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Linn Energy, LLC Message Board

  • norrishappy norrishappy Feb 19, 2013 6:18 PM Flag

    RLP'DRRBS Nonsense - Yes it was more than Weil the shill

    In its blog, Bronte called the company's management liars, when Linn said "Out of 40+ hedging transactions over the last 10 years, only 7 were purchased "in the money."
    "I am just going to call BS on this," Bronte's John Hempton proclaimed. "The company is claiming that it purchased substantial numbers of below market hedges. I want to point out the average price of gas sold after hedging in 2009, 2010 and 2011 was $8.57, $8.22 and $8.20 respectively. It is an awful long time since the natural gas prices -- even forward natural gas prices -- let alone say five year strip natural gas prices were that high. There is simply no way that these prices were obtained except by purchasing substantially in-the-money positions with large amounts of cash."
    Well here is evidence from the company's August 2008 conference call that Bronte is just plain wrong. Remember that Linn hedges 3-5 years out into the future.

    "Q): Hey guys, I actually have two questions for you. The first one is on the hedging, I think it's great that you rolled up the hedges on the oil production. Just curious why you didn't look to do anything in gas, with the big spike we had in gas recently as well?
    "A) Michael Linn: Well, we looked at both of those, Dan, but quite frankly, gas had moved lower by the time we were executing these trades. So, if gas moves up again higher, I think we would look at that seriously because I think we picked some significant value. But with gas moving down towards the $9.00 range with our hedges at $8.50 there's really not much to be gained there."
    Bronte conveniently forgets that natural gas prices traded well above $10 at points in 2008 when Linn was hedging these positions. So, who is spewing BS now?

    The truth is the short positions are probably already closed out. Certainly not going to wait until the earnings call and get blow out it the GW/Hog results are good.

    Sentiment: Buy

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    • I agree with you but you can see that there is fear among shareholders because LINE is up and down like yoyo. Nice recovery today, but A/H and opening doesnt look good again.

      • 1 Reply to ovicp
      • Good observations. But technicals must assume an efficient market to have any predictive power. This type of public attack is an attempt to destroy efficiency.

        Clearly a great number of individual investors were scared out by all this. Also I do not know how many shares were borrowed in this attack and may yet need to be covered.

        Looks to me like the emotional investors have been scared out. But also the gap between LNCO and LINE was very wild. So how LNCO may have been used in this is open as well.

        The answer is Thursday.

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