbursed to unit holders) versus the enterprise value, I think you would find that Buffett is looking for much higher returns.

    • I laughed out loud when I read it. No c-corp is going to buy Linn. Linn is an arbitrage vehicle using its tax advantaged equity to expoit the difference in what production assets cost on the private market vs what they are valued at by investors when turned into an income stream. If XOM were to go after anyone, it would be a much larger player with a lot of undeveloped shale acreage..with the age old rumor being CHK, but I would not rule out players like Range or a big player like EOG, with their large shale holdings. I also wouldn't rule out a few of the smaller players with large undeveloped acreage.

      Linn is far too PDP for XOM...and besides, I think I saw the other day where one of the brokerages pegged the NAV of Linn in the low $40's. That's hardly the upside that XOM is looking for.

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