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Linn Energy, LLC Message Board

  • jfredrogo jfredrogo Jan 19, 2013 11:24 AM Flag

    dividend increase?

    does anybody feel we have a little divy increase coming this week? I don't know why this stock has not moved higher wwith everything that seems to be going good, I have said this before, what am I missing?

    Sentiment: Strong Buy

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    • I believe we will see a dist increase but smaller this year than last over the past three years line has had a dist increase every 3 quarters.

      • 2 Replies to davemaine
      • I'm not convinced there should even be a distribution increase this year considering Linn's leveraged finances. Still, I think there may well be one in April. But January? Sugar-plum fantasy. Meanwhile, LINE is certainly continuing its bullish momentum, and I think there's more to come in the days ahead. Unless there's an irresistible pop, I'll probably sell my options just before ex-div.

      • I would guess you are correct that distribution increases will now be annual rather than when management feels they do not have 'better' uses. They have signed up for at least 5% annual increase as nearly all MLPs have done.

        There are quite a few moving parts this quarter. I suspect Sand is very much correct that Granite Wash results will be better than management modeled. Lighter ngls prices maybe a negative depending how effectively management handle it. A positive should be continuing reduction or greater efficiency in drilling and handling costs as a % of production. Of course over all production will increase as well.

        The analysts have kept to their public targets around $44 to $45. But not bold enough to change their buy ratings. Understandably so given all the changes in assets and limited visibility to the mix of production being generated by the GW effort. This will get the OLB camerals all worked up but it is a question of good, real good or happy happy.

        So I bet a 5% increase next quarter.

    • It is a mystery why Linn has not participated as much as others have in the MLP sector the last two weeks. I still think we should see a rise entering the ex-distribution date; perhaps if there isn't, there won't be as much of a drop post-distribution. Certainly Linn has NGL exposure, but so do many others.

      • 1 Reply to rlp2451
      • 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 the tune of perhaps $1 to $1.5 billion.

    • I wouldn't bank on an increase. We'll see how their DCF coverage plays out this Q with weak NGL prices.

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