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Vanguard Natural Resources, LLC Message Board

  • I don't see LINE buying BBG. BBG's remaining assets will require a lot of capital to develop. LINE already has its handful balancing growth of the distribution, growing production and also managing the overall decline rate of the company.

    Linn's done well with the Granite Wash, but they have also put so much capital to work, that the overall company decline rate is pushing 25-30%. This is very high, and requires dilligent focus to manage.

    These guys have plenty of prospective acreage...but as I have pointed out LINE has been struggling with the ever declining natural gas hedges. Norris and Sand can argue about it all day long, but without the acquistions, they would have had to cut the distribution. They contiue to face headwinds of declining gas hedges.

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    • Linn is looking for companies, or rather assets, that are more heavily Proven Developed Producing (PDP).

      Of course, lately, lots of E&P MLPs have been making natural gas deals where they are ONLY paying for the production and not the unproven acreage. Atlas made several very very attractive deals in the Barnett shale, where they paid absolutely nothing for the acreage, most of which is already Held By Prodution (HBP). They can sit on it for years and wait till prices rise before they drill. I have cautioned that with Linn, it is going to become increasing hard for them to grow. They are already near the top 10 in terms of E&P companies. It takes $2-$3 billion in acquisitions to produce modest growth of 5%. Plus, the still face the headwinds of falling natural gas hedges.

      They made some deals, that cleary, in review, were not good. The market for $2-$3 billion dollar deals is limited.

      • 1 Reply to rrb1981
      • I talked to them earlier this week and told them (and followed up with an email) on a potential acquisition they were previously unaware of. But they said they were still looking at various opportunities. If you notice on the slide presentations, they look at dozens, if not hundreds of possibilities, bid on some, win some, lose some.

    • Yes, I agree, but I wonder what other opportunities for acquisition are available that won't require a lot of capital. The easy pickins have been picked.

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