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Linn Energy, LLC Message Board

  • porciuscato porciuscato May 9, 2008 7:38 PM Flag

    LINE & EVEP - a follow-up

    I pulled this up to a top-level thread, since it was getting buried.

    Thevalveguy said:
    "Referring to EVEP your problem is in your answer :yoou use wachovia's numbers" or "your brokers numbers".. .You obviously have not read the detailed s1 filed with the sec.. .and read the terms to there fixed swap contracts. "

    I actually did read it and looked at it again today. There's no there, there. First, most of the listed contracts expired a long time ago; the remainder only cover a small portion of current production (remember: they acquired a lot of assets since then). Second, the terms are very good - average of $9.7/mfce.

    And no I don't need need Wachovia's numbers. The Std. Measure numbers are just as compelling: there's a 5% premium for LINE and a 12% discount for EVEP.

    But let's go a step further and use some official numbers. Using their last reported quarters as a run-rate, the EV/EBITDA ratio for LINE is 7.86; it's only 6.24 for EVEP. And that's really unfair to EVEP since it's using Q4-07 vs. Q1-08 for LINE. It takes $54K worth of LINE to generate 1mcfe/day. It only takes $33K of EVEP and $40K of BBEP.

    These are all audited numbers and my calcs, no reliance on any broker.

    Now tell me if you have something specific --- or are you just trying to send me on a fishing expedition of your design?

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    • Not sure what standardized measure you are looking at, but if its the one provided in the 10-K or yearend press release, you probably need to add $18MM to that to reflect the recent acquisition that they announced. That should make the discount even higher.

      • 1 Reply to speaker8000
      • Tortoise Capital (TTO) is a closed-end fund that allows you to participate in a significant portion of the energy MLP sector. It's a little more than a year old and just raised the divy for the second straight quarter.
        Currently trading at a 10% discount to NAV, you avoid all the tax reporting headaches of owning the partnerships directly and its top 10 holdings include EVEP and EROC

        check it out

    • I sincerely wish you all the best with your investment. I am not interested in owning EVEP, my research on that concluded a few months ago. I won't be posting comparisons or debating why LINE is a better investment. I know the value of LINE and it is much higher then present, much of my D+D is here on the bard since to IPO.

      My time is better served focusing on the profitable investment i plan to make or have and currently hold.

      Many compounded returns to you.

      • 1 Reply to thevalveguyinvestor101
      • Hi Valveguy. I really wasn't looking for debate, just sound reasoning as that can be educational for all, myself included.

        In pursuit of discovering your rationale, I did check to see what you had said about EVEP on this board and on the EVEP board to see if you ever said anything about EVEP previously that indicated that it was a poor investment since I really wanted your thoughts.

        I did find on the LINE board the following postings by you (among a couple others mentioning EVEP that didn't add much on the subject of EVEP):

        12/7/07, an entry stating that you bought EVEP that week.

        1/13/08, mentioning EVEP's income.

        2/5/08, list investments in order of value as LINE, ENP, EVEP.

        On the EVEP board I found your posts:

        2/6/08, predicted increase in EVEP distribution from $.60 to $.68.

        2/7/08, stated that NAV of EVEP was $35.85.

        Didn't see anything really negative about EVEP until very recently (made in connection with the recent comments by Cato) and one post did say they have good (or great) management.

        Apparently you have moved on, but I don't see any reasons in the posts other than possibly a couple very recent comments on the LINE board relating to Cato's posts.

        I can only guess that you were disappointed that EVEP only increased the distribution from $.60 to $.62 instead of the projected $.68 and perhaps you changed your mind about NAV. EVEP's significant distribution miss would be one reason to move on. Still I would have loved to hear your rationale for the change of heart rather than have to guess at it (I know Cato became disenchanted with LINE due to incentive units, and has expressed his reasons and his honest misgivings both ways on the subject, like stating that he may have been wrong to sell LINE -- which I hope he was, but not because I don't wish him well, just my personal "greed" and hope that I am right about LINE).

        You have indeed been a fan of LINE for some time. Glad you haven't changed your mind on that one, I agree with you that it is a very compelling value for many reasons although I do somewhat wish they had hung in there to see what Marcellus could do for them. But I suppose my ATN holdings cover that base adequately. However, the fact that I htink lINE is presently a good value doesn't mean it is the only investment in town, so I am always looking for other options that may prove more profitable.

        I have found this board to have many sensible viewpoints and pertinent, thought-provoking observations (many times expressed by you as I recall) and it is not just a rah-rah/bash-bash board in which people congratulate (or insult) each other because of how they may individually feel about LINE.

        I will have to look at ENP, as I can't say that I have ever paid attention to it before and in fact (insert an embarrassed cough sound here) I will have to look up the symbol to see what it is. Thank you for mentioning it in your posts regardless of what conclusion I reach about its merits and good investing to you as well.

    • "It takes $54K worth of LINE to generate 1mcfe/day. It only takes $33K of EVEP and $40K of BBEP. "

      Oops. Right ratio; wrong units. Should be:

      BBEP $3604 EV/Mcfe per day
      CEP $3467 EV/Mcfe per day
      EVEP $2879 EV/Mcfe per day
      LINE $4664 EV/Mcfe per day
      LGCY $4953 EV/Mcfe per day