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Linn Energy, LLC (LINE) Message Board

  • margretbar2 margretbar2 Nov 4, 2013 8:58 AM Flag

    Cramer AA+ Buying 500 shares of Linn of $32.20/$32.30

    Sent: 11/4/2013 8:43:35 A.M. Eastern Standard Time
    Subj: Action Alerts TRADE -- LINE HON
    Monday, November 04, 2013 8:42 a.m. EST

    -- Buying 500 shares of Linn Energy.

    -- Selling 200 shares of Honeywell.

    We added meaningfully to this position on Friday following
    the SEC news and will add another 500 shares, which have a
    bid/ask of $32.20/$32.30.

    We expected the amendment to occur and the new terms, which
    value the transaction at $4.9 billion, in line with our
    expectations (we had heard $4.5-6 billion). It is an
    all-stock transaction and LINE has agreed to issue 1.68
    common shares, up from the original 1.28 common shares. This
    is another big overhang removed from the stock and the
    combined entity will create one of the largest independent
    oil and natural gas companies in North America with more
    than 1 Bcfe per day and proved reserves of 7.7 Tcfe. The
    deal will be accretive to LINE's cash available for
    distribution. We like the transaction and have viewed it as
    essential in owning the LINE stock.

    With the SEC overhang removed and the BRY deal terms now
    restructured, we can now focus back on the fundamentals
    (which were ahead of expectations for its 3Q last week). BRY
    has long-life, low-decline, mature assets that fit well with
    LINE's current asset base. It increases the geographic
    exposure to California, Permian Basin, East Texas and the
    Rockies. Production with BRY will be increased by 30% and
    the mix is attractive with reserves at 75% oil (up from 54%
    for LINE stand-alone). Proved reserves of 1.65 Tcfe,
    increases LINE's proved reserves by 33% and the companies
    have outlined additional probable and possible reserves of
    3.8 Tcfe. The accretion (which we'll get more details on at
    tomorrow's call) does not include cost savings.

    After our trades we'll own 2,000 shares of LINE, or 2%, and
    1,300 shares of HON, or 3.7%.

    Sentiment: Strong Buy

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