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Linn Energy, LLC Message Board

garrh 235 posts  |  Last Activity: Oct 6, 2015 4:43 PM Member since: Oct 2, 2012
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  • Reply to


    by stockdeath Oct 6, 2015 4:03 PM garrh Oct 6, 2015 4:43 PM Flag

    Down 19 cents after hours

  • garrh Sep 30, 2015 10:59 AM Flag

    So who are we to believe, the author of this quote, or the author of snopes.

    Sentiment: Hold

  • Reply to

    LINE....Death by Strangulation

    by barebuttbob Sep 25, 2015 1:16 PM garrh Sep 25, 2015 5:36 PM Flag

    OPEC is fighting for its life as oil export revenues are halved, forcing painful spending cuts and increased borrowing, which, if continued, could destabilize governments and lead to civil strife.

    We think OPEC made a fatal mistake dismissing the shale revolution which boosted US oil production by 4 mmbd, or more than the current production of Kuwait and UAE combined.

    OPEC is fighting against advancing technology and time is not on its side. Shale technology is the future, OPEC is the past. The oil shock is a wake-up call for OPEC to diversify its economies, live within its means and embrace technology. We believe technology, cost control and consolidation will make surviving companies more resilient to low oil prices.”

    And get ready for oil industry consolidation:

    “The next and most logical step is industry consolidation, which will take cost saving measures to a new level no company can achieve individually. Industry consolidation will reduce costs sharply and create companies that are more resilient to low oil prices.”

    Sentiment: Hold

  • OPEC is fighting for its life as oil export revenues are halved, forcing painful spending cuts and increased borrowing, which, if continued, could destabilize governments and lead to civil strife.

    We think OPEC made a fatal mistake dismissing the shale revolution which boosted US oil production by 4 mmbd, or more than the current production of Kuwait and UAE combined.

    OPEC is fighting against advancing technology and time is not on its side. Shale technology is the future, OPEC is the past. The oil shock is a wake-up call for OPEC to diversify its economies, live within its means and embrace technology. We believe technology, cost control and consolidation will make surviving companies more resilient to low oil prices.”

    And get ready for oil industry consolidation:

    “The next and most logical step is industry consolidation, which will take cost saving measures to a new level no company can achieve individually. Industry consolidation will reduce costs sharply and create companies that are more resilient to low oil prices.”

    Sentiment: Hold

  • by garrh Sep 13, 2015 11:30 AM Flag

    Once the indisputable ruler of oil markets, the OPEC cartel is under great pressure to revise its current policy as low oil prices are starting to hurt oil exporters’ economies and threaten to split the Organisation apart.

    The past year was not good for OPEC. The global oil glut slashed oil prices by more than 50%, and brought into question the traditional role of the Organisation as a key global market mover. However, the downward trend had already begun took place in the beginning of the decade when the US shale revolution, helped by the $100+ oil prices, started to affect global oil markets.

    Change oil production since 2011
    Global Risk Insights

    The past five years have completely changed oil market flows. With US production increasing and oil imports rapidly declining, many oil exporters such as Nigeria, Libya, Algeria, and Angola were completely locked out of the American market. Others, like Saudi Arabia, are fighting hard to retain their global market share by continuing to pump vast quantities of oil.

    How successful has this strategy been since it was introduced in October 2014? In terms of market share, the cartel succeeded in retaining traditional markets, but at a heavy price for its revenues.

    According to J.P. Morgan, Saudi Arabia alone loses around $90 billion a year with oil prices staying at $60 per barrel, and with Goldman Sachs predicting the oil prices to stick at $50 per barrel by 2020, it will be hard for Riyadh to maintain its influence and cohesion within the Organisation.

    Business Insider
    Global Risk Insights
    Source: Business Insider

    OPEC revenue
    Global Risk Insights
    Source: EIA

    Another goal – to suffocate the US shale industry with low prices – brought mixed results, and in the long term it will probably fail. The US producers were forced to cut capital spending and significantly lower their breakeven prices.

