For those that believe Linn is a Ponzi, it boils down to one very simple question. Can Linn maintain the distribution (i.e. DCF/unit) without issuing new equity and/or debt.
It really is quite simple. Does Linn set aside enough maintenance capital to maintain production and cash flow. In fact, one could argue that they don't even have to maintain production on a per unit basis, if they are replacing low value mcfe (gas and ngl's) with bbl of oil. That is the tack that VNR has taken. They strive to maintain DCF/unit, not production//unit.
My gut feeling is that at present, the answer is yes, but only by the slimmest of margins. Linn's heavy drilling campaign has pushed the overall company decline rate up to very high levels. It takes more and more capital to offset that decline, especially if you didn't allow for sufficient coverage in the first place.
Linn needs Berry's high IRR oil properties badly, desperately. They do not have enough inventory in-house in the Permian to deploy the amount of capital they need to deploy to maintain cash flow while achieving high returns. They need multi-basin exposure. It isn't enough to participate in a handful of Bakken and Oklahoma Hogshooters with other operators. Linn is a beast of a company, that needs to consume a lot of locations. It's the law of large numbers that is finally catching up with them..
A Ponzi is theft and illegal. Anyone who calls something illegal should prove it or pay the price. Dividends are not guaranteed. Sounds like you are saying any company that may cut or cuts there Dividend is a Ponzi, that is ludicrous.
The new shale has a more rapid decline rate than legacy assets. But the tails on production are still very long.
There was plenty of nonsense about Bakken wells when the truth is with the discovery of the natural gas the average productive life span is about 50 years.
So the shorts are purposefully mixing apples and oranges to show a decline in drilling efficiency.
Purposefully ignoring pressure problems accounted for a 5% loss in production last quarter. Nor did they bother to adjust their figuring for Hogshooter which was a big disappointment.
This bogus narrative requires ignoring the real reason there has been stress on the cash flow for some time now. That is LINEs increasing share of production to about 20% in ngls and the collapse in pricing. All the lucid rational people here also know there are not efficient futures market where this production could be hedged.
But while Lixa went on and on about a 'barrel' of ngl there are 5+ distinct product streams. Ethane is being destroyed in America due to Obama scaring off capital investment. Propane is being exported and large jumps in export capacity. The other heavier ngls have held up much better but are still at a very wide and inefficient discount to the BTU or economic value of WTI.
Now as usual the OLB troopers like you have managed to find some where on the net the postings of dishonest delusives Like Lisxa taking the prize by posting the claims of a used MLP salesman that incentive distribution rights are always earned.
But higher oil prices should also lift he market prices of the heavier ngls. Large amounts of propane export capacity are coming on and as a refined product can not be blocked. Even ethane is going to exported but market impact is questionable.
Gee I wonder why the shorts run off in weird direction and you follow? In the long term markets allowed to function will close these discounts. Obama can not be President again.
You know, with all the ponzi talk, I wonder if this talk is going to hit the rest of the MLP's? I own EPD and I am thinking of selling it and moving on to a safer comsumer staple stock which will do great in rising interest rates.