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Linn Energy, LLC Message Board

jrad52 46 posts  |  Last Activity: Jul 11, 2016 5:18 PM Member since: Jul 25, 1999
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  • From today's NY Times, part of a longer article:

    The Federal Communications Commission on Friday said it reached its greatest hopes for the amount of spectrum it would be able to offer to wireless carriers in an auction scheduled to begin in late May. Television stations flocked to provide the spectrum, promising to sell enough of the valuable airwaves they use for broadcast programming to reach the agency?s maximum target for the auction. The airwaves will be reconfigured for the next generation of wireless services for mobile phones, cars and other devices that will connect to the Internet.

    The auction is drawing attention because of the kind of spectrum that is becoming available: low-band spectrum that is valuable for its robust qualities and capacity to penetrate thick walls and travel far distances. The sale of such choice spectrum is rare; the last auction in this band category was in 2008, and there are no plans for similar offerings in the near future.

    Now my comment:

    On an earnings call last year, SBGI said that they could raise as much #$%$ 2 billion while only giving up spectrum that generated 3% of its income. I assume that because so many stations agreed to take part in the first leg of the auction, the prices are coming down. The FCC said they would inform the stations that satisfied the requirements for the auction this coming week. None of the participants (or failed participants) are allowed to disclose anything, so we won't get much info from SBGI for a while (I think not until after the second leg of the auction closes). But maybe on Wednesday's call, SBGI will at least confirm that they are part of the auction process.

  • Reply to

    Is the buyout price still about $26.00?

    by helmut0 May 3, 2016 9:05 AM
    jrad52 jrad52 May 3, 2016 9:36 AM Flag

    It never was $ 26. There are 3 choices that a selling NTI unit holder can choose from, and right now everyone will choose the $ 26.06 all-cash offer. But there's a cap on the amount of cash WNR has to pay, so proration will kick in and everyone will get $ 15 cash plus .2986 of a WNR share. That's worth somewhere around $ 22.50 right now.

  • Reply to

    Down 8% the two days before earnings come out.

    by fwb54 May 4, 2016 11:07 AM
    jrad52 jrad52 May 4, 2016 2:24 PM Flag

    TROX reports tonight. Forget the overall numbers; TROX has been in the tank for lots of reasons over the last year. But TROX is the owner of a larger soda ash operation in the Green River basin, which is next door to CINR's operation. TROX and CINR are both partners in ANSAC for export sales so tonight's release should give a good hint as to CINR's export sales in Q1. TROX has lots of debt, so forget the bottom line. But they give a lot of detail into the soda ash operation and that might give us a 24-hour head advance look at what CINR is likely to report tomorrow night.

  • Similar to Q4 2015 but down slightly. Export dales prices down in Asia due to Chinese competition but things seem to be improving in Q2.

    It's surprising to me that CINR's EBITDA margins are so much better than TROX's. I also think TROX overpaid for the soda ash operation. But I don't think we will be surprised by CINR's results tomorrow night, maybe down slightly from Q4 but not much.

    We'll see soon enough.

  • Reply to

    TROX reports

    by jrad52 May 4, 2016 6:44 PM
    jrad52 jrad52 May 4, 2016 9:34 PM Flag

    I think CINR has talked about some Chinese competitors dropping out on its last 2 calls. It was a convoluted story - something about the by-products of the synthetic soda ash process being worth less so the operations were not profitable. I didn't get the feeling that it was anything permanent. Maybe CINR will comment on this on tomorrow's call.

  • To follow up on a comment I made last night, about TROX's operation. CINR is a lot more profitable/efficient than TROX is.

    TROX owned its soda ash business for 8 1/2 months in 2015. During that time, sales were $ 602 MM and adjusted EBITDA was $ 129 MM. So on a cash basis, TROX netted about 21% of sales. For Q1 2016 the adjusted EBITDA margin was 18.4%. I use EBITDA because TROX's depreciation expense and interest expense are affected by last year's acquisition. The comparable EBITDA margin for CINR Wyoming in 2015 was 27.5%. We'll see the Q1 number in a few hours. And the CINR margin includes overhead expenses, whereas TROX has a separate line for corporate charges. So the difference is even larger than the numbers I'm giving.

    TROX and CINR are partners in export sales, so the export sales price must be the same for both companies. TROX doesn't disclose any selling prices, export or domestic, but I can't see why its domestic prices would be lower than CINR - the product is a commodity, with no differences. So the difference in margins has to be the cash cost of producing the soda ash.

    I have absolutely no idea or suggestion to explain the difference. But it sure seems like TROX way overpaid for its soda ash business, or else CINR is way undervalued.

