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Linn Energy, LLC (LINE) Message Board

  • lesspheus lesspheus Mar 27, 2014 6:44 PM Flag

    Delayed cash generation

    Cash available for distribution could be easily raised via a more aggressive capital plan, but LINE is in this game for the sustainable long term and not out for a short term boost. Cash available for distribution could also be raised substantially by ramping up Wolfcamp drilling and production, but those are not the type of assets that LINE specializes in. LINE would rather delay cash generation so that they can do it properly in a way that matches their business plan. I really do not understand how so many people do not seem to be able to comprehend this.

    People see a flat distribution and claim that the Berry acquisition is not accretive. What kind of single variable "analysis" is that? You can't look at a single data point for a story as complex as the one LINE has and make a sweeping generalization that there was no accretion from Berry. LINE picked up $2 Billion (+/- $1B) worth of Wolfcamp acreage from Berry that they are not exploiting yet. There are actively negotiating with multiple parties over deals for the 8 property parcels. At some point LINE will transform ownership of those parcels into ownership of an equivalent amount of long life, low decline assets. Even at the very low end of the valuation range for the Wolfcamp assets, LINE should have another billion dollars worth of producing assets rather than a billion dollars worth of assets that are primarily waiting to be monetized. That much additional producing assets will make a substantial difference. And guess where those assets came from? Duh, they are from Berry. Have a little patience and foresight.

    Sentiment: Strong Buy

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    • a little insight to your comments. i live here in the permian and the activity is crazy. odessa and midland are the 3rd and 4th fastest growing towns in the country. its all the oil and exploration being done. 2 new drilling cos. just moved into the area. these people are begging for acreage to drill on and if line turns loose of some, it will be at a premium price. i have lived here for 40 yrs and never seen it this way. listen to what the pxd ceo had to say about the thirty years of work they had. this is turning into the north dakota deal down here in tx. with old technology this land is ho hum, but with new technology they are sitting on a gold mine and line knows it, we are just understanding it and jpm or cramoron cant see it out their 40 story over looking statue of liberty. oh and how bout that oil that caught fire off the train car. its special oil and burns faster, REALLY. my 2 cents thanks

    • And just think of the potential if the Wolfcamp assets can be valued even at mid-range estimates of around $2 billion. If so, I believe LINE could be on the way back over $40.

      Sentiment: Strong Buy

 
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