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Linn Energy, LLC (LINE) Message Board

  • diet_coke1x diet_coke1x Jun 21, 2013 8:39 AM Flag

    RBC - Line Energy Report - June 20 2013 PT=47

    June 20, 2013
    Linn Energy, LLC
    "The Other Side of the Story" - LINE Management
    Conference Call Highlights
    Our View: RBC hosted Senior Management from Linn Energy LLC,
    for a conference call to address key issues facing the stock recently.
    Management reiterated its confidence in the strength of the distribution
    coverage and the closing of the berry acquisition in 3Q12 with current
    terms. As the noise dissipates, we reiterate our Outperform Rating ahead
    of additional A&D activity.
    Key Points:
    RBC Internal Call with LINE's Senior Management.In response to the
    impact of a well publicized short selling campaign against Linn Energy
    LLC over the past few months, we hosted LINE's senior management
    on an internal RBC conference call where key issues and concerns were
    discussed. In attendance were Chairman, President and Chief Executive
    Officer Mark Ellis, Executive Vice President and Chief Financial Officer
    Kolja Rockov and Vice President, Investor and Public Relations Clay
    Jeansonne. Key takeaways from the conference call are summarized in
    this note.
    Directly From the Horse's Mouth: Derivative Reporting, Maintenance
    CAPEX, and the BRY Transaction Clarified.Key issues addressed by
    management include Derivative Reporting, Maintenance CAPEX, and the
    BRY Transaction. These timely topics remain the focal point of a large
    scale short selling campaign that has weighed on the stock significantly
    over the past several months. Year-to-date, units of LINE are down 6.1%,
    while shares of LNCO have fared not much better, up 0.4% YTD.

    Sentiment: Strong Buy

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    • Once again, thanks for the series of morale-boosting posts!

    • Target Price/ Base Case
      We arrive at our target price via a two-methodology
      blend including a traditional DDM analysis($45.72/unit) and
      a detailed NAV calculation ($42.26/unit). We believe this
      method is appropriate as it takes into account the future
      distribution stream of LINE units and also the estimated
      liquidation value of LINE’s assets. We arrive at a $47/unit
      target price, which implies 12-month total return potential of
      50.2%.
      Upside Scenario
      A stronger oil and natural gas price environment would add
      significant value to the reserves and the production of LINE. In
      addition , a favorable A&D market would allow the company
      to grow at an accelerated pace that could increase its value to
      $55.
      Downside Scenario
      In a weaker hydrocarbon price environment compounded
      with a difficult A&D market preventing line to execute
      accretive acquisitions, LINE units value may decrease to $33.

      • 1 Reply to diet_coke1x
      • Investment Thesis
        We derive our target price via a two-methodology blend
        including a traditional DDM analysis($45.72/unit) and a
        detailed NAV calculation ($42.26/unit). We believe this
        method is appropriate as it takes into account the future
        distribution stream of LINE units and also the estimated
        liquidation value of LINE’s assets.
        We rate LINE shares Outperform as we believe the company
        has:
        • A very strong balance sheet that positions the company
        favorably among its peers to take advantage of accretive
        acquisitions
        • A high degree of trading liquidity due to its large size
        • A secure cash distribution providing strong yield to
        • Strong upside from organic growth optionality from its
        attractive Granite Wash, Wolfberry, and Bakken leasehold.

 
LINE
12.25+0.27(+2.25%)3:59 PMEST

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