Recent

% | $
Quotes you view appear here for quick access.

Linn Energy, LLC Message Board

  • fredrickson01 fredrickson01 Mar 26, 2014 11:06 PM Flag

    Linn's 3/25/2013 Presentation at Howard Weil Conference

    Confirms 3-4% organic growth in production in 2014.
    Confirms distribution expected to be "fully covered".
    Confirms all strategic options for Midland assets in the Permian Basin would increase cash available for distribution.

    See Linn's website, Investor Center, Presentations.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Those who listen to facts will enjoy the profits that come from buying low and selling high.

      Sentiment: Strong Buy

    • "Confirms distribution expected to be "fully covered"
      Only because they reduced the capital spending by $250 million. I'm fairly sure Wall Street figured that out almost immediately after they saw the guidance.

      "Confirms all strategic options for Midland assets in the Permian Basin would increase cash available for distribution."
      Except, Rokov already said the Midland assets are going to be used as a "bank" to make new buys. That doesn't really sound like "available for distribution" to me.

      Linn is working hard just to cover the existing dividend, including that piddly 3-4% organic growth. Of course, perfect execution is assured, right? Just exactly how do you see them able to issue more units/shares, to buy even more property, and pay yet HIGHER cash out on MORE SHARES in perpetuity?

      The MLP model works until it doesn't. I think Linn has nearly arrived, maybe sometime next year. The only thing I can see LONG TERM is an eventual, inevitable distribution cut. I think Wall Street has figured that out, too. And then there are those nagging 23,000 puts at $26 for 4/19 - now why would somebody want to spend $1.6MM on options that will expire worthless? They must be the idiots!

      Proceed with extreme caution all.

      • 6 Replies to wegneredward
      • "Linn is working hard just to cover the existing dividend, including that piddly 3-4% organic growth. Of course, perfect execution is assured, right?"

        Not at all. 3 to 4% organic growth assumes that they don't blow away their softballed guidance. Perfect execution would allow significantly more upside.

        Sentiment: Strong Buy

      • "Except, Rokov already said the Midland assets are going to be used as a "bank" to make new buys. That doesn't really sound like "available for distribution" to me."

        The company is negotiating to trade for low decline producing assets. LINE takes over production and works on expanding production over time. Once each of the deals is finalized there could be very little lag between then and when additional cash is available for distribution.

        Sentiment: Strong Buy

      • "And then there are those nagging 23,000 puts at $26 for 4/19 - now why would somebody want to spend $1.6MM on options that will expire worthless? They must be the idiots!"

        All short term large-ish option bets work out? What about the billions and billions spent on LINE, LNCO, and the shorted shares thereof? How does a miniscule bet of around a tenth of a percent of the dollar value of the shares held by longs define the direction for the share price?

        $1.6M is a drop in the bucket for so many. It is not a bet that defines reality. It is a bet large enough to scare some and help drive LINE well below fair value so that shorts may cover and go long.

        You are a P0S working for the short side.

      • Ed...My understanding of the situation with the Midland assets in the Permian is that new wells in that region have a very fast decline rate (from my call with Linn IR). This forces aggressive Maintenance Capital Spending to sustain overall production volumes. If some or all of these assets are sold or traded for established, slow-decline assets, Maintenance Cap Ex can be trimmed and this would allow more cash available for distribution.
        On those 26,000 April 26 Puts -- Yes, that's a big bet...but someone took the other side of that...someone sold those puts....so somebody is betting big on a price rise.
        About piddly 3-4% organic growth....Linn and all E&P companies must first produce enough NEW oil & gas and NGLs to offset inherent organic declines...probably in the range of 5% for very low decline assets to 20% or more for high decline assets. That's no small feat. Linn is saying that they'll match their organic declines with new production and then top that, netting out with organic growth of 3-4%...and all of the new production is heavily or totally slanted to oil rather than gas.
        Linn is well aware that 10-11% yielding equity is too expensive to support financially attractive acquisitions and mergers...Their strategic focus Is aimed a restoring market confidence in it's ability to grow production and fully cover the distribution. In this connection, the Midland strategies are all designed to do this.
        Best of luck. Hope we all meet or exceed our $$ goals.

