Leo and Mike (Leon Cooperman of Omega Advisors and Mike Linn) should set up their own hedge fund and then buy out LINE’s hedges and remove this problem. Whatever the cost that this solution would have to them will be richly rewarded by the responding increase in share price.
Selling the puts doesn't solve the real problem. It is just the side show that has discredited Management and led to an overvaluation of the share price that has now been corrected. I estimate that $.30 of the $2.90 distribution was a return of capital due to the puts. If this were the only problem, the share price will go back to a range of $30-35. The real problem is growing proven reserves and production on a per unit basis. They need achieve north of 820 MMCFE of daily production in the current quarter. Anything less Than 800 will embolden the shorts and doom the Berry acquisition. IMHO
Great points, but it also depends on the product mix.
They doubled production of NG and NGLs from March 2012 to March 2013, but only increased oil production by 15%. If oil prices remain high, one would assume that's where they are focusing their production activities. But selling 5% of their capacity in April, and moving to a lower interest in Oklahoma Hogshooter, it's got to be a difficult task.
one of the analysts estimated closing the puts would cost $130 million but that might be cheap in regard to how much more they would have in share value if the shorts are burned much as the shorts for LEAP were Friday night. I don't own LEAP stock but love watching institutional shorts get reamed two news ones. Talk about roto rooter at work