    Nonetheless, US producers are still succeeding in keeping their heads above the water, even with the prices as low as $40 per barrel of the WTI traded oil. In addition, the sudden drop in prices helped the industry toconsolidate, both in terms of productivity and cost efficiency, and although some of the production will inevitably become unsustainable, the core areas can continue to pump oil at a profit with prices as low as $30 per barrel.

    The Saudis took a gamble, but it seems that the calculation was misleading. The final result could be not only a loss in revenues, but also a major split between the rich Gulf States, and the less fortunate ones – the African and Latin American states, Iran, Iraq, and Libya – and consequently the end of OPEC as we know it today.

    With the cartel losing its ability to influence the global price of oil, the Organisation might soon dissolve, since many member countries will not be able to provide basic services at today’s prices. These countries desperately need oil revenues to keep them moving and to preserve their economic and political stability.

    Oil countries WSJ
    Global Risk Insights

    In the current climate it is hard to foresee oil prices bouncing back to previous levels. Considering that the markets are still oversupplied with around 3 million barrels per day, and that Iran’s production is expected to beef up the glut by another 400-600,000 barrels per day, the period of low prices may continue for several more years.

    There is no easy solution for today’s situation. The OPEC leaders are correct to point out that the cartel is not the one to act alone. However, in current circumstances, due to weak balance sheets and extreme reliance on oil exports, the OPEC members will bear the greatest economic and social brunt of the falling prices. S

    audi Arabia, as the most influential member of the club, needs to understand this and act accordingly if it wants to preserve its regional and global role.


    Sentiment: Hold

  • by garrh Sep 10, 2015 5:56 PM Flag

    It looks like Line isn't following the price of oil anymore. I hate to say it, but that just about sums it up. Without the distribution, nobody is going to invest.

    Sentiment: Hold

  • garrh Sep 4, 2015 12:56 PM Flag


  • by garrh Aug 20, 2015 11:00 AM Flag

    LINN Energy LLC (NASDAQ:LINE) and LinnCo LLC (NASDAQ:LNCO) recently surprised investors by suspending their respective distribution and dividend payments. It was a tough decision for the company to make, but one it felt was the right one in the current environment. Here's what LINN's management team had to say on its second-quarter conference call about that suspension, as well as other moves it's making to weather the current storm in the oil market.

    1. Here's why we suspended the distribution
    LINN Energy CEO Mark Ellis led off the call by say that "after careful consideration" the company has decided to "suspend the payment of LINN'S distribution and LinnCo's dividend at the end of the third quarter 2015 and reserve approximately $450 million in cash from annualized distributions." It's a decision it believes to be in the best long-term interest of all company stakeholders.

    Later on during the call, CFO Kolja Rockov gave a bit more color on the suspension:

    So if you look at where have we been, just earlier this week we're trading at a 23% yield. So obviously we're not getting much credit for paying the dividend. And when you look across the other side of the fence, you see an opportunity to repurchase your bonds at a very significant discount and earn a rate of return at yield to maturity of 18%, [equating to] a return on investment of over 50%. So we saw an opportunity to really add meaningful shareholder value, and I think it's what we've done.

    In other words, because investors didn't think the dividend was safe, the company decided that it wasn't worth paying at the moment, as it wasn't getting credit by the market for the payout. Instead, it will use that cash to enhance the value of the company in other ways, including buying back its deeply discounted bonds.

    2. We're taking advantage of the current market uncertainty
    Rockov then provided even more detail on that bond repurchase:

    [W]e repurchased approximately $599 million of senior notes in privately negotiated transactions for approximately $392 million, representing a discount to par of approximately 35%, a weighted average yield to maturity of 18% and return on investment of greater than 50%. Year-to-date, we have repurchased approximately $783 million of senior notes. We estimate the aggregate senior note repurchases to result in annualized interest cost savings of approximately $54 million. This significant repurchase of our outstanding senior notes demonstrates our proactive commitment to investing our cash resources in the most attractive risk-adjusted return opportunity. We expect this series of transactions, along with potential future repurchases, to add meaningful unitholder value for the long-term.

