Sorry - I did the math wrong. You would only receive 5-6 shares of SYF for every 100 shares of GE you own.
I always read that LINE has nearly all of its production hedged to sell at high prices. If this is true, then why is the company losing so much money with this downturn in OIL/GAS prices?
gpd8252- Thanks for a real answer.
OK - I see this in the current report:
LINN is hedged approximately 100 percent on expected natural gas production through 2017 at average prices ranging from $4.48 to $5.12 per MMBtu. The Company does not currently hedge the portion of natural gas production used to economically offset natural gas consumption related to its heavy oil operations in California.
For expected oil production, the Company is hedged approximately 90 percent for the remainder of 2015 at an average price of approximately $88 per Bbl and approximately 70 percent in 2016 at an average price of approximately $90 per Bbl.
LINN’s hedge book had an estimated net positive mark-to-market value of approximately $1.9 billion as of September 30, 2015.
If this is true, it seems that the bleeding should not be as bad as it always is. I am still confused. If LINE is hedged to receive $88 /bbl/ $5/MMBtu and the market price is $45/bbl/$1.5/MMBTu, they should be doing great financially.
I understand the write downs. What I do not understand is why if their oil was hedged at like $100 per barrel this quarter, how their earnings would be only $.25. They should be more like $2.50. In fact, they should have had almost no impact on earnings (less one time charges) from lower oil and gas prices if all production was hedged.
I think both stocks will fall off after the deal is done.
SYF will fall off sooner due to all of the new shares available (increase supply starting this week).
GE will take longer to fade due to GE shares being tendered which will reduce supply starting tomorrow. Offsetting this, starting tomorrow, GE shares lose the "option value" they had before the tender offer expires.
By spinning SFY, GE will see a net reduction in EPS though, so that is a negative for GE. GE has already planned that they can offset that earnings reduction though for awhile anyway. So that will create a smoke screen for a few quarters anyway.
I would expect a decline in both stocks from these levels.
I mean, you could have bought SYF before, so why would anyone suddenly want to buy now? Only due to lower price?
If you didn't like GE before, why buy now after the tender option expired?
I see no compelling reason for new buyers to come in right now for either stock.
LINN Cost of NAT GAS = $4.75/MCF (Which includes $1.88/MCF for Depreciation, depletion and amortization).
So I guess they cannot make any real profit when gas is less than about $3/MCF.
At $2.32/MCF(current market price), they can only cover lease costs + taxes + transportation
At ~$3/MCF they cover lease costs + taxes + transportation +SGA
Lease operating expenses for the third quarter 2015 were approximately $154 million, or $1.40 per Mcfe, compared to approximately $192 million, or $1.67 per Mcfe, for the third quarter 2014. This 20 percent decrease was primarily due to cost savings initiatives, a decrease in steam costs and lower costs as a result of the properties sold during the fourth quarter 2014, partially offset by costs associated with properties acquired during the third quarter 2014. Transportation expenses for the third quarter 2015 were approximately $55 million, or $0.50 per Mcfe, compared to $53 million, or $0.47 per Mcfe, for the third quarter 2014. This increase was primarily due to higher transportation costs associated with properties acquired in 2014. Taxes, other than income taxes, for the third quarter 2015 were approximately $46 million, or $0.42 per Mcfe, compared to $67 million, or $0.58 per Mcfe, for the third quarter 2014. This decrease was primarily attributable to lower commodity prices. General and administrative expenses for the third quarter 2015 were approximately $60 million, or $0.55 per Mcfe, compared to $75 million, or $0.66 per Mcfe, for the third quarter 2014, which includes approximately $13 million and $9 million, respectively, of non-cash unit-based compensation expenses. This 20 percent decrease was primarily due to lower acquisition related expenses and salaries and benefits related expenses. Depreciation, depletion and amortization expenses for the third quarter 2015 were approximately $207 million, or $1.88 per Mcfe, compared to $290 million, or $2.54 per Mcfe, for the third quarter 2014
You are missing the fact that if GE gave you your SFY shares, you would only receive about 18 shares of SYF for each 100 shares of GE you own. This is about the same ratio as the exchange ratio 1.0505 (118/100).