      • a perfect non sequiter argument using a falsehood to prove another falsehood this is what creationists do and you seem to like to do it as well

      • "Confirms distribution expected to be "fully covered"
        Only because they reduced the capital spending by $250 million. I'm fairly sure Wall Street figured that out almost immediately after they saw the guidance.
        ____________________________________
        That's not an accurate statement above. If you understand the difference in maintenance capital and growth capital, you'd understand why it isn't true. The reduction in coverage ratio is however a function of the reduced growth capital program (that's direct from Linn management by the way before anyone wants to argue it).

        You do not increase DCF by reducing growth capital. You could increase DCF by reducing maintenance capital (if for example, you could drill and complete wells cheaper and realize the same production and reserves). It all goes back to what their primary goal is (and it is interesting to see the wide array of objectives across the E&P MLP sector). Some E&P MLPs wish to maintain cash flow (Vanguard), some wish to maintain cash flow and reserves, some wish to maintain cash flow, reserves and production (most conservative!).

        VNR's approach is that they will happily replace 6 mcf of gas production with 1 bbl of oil production because the margins are higher. They could actually let production drop, and still maintain cash flow.

        As for the distribution cut, I'd bet that a cut isn't in the near future. I keep waiting on someone on the board to make some sort of side wager on this... Can we get one of the IB's to create a synthetic distribution that we can bet on?

        I do agree though that investors should proceed with caution. It appears many of them invest before doing due diligence.

    • Presentation shows that the distribution is covered for 2014 and strategic plan is in place for more stable revenues, continued organic growth at 3-4 % and continued acquisitions will play a huge role in their success.

    • Oops, that's 3/25/2014.

    • I reviewed the presentation and it looks even more upbeat than last months earnings conference call. Specifically whereas they reiterated confirmations of the growth, earnings distributions fully covered and permian basin increase in distributions just before its next earnings. Its kind of like telling you ahead of time next earnings will meet or beat expectations. I would not be surprised if Howard Weil upgrades the stock and sets a price target at $36+ on the stock after this presentation. On the other hand, someone with the big gun money placed the stock at a major buying opportunity.

      Sentiment: Strong Buy

    • Tuesday's presentation is very upbeat.

      1. Wolfcamp alternatives are extremely positive for cash flow

      2. Tremendous growth opportunities via industry consolidation....this is a growth company

      3. 2014 distribution fully covered

      4. Share upside from yield compression. Current LINE yield is 10.5% vs 4-yr historical avg of 8.2%

      I think the market is trading LINE at a a current 30% discount, and is saying to management....Show Me.

      Show me that you can monetize the recent Berry purchase. Show me that Berry purchase was accretive...or at least not dilutive. Show me that you can grow production. Show me that you haven't lost your mojo to make accretive, dividend increasing, acquisitions. Show me that your oil production is an increasingly fraction of liquids. Show me that you can hedge future oil production (currently only 50% for 2015/2016) at strong prices (above $90).

      Show me these and other attributes, and we'll be willing to own LINE shares are a much lower yield...I.e. Pay up on share price. Fail to show, and we will demand greater yield compensation to hold the equity.

    • It's amazing, the disconnect between market sentiment and reality. If you looked at that presentation in isolation, you'd come away thinking, hey, looks pretty good. They expect to cover in 2014 despite cutting back capex, and that's before a potentially major cash flow effect from Wolfcamp (estimated in one article at 30-60 cents per unit in DCF). But the market is like a herd of animals in a panic, nothing can stop or turn it until it runs out of steam.

    • Do you mean 3/25/2014?

    • Fred,
      Having been deep in the same hole myself, I've finally come to realize that the need for higher income in a low-rate environment is too treacherous an elixir to risk my hard earned money on. I too was so fixated on that high dividend rate that I was blind to what I knew was not right. A huge open short interest that didn't diminish even as the SP climbed? Going ahead with the Berry deal at any cost - an act of necessity more than good business sense? In the 2-12-2014 Credit Suisse presentation they said Berry was accretive to cash available for distribution - not! How can you maintain a constant dividend indefinitely when all your assets are depleting? I'm certain some who post on this MB, and others, will but I'm not going to drink any more of the cool-aid ever again. I sincerely hope it works out OK for you.

 
LINE
0.180.00(0.00%)May 23 3:59 PMEDT