Management needs to put together a plan to stem the overall company declines, then address how they will deal with the hedge cliff. 2013 average gas price is $5.31, 2014 is $5.17, 2015 $5.14, 2016 is $4.48.
The drop from '13 to '14 is a mere $.14/mcf, however, when you do the math, it adds up to nearly $.10/unit in DCF. Look at the drop in '16. From '13 to '16, that is an evaporation of $.87/mcf in margin, or about $.55/unit in DCF.
The '23 to '14 hedge price drop is 3% of the distribution. That isn't severe, but it isn't helpful.
I think the plan is to buy BRY and spend capex on oil instead of gas. I still think Ellis is deluded on being "agnostic" as to buying either oil or gas reserves. I do not know if BRY will go through, but it would fix a lot of problems. The tax advantages to BRY shareholders may swing the balance in favor of the deal, but who knows.
Good info, so if you figure worst case, or just this differential, $3.08 x 95% coverage next qtr, assume that is maintained, you get to around $2.40, assume 10% yield, $24 unit price. Seems the value currently is in the range of a good bet. $20 would give more of a cushion for something unexpected, SEC. Don't see how they get BRY, but that would help the cause. Think I would buy LNCO. at $22. I don't think LINE is going back to the $30s anytime soon.