  • Reply to

    What happened - 18%?

    by bbkb8311 May 5, 2016 3:06 PM
    jrad52 jrad52 May 5, 2016 4:54 PM Flag

    I can't believe that people are surprised. TNH announced the partial shutdown a long time ago, and fertilizer prices have been in the tank for months now. Last year, they had a turnaround in Q! and the distribution was just over $ 2. For a 1-facility company, any operational problems are big deals. I don't see the surprise over the $ 1.51.

    I was upset with myself for missing the run up to the $ 120s because I was out. Now I'm not so upset. At today's closing price, TNH gets interesting. The pricing issue is still there, but higher production should help next Q.

    And TNH had positive free cash flow for the Q. And its distribution has always varied from quarter to quarter.


  • Reply to


    by jrummell7 May 5, 2016 2:44 PM
    jrad52 jrad52 May 5, 2016 5:00 PM Flag

    For the 2015 quarters, NRP generally reported 1 day after CINR. I assumed they waited for final CINR Wyoming numbers. For the 10-K, as you recall, NRP waited a month after CINR reported because of the debt covenant issue.

    I suspect we will see numbers from NRP tomorrow.

  • I'm surprised at how closely CINR's Q4 results tracked TROX. Everything down a bit from Q4 2015. (TROX didn't own its soda ash operation in Q1 2015, so no comparisons there.)

    Anyway, OK results but I think the price drops tomorrow.

  • CINR owns 51% of Ciner Wyoming; NRP owns the other 49%.

    CINR reported Q1 numbers tonight. Everything was down from Q1 2015. For NRP, the net income from Ciner in Q1 2015 was $ 12.5 million. In Q1 2016, that number should be $ 10 MM. EBITDA from Ciner should also be down by about $ 2.4 million. DCF should drop slightly more because CINR had more maintenance capital expenditures than it did last year.

    I don't think this drop is all that significant to NRP's Q1 results. I was expecting about $ 35 million of operating income (before interest expense) and $ 25 million of DCF, so a drop of about $ 2.5 million isn't all that big.

  • Nothing good in the release and ENDP's stock is tanking after hours - down 25% on 2 million plus shares traded. ENDP did say that its revenue from XIAFLEX increased 57 percent compared to first quarter 2015; this increase was attributable to the full quarter of revenues reported by Endo as well as continued demand growth for the product. So maybe good for BSTC.

    Since BSTC reports its income from ENDP on a 1-quarter lag, this would affect Q2 for BSTC, I think.

  • Good because of rising sales? Bad because of declining gross margin? Neutral because of both?

  • The units still aren't trading on any fundamental value of the company's operations, so the Q1 numbers are irrelevant to the price. The only important thing they said was that bthey think they will be able to exit the oil & gas business in Q2. That is certainly a positive, assuming they can get anything near a decent price for the properties.

    But having said that, Q1 seems to have been pretty bad.

    I had thought they would generate $ 25 MM of DCF in the quarter, excluding the asset sales. The actual number was $ 58 million. Great, right? Not really. They include the gross proceeds of the sales ($ 43 million), so DCF from operations was only $ 15 million. Not so good. Same thing for EBITDA.

    I have to review the numbers in greater detail, but coal fell off a cliff. Production on NRP's properties was down 27%, and the average royalty received per ton dropped 16% so coal royalty revenue dropped 40%. We had a mild winter compared to last year, so this is presumably all related to demand.

    Anyway, I'll post later.

  • Reply to

    What happened - 18%?

    by bbkb8311 May 5, 2016 3:06 PM
    jrad52 jrad52 May 6, 2016 9:02 AM Flag

    First, I know how you feel. I own another MLP that reported disappointing earnings last night and I'm expecting a drop similar to TNH today. Hopefully I'm wrong, but probably not.

    And you're still ahead of me. I bought and then sold in the $ 105 - $ 110 area so I missed the entire run up to $ 125. Sure I missed yesterday's drop, but I could have done better.

    And finally, depending on what happens today, this might be a decent time to get back in. Nitrogen fertilizer prices are still weak, and more supply is coming to market, but I think TNH should do OK. mI'd love to get your $ 95 entry point but I don't see that happening.

  • Reply to

    NRP reports

    by jrad52 May 6, 2016 8:57 AM
    jrad52 jrad52 May 6, 2016 1:11 PM Flag

    Sure. They have $ 425 million of publicly-traded debt that is trading at a discount and if they buy any of that back, it could result in CODI. Most of their debt is bank debt, though, and I can't see the lenders accepting any haircuts yet. So there's some risk, but probably not a lot.

