Ronharv posted the following from WF on the BRY board. I thought worth repeating here. thanks to ronharv.
Wells Fargo -
• Key Takeaways.
We believe LINE/LNCO has comeunder selling pressure today
on market speculation that LNCO could realize a large tax liability in 2016. We do
not believe this assessment is accurate. Weexpect LNCO’s tax liability will remain
minimal into the foreseeable future inthe 2-5% range (i.e. in line with
management’s guidance for 2013-15). As a reminder, LNCO benefits from
minimal taxes at the C-Corp level due to LINE’s high tax deferral shield (i.e. in
excess of 100%), which is primarily generated by LINE’s robust drilling program.
Hypothetically, LNCO’s tax obligations could increase if LINE significantly
curtailed drilling activity (as noted in our initiation report); however, we do not
see this scenario developing in the foreseeable future. Notably, based on our
meetings with management at the NAPTP conference last month, we believe
LINE is likely to maintain its current capex spending level into the foreseeable
future. While we believe short selling could result in continued unit price
volatility in the near term, we continue tobelieve the closing of the BRY merger in
Q3’13 will act as a meaningful catalyst for LINE/LNCO shares. We remain
comfortable with our Outperform ratings on LINE and LNCO. To note, CEO
Mark Ellis and COO Arden Walker purchased 10,000 units and 5,000 units of
LINE, respectively, on 6/14/13, underscoring management’s confidence in
LINE/LNCO’s business model.
• Distribution Increase Still Anticipated For H2’13.We continue to believe
LINE is on pace to deliver a 6.2% sequential distribution increase later this year
(i.e. to a quarterly distribution of $0.77 per unit) based on anticipated accretion
from the BRY acquisition. However, since the BRY merger has been slightly
delayed from its originally anticipated closing date (i.e. we believe mid-August
versus early July previously), we antici