Feeling good about my recent purchases of KMI and LNCO. Slowly starting to inch upwards. Looks like a good time to start nibbling on EPB as well. It will take a couple of years for EPB to recover but the LNG project in '17 should be a strong catalyst. It's a nice yield until '17.
Just added to my Warren Resources (WRES), which, in my opinion, is a perfect candidate for Linn to acquire. I'm actually surprised it hasn't come up on the board before. I've seen all kinds of ludicrous suggestions such as Diamond (why would Linn divest it's largely PUD Wolfberry only to turn around and acquire a capital intensive, high decline company like Diamond...rolling my eyes on that one and the person that suggested it clearly showed he has no understanding of the companies desire to lower their capital intensity and focus on low decline, mature production)
WRES is large enough to be meaningful, small enough to not be difficult to absorb, very underlevered, 66% PDP, undervalued, plenty of oily PUDS, strong California oil operation and hidden value (Niobrara) in the cbm assets (the cbm assets appear to be consuming nearly as much cash as they generate due to BLM drilling mandates but WRES will be good until '16 so they can keep their concession). Selling for EV of about 5x cash flow.
It one of those volatile small caps that has potential to do really well. I'll tuck it away and wait and see what happens over the next year or two.
The people in Kalifornia are indeed wack jobs and it is indeed a legitimate concern, but let's remember, they've been producing oil in the Los Angeles basin area for near 100 yrs. The only thing that Kalifornia wants more that clean/green energy is cash. They need massive infusions of cash to run their welfare state. At the end of the day, most politicians understand that government produces nothing and simply redistributes, so they must rely on enterprising capitalists to bring cash to them. The E&P industry brings an enormous amount of cash to the state coffers.
The Monterey Shale hysteria is different than the Dolomite plays and other less "sensitive" and more conventional development activities like steam floods, water floods etc.
And again as I highlighted, when you are selling for an EV of 5x cash flow, you aren't really paying for the PUDs.
Not only that, Gumby, but there's a big move for an extraction tax, which Calif. lacks. I find that more concerning than the anti-fracking issue. Those who read the latest 10K will see that Linn is facing a number of potential headwinds that may well be keeping a lid on PPS appreciation.