No mystery whatsoever. Nearly 20% of Linn's volumes are NGLs. None of those volumes are hedged directly and only the BP Hugoton volumes are heged via dirty proxy hedges.
Additionally, Linn already has a lower yield than just about any of the E&P MLPs. Additionally, they have allowed their balance sheet to get too bloated. Their debt/ebitda ratio is approaching 4.0x, much higher than the 3.0x they target. This deleveraging will mean the next transactions they make will need to be heavily financed via equity..to the tune of perhaps $1 to $1.5 billion.
Amazingly simple minded but not surprising so for RRB.
MLPs are valued on the EBITDA multiple which has nothing to do with the yield. Although given some of the MLP structures being brought to market individual investors are clearly being taken advantage of.
Sorry norris you are mistaken, as usual. MLPs are valued on their Distribtable Cash Flow, not their Ebitda. Not all MLPs convert Ebitda into DCF at the same efficiency. The market differentiates the MLPs stability, prospects, capital structre etc by assigning various yields. Better luck next time buckeroo.
I don't own NTI, nor the recent CVR offering nor Alon's refinery MLP and have no interest in them. I think many investors will be very disappointed with the floating (i.e. variable) distribution policy when margins contract and payouts drop.
Only variable pay MLPs that I have any interest in are Dorchester Minerals and to a lesser extent,Petrologistics, the later of which because I make a nice round trip trade on it when it fell, though I do believe the polypropylene business is the place to be, I would prefer them much better if they had gone the route of EPD and converted it to more of a fee based enterprise rather than taking n so much commodity price risk.
I'll stick with my steady stable of midstream MLPs that have served me well, many of which I have held for 10 years or held the GPs before they were absorbed. Enterprise (via EPE), Sunoco, Kinder Morgan, Energy Transfer Equity, Magellan (via MGG),Plains, Williams (via WMZ), TransMontaigne, El Paso, Markwest (via MWP).
I don't know how you get the 4.0x ratio, but I am quite certain the NGL production has dropped in the fourth quarter from prior levels. And, depending on the mix, NGL revenues may not have been a total disaster.