  • CF is TNH's controlling owner. Credit Suisse had a report out on CF yesterday and with regard to nitrogen markets (which is all TNH is involved in), CS said: "In our view, global nitrogen markets will remain volatile, particularly in 2H16, but note that (i) this has been well expected by investors and (ii) product prices are at or near their respective marginal cost of production (limiting downside in intermediate term; this is in contrast to P&K). Despite near term noise, we continue to believe that more upside exists than downside, especially given incredibly low expectations for global nitrogen markets."

    Not the most ringing of endorsements, but CS has an Outperform rating on CF.

  • jrad52 by jrad52 May 6, 2016 3:26 PM Flag

    1 complaint and 1 comment. And of course more comments in posts to come.

    The complaint - in the earnings release, NRP has a section titled "Business Results and Outlook". In all of the rest of the release, I found 2 sentences that might be called "Outlook" - under coal, where the release says "First quarter coal production in the United States was down 32% as compared to the first quarter of 2015, and NRP expects that coal producers will continue to cut production and idle additional mines in response to market conditions. In spite of this supply reduction, decreased demand for both thermal and metallurgical coal continues to out-pace supply cuts, and utility stockpiles remain at peak levels." That's it; nothing under soda ash or VantaCore or oil & gas (oil & gas is understandable since they intend to sell the investment). So other than saying coal still has problems, they give us nothing about how they think the rest of the year will go. No range of possibilities, nothing. I find that really upsetting.

    Which leads to the comment. In Q1, they sold assets for $ 42 million (the headline says $ 47.5 million, but the statement of cash flows says $ 42 million; I guess selling expenses ate up the difference). They used this $ 42 million to repay debt. Other than that, they were only able to repay $ 9 million of debt from operations. And half of that $ 9 million came from reducing maintenance capital expenditures. I don't know how much NRP hopes to get for selling its oil & gas interests, but it had better be big.

  • Reply to

    Q1 results

    by jrad52 May 6, 2016 3:26 PM
    jrad52 jrad52 May 6, 2016 3:58 PM Flag

    Last year, NRP filed suit against FELP for not paying minimum royalties on the Deer Run mine. Through March 31 2016, this has cost NRP $ 23.6 million. Comparing this to the disclosure in NRP's 10-K, FELP owed NRP $ 7.5 million for Q1 minimum royalty and paid $ 100,000.

    Now it seems that FELP is also shorting NRP on other payments as well. On April 1, 2016 NRP filed another lawsuit against FELP for failing to pay $ 4.7 million in various payments at the Macoupin mine. This was not disclosed in the 10-K so I guess most of this amount accrued in Q1.

  • Reply to

    Journal Cost Basis

    by jchia1236 Apr 26, 2016 10:37 AM
    jrad52 jrad52 May 6, 2016 4:24 PM Flag

    Go to SSP's web site and on the Investors Tab you can access 4 IRS Forms 8937 that discuss the effect of the merger between Journal and Scripps, the $ 60 MM dividend and the receipt of JMG and SSP stock.

    I don't know if you were historically an SSP shareholder than received JMG shares or if you were an historic Journal shareholder. If you owned SSP before the deal closed, look at the 4th Form 8937 on the web site, especially the example attached to it.

  • Reply to

    Q1 results

    by jrad52 May 6, 2016 3:26 PM
    jrad52 jrad52 May 9, 2016 2:02 PM Flag

    I understand the sentiment but I think it depends on the price they might get.

    People on this board didn't agree with me when I suggested NRP should sell some of its interest in Ciner Wyoming because they didn't want to sell the crown jewel, and no one wants to sell the oil & gas properties because prices are too low. But NRP has to sell something, and if the oil properties can bring a halfway decent price, I think they should be sold. Either sell Ciner at the top, or sell oil properties at the bottom.

    In Q1, the operational DCF from oil was $ 600K. And the interest expense related to those properties was at least $ 2.5 MM. And the distribution on the units that were sold to fund the purchase price cost NRP another $ 440K. So on an annualized basis, the remaining oil properties will cost NRP $ 10 MM cash flow this year. Not only won't they help pay down debt, they will prevent some debt repayment.

    Which leads me to my point - things are worse at NRP than I realized. And I thought things were bad. In Q1, they could only repay something like $ 10 MM in debt from operations. All the other debt repayments came from asset sales. At this rate, they are OK for 2016, but will they be able to roll the 2017 maturities? And can they repay the $ 500 million of principal that comes due in 2018? Delaying things while we hope for a coal rebound isn't much of a plan. They need to sell what they can, and hold onto Ciner as long as they can. Personally, I think Ciner will be sold at some point; it's the only asset that might raise enough cash to make the lenders comfortable with extending.


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