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Linn Energy, LLC (LINE) Message Board

  • fredrickson01 fredrickson01 Sep 12, 2013 10:16 AM Flag

    What the Permian Acquisitioon Means...

    Is accretive to funds for distribution (per Linn's press release).
    Restores any fractured confidence in Linn management team. They're back on their game.
    Boosts LINE/LINCO market price.
    Secures probability of Linn/Berry deal. (BRY shareholders sure to get $3.85 annual distribution plus $42-45 per share, depending on how LNCO does over next few weeks. This distribution is a HUGE factor in the deal for Berry shareholders -- often underappreciated by analysts.)
    Increases ratio of oil assets.
    Earns, repeat, earns many upgrades from analysts.
    Merits analysts' boost in 2014 earnings estimates.
    Totally discredits the short critics and groups with eye in their name.
    With announcement yesterday about minor amendments to S-4 and setting record date for shareholder-unitholder meetings, this clearly signals that the SEC inquiry is o-v-e-r and no real issues.
    Probably some more positives I've missed.

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    • line may be one of only a few MLP's able to do a 525 million purchase, and with oil at record highs line may be paying up to out bid others in the deal. (read paying to much)
      however it is the best thing that line can do to right the ship and get back to what they do (buy assetes, punp oil and gas and drill)

      • 1 Reply to davemaine
      • If it is accretive, they are not paying too much. If I buy a rent house that can make me money on the rentals, I have a profitable purchase, which is what matters. There is such a thing as penny wise and pound foolish. You are going to pay more for a property that is 70% oil, has low driling costs, and a low decline of 17 years. This is so much better than the old philosphy of we don't care as long as it is cheap which landed us with the 2 BP acquisitions and all the problems. Kudos to Linn for selling the Panther for $220 million, 44% of what they are paying for a Permian Basin property. Pay up for the good properties that are accretive and allow you to raise the distribution, and forget the cheap ones that bring you lower revenue, lower production, and .89 x coverage of the distribution.

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