    In other words, LINN is taking advantage of the currently uncertain market to invest its cash in the best opportunities it can find. In this case, the best opportunity it's seeing is to buy back its own bonds. The company would love to continue to buy back its bonds at a discount, because it believes these transactions will create a lot of value over the long term.

    3. Our liquidity is just fine
    One of the big worries with LINN, and the industry as a whole, is that its liquidity will dry up as banks and investors will refuse to give it money when it needs it the most. At the moment that's not a concern, since it has roughly $1.5 billion in liquidity. However, given where oil prices are right now, the company expects the borrowing capacity on its credit facility to drop later this year. According to CEO Mark Ellis, LINN's "estimate is that impact probably leaves us with a liquidity of around $1 billion" to end the year. However, the company believes this is more than enough money to operate the company, especially after suspending the distribution.

    4. We're generating excess cash flow
    The other reason it's comfortable with its liquidity is that it's generating a lot of free cash flow right now. "For the second quarter 2015, we had an excess of net cash ... of approximately $71 million, exceeding guidance by approximately $90 million," Rockov said. While he expects that excess to just be $14 million for the third quarter, for the full year he expects the company to generate more than $200 million in cash.



    5. The acquisition market has been really slow
    One thing LINN Energy has been known for in the past is its growth-by-acquisition model. However, the company hasn't made any acquisitions this year. LINN would love to take advantage of the current environment and use its AcquisitionCo funding. But as Ellis lamented:

    And on the acquisition front, it's just been very slow. There've not been a lot of transactions, but we stand ready. [We] have $1 billion of committed capital there, and we can prosecute that if those opportunities materialize. So we stand ready, but I can tell you that the first part of the year here has been very slow.

    While it's not burning a hole in LINN's pockets, the company does have a billion-dollar war chest for acquisitions that it would love to put to work. The problem is that there just aren't a lot of compelling assets coming to market right now, as the whole industry is in a wait-and-see mode. But when an opportunity arises, LINN is ready to jump on it.

    Investor takeaway
    One thing LINN Energy's management team made clear is that it didn't suspend its distribution and LinnCo's dividend because it's in distress, as it has plenty of liquidity and is generating free cash flow. Instead, the move was made to take advantage of the market to buy back its bonds at a huge discount. Clearly, this is a company that expects to survive the downturn, despite what the market currently thinks about its chances.


  • Reply to

    The next step we should see from LINE

    by elishapira Jul 31, 2015 10:59 AM garrh Jul 31, 2015 12:28 PM Flag

    A rebound in oil is the only thing that will save them. Everything else is just talk.

    Sentiment: Hold

  • Reply to

    SA cutting production

    by lordofdoggtown Jul 29, 2015 2:30 PM garrh Jul 29, 2015 3:28 PM Flag

    They are only cutting 200k to 300k bpd based on domestic demand

    Sentiment: Hold

  • garrh Jul 29, 2015 10:52 AM Flag

    Robby, Wow! You must really have your head in the sand.

    Sentiment: Hold

  • by garrh Jul 29, 2015 9:48 AM Flag

    Some Oil Companies Have Already Gone Under
    The initial drop in oil prices in the winter and spring of 2015 has already brought with it a string of oil-related bankruptcies. In March, Quicksilver Resources, a billion-dollar shale operation filed for Chapter 11 bankruptcy protection after missing a bond payment. Also that month, BPZ Resources shuttered its operations as well as Dune Energy, and they were subsequently followed by Sabine Energy, WBH Energy and American Eagle Energy. Not only do these bankruptcies hurt the shareholders in those companies, but they also ripple through to the financial sector who issued loans and credit to these companies, the land owners who leased their property to drillers, as well as those workers who have now become unemployed. (For more, see also: Falling Oil Prices Could Bankrupt These Countries.)

