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Linn Energy, LLC (LINE) Message Board

  • rrb1981 rrb1981 Aug 13, 2013 11:19 AM Flag

    Bottoming Soon

    I'm calling a bottom before $20.

    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.

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    • 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.

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