A few months ago, Cramer had the Ceo OF Linn on his show for an extended discussion about the company. Cramer heaped praise on Linn for its busines model, management acumen, and anything else he could think of as the stock rose. Now he recommends sell. That's good enough for me. Buy all you can. Cramer is a true asshole.
I called the company a week or so ago. The girl in investor relations said that they have hedging contracts. An average of $100 per barrel for oil and , also, a decent price for gas (Can't remember the exact figure, so I won't quote her. She claims the company has them for 3 years. (Do you know which bank holds the hedges? )
If this is true, what do you think is holding this stock back? I know there was a big problem when Lehman went under. Currently, it seems like a buy....Even if production is lower than last year, the dividend is quite hefty. Even if it were lowered by 30 percent, it still looks good for 3 years.
There may be some concern with the dividends. If the creditors decide to reduce borrowing base due to lower commodity prices, distributable cashflows may be diverted to debt reduction. That almost always leads to a big haircut to stock price.
Eventually the hedges will come off and distribution will depend on commodity prices. Hopefully 3 years out prices will (and should) be much higher. A 15% IRR is goning to be the return investors use to price deals. Unless commodity prices recover meaningfully, unit price won't have too much room to rise. But getting high teen's dividend while waiting is not the worst option in this market.