    Oil Companies Next at Risk for Bankruptcy
    The renewed bear market in oil is likely to take more casualties in the coming weeks and months. Investment bank Goldman Sachs Group Inc (GS) issued a report earlier this year ranking the relative financial strength of oil companies exposed to low oil prices. The findings are reproduced in the table below from their report:

    Group 1 and 2 companies have strong balance sheets, in the sense that they have enough cash or liquidity on hand to service their debts and weather a prolonged period of low profitability. Groups 3 and 4 include companies with weak balance sheets who are at risk of going under. Group 3 companies are those who may be acquired at a bargain by larger oil companies as they begin to struggle, and are at less risk of outright bankruptcy. Group 4 companies, on the other hand, are at great risk.

    Let's take a quick look at the stock performance of these companies most at risk since this report was issued in January:

    1. Approach Resources (AREX) has seen its stock price tumble more than 33% year-to-date.

    2. Exco Resources (XCO) shares are down 74%.

    3. Goodrich Petroleum (GDP) is down over 80%.

    4. Halcon Resources (HK) has lost 50% of its market capitalization.

    5. Magnum Hunter's (MHR) stock price is down almost 70% since Jan. 1.

    6. Midstates Petroleum (MPO) has lost 65% of its value.

    7. Rex Energy (REXX) is down nearly 56%.

    8. Sabine Oil & Gas has gone bankrupt.

    9. SandRidge Energy (SD) trades more than 70% lower than at the beginning of the year.

    10. Swift Energy (SFY) is down more than 80% year-to-date.

    There is a high probability that these nine American oil companies left standing will be the next to fall.

    The Bottom Line
    Low oil prices have plagued petroleum companies now for half a year, and with the global economy on shaky ground, the demand for oil may stay lower than expected. As a result, there are likely to be more bankruptcies in the energy sector by those companies with weak balance sheets who are no longer able to profitably produce oil in today's market. At the same time, now might be a great opportunity to find oil companies who may weather this downturn and see their stock prices recover in the future. For those companies, now might be a unique opportunity to invest.

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  • by garrh Jul 23, 2015 12:55 PM Flag

    Looking for a stock that might be in a good position to beat earnings at its next report? Consider Linn Energy, LLC (LINE), a firm in the Oil – U.S. Export & Production space, which could be a great candidate for another beat.

    This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, LINE has beaten estimates by over 100% in both cases, suggesting it has a nice short-term history of crushing expectations.

    Earnings in Focus

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    Two quarters ago, LINE was expected to earn 3 cents per share, while it actually produced earnings of 99 cents per share, a significant beat. Meanwhile, for the most recent quarter, the company looked to incur a loss of 18 cents per share, when it actually saw earnings of 13 cents per share instead, representing a positive surprise of over 100%.

    Thanks in part to this history, recent estimates have been moving higher for Linn Energy. In fact, the Earnings ESP for LINE is positive, which is a great sign of a coming beat.

    After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for LINE, as the firm currently has a Zacks Earnings ESP of 133.33%, so another beat could be around the corner.

    This is particularly true when you consider that LINE has a great Zacks Rank #1 (Strong buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. And when you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that LINE could see another beat at its next report, especially if recent trends are any guide.

    Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

    Sentiment: Hold

  • garrh Jul 22, 2015 7:37 PM Flag

    Is your goal to make all of us that lost money in this stock feel worse? What is the point of your posts? I don't get it.

    Sentiment: Hold

  • by garrh Jul 22, 2015 11:18 AM Flag

    With all the other mlps doing so terrible, why is it the analyst's seem to pick on Linn and Linnco so often?

    Sentiment: Hold

  • by garrh Jul 20, 2015 5:05 PM Flag

    This has gone to bad, to worse, to really, really ugly!

    Sentiment: Hold

  • Reply to

    GOP's bigest problem with deal with Iran.

    by mickeyy20 Jul 14, 2015 10:05 AM garrh Jul 14, 2015 12:53 PM Flag

    They are all 0's in my book.

    Sentiment: Hold

  • garrh Jul 6, 2015 4:18 PM Flag

    Just keep talking to yourself. It doesn't seem anyone is listening. You are a very strange person.

    Sentiment: Hold

  • by garrh Jul 6, 