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Linn Energy, LLC (LINE) Message Board

  • bwilson1110 bwilson1110 Feb 27, 2013 10:31 AM Flag

    Cramer This Evening

    I think I heard Cramer say he had LINE on this evening ...... get ready to do the opposite of what he recommends .....

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    • From the text of the show:

      "time for you to double down on a stock that gives you a sky-high energy play. i'm talking about linn energy, the 12th largest independent gas exploration company in the company. it has a big 7.7% yield. if you want to own this for a tax favored account like a 401(k) or i.r.a. you can buy linn co. i always tell you to go to your tax accountants even the mlps. linn announced it is buying barry petroleum this is a brilliant deal. in the first year after the deal closes, expect to to add more than 40 cents to the cash flow power. we want yield to go higher and from a higher distribution. that's what could happen from berry. i think this is huge for linn's future. they have come under fire for hedging. they use a mix of swap contracts and put options. some don't like the way the company accounts for hedges. they have a chance to explain the hedging on air. let's talk to mark ellis of linn energy to dig deeper into the story. welcome back to mad money. good to see you. before we get to the acquisition, which i praised on air numerous times. no shock to you, andrew berry from town, really nice, writes in an article in barron's that lin doesn't deduct the cost of the derivatives from hedging gains. that suggests that cash flow is overstated. does it? yeah, jim. we saw that article. a week and a half ago we actually did our response to that put a presentation out there. saw it on the web if anybody wants to see it. clearly spains how we do that. misunderstandings in the way we deal with nongap accounting. we stand strong behind our hedge. it's critical to the success of our business. it allows to us pay distribution some 28 quarters in a row, and by the way, those are cash distributions. no fasbe commentary, no s.e.c. inquiry. none whatsoever to our nongap accounting. the reason i recommend the stock, is because you do it. too many cowboys that wouldn't be near the 52-week low if they did the hedging program. the hedging part is part of the cost of doing the deal. you say it up front. absolutely. we lock in hedges as many as five years. we take very little commodity price risk, and manage the operational risk with the types of assets we buy. buy mature assets, development drilling, so it's very secure. take commodity price out of play and build stability in distribution and you give -- you give the strength also to be able to raise distribution in the future with outstanding operational performance. and a series of acquisitions. so people know at home, what you are trying to do, unlike most of the ceos that come on here, you are not making a directional bet on the price of oil. just making a bet on the volume you can get and hedging it out so you don't get surprised by a sudden downdraft. correct. what we know we don't know is to predict prices. we hedge for five years. it is three to five years. we hedge for five years. not good at predicting prices. i thought natural gas was going to go higher except for you. last year we bought a lot of gas assets. it allow us to be more competitive. we buy the margin, lock it in for five years, move on to the next transaction. i want to talk about berry and the bp assets. okay. bp, i will tell you, didn't think that was a great operator. berry is a great operator. new tech nog they may be using far more oil than we may have thought or has been found so far? okay. let me split that in two places. as it relate to bp, high quality assets. well trained individuals that work those assets. the problem there is they just weren't core assets for bp. not spending money. current technology or care and feeding will make them perform better. we're seeing results and we'll put rigs to work. and berry on the other hand, very talented workforce, as much the assets are important to us, the people that run the assets are critical to us, the knowledge in terms of steam plating in california, which is half the production base there and 3/4 of the value in this transaction is critical to the success of the deal and very good at what they do. david dempster came on the show, telling us about a couple possible prudhoe bay like sized fields. i believe they are in california. do you think california has that possibility and are you anywhere near where some of the big -- some of the big technological finds can be. they all know them. they are right in the backyard now we have it. couple of key fields and more mature steam plates are really interesting. we have as play she in a small acreage position. berry has that play figured out. the steam cycles are down to the point where they have great production. i have been talking about the mismatch. oil where it can't be refined easily. natural gas not being used effectively because of crazy energy policy. any time in our lives, will we have a rational energy policy and be able to be continental secure in our energy? we have the technology to get there i would love to see us have an energy policy at some point in time. hopefully we'll get there. i got to tell you, again, i want everyone to go to the website, everything is public. not anything i didn't know about linn beforehand. i don't know why anyone is shocked. they are not trying to bet on natural gas going to 7. i don't want to make this bet. they don't either. thank you, mark ellis, president and ceo of linn ener thank you, jim. stay with cramer."

    • Yes, tempting to sell after hours and buy back Friday.

 
LINE
13.15-0.1500(-1.13%)Apr 21 4:00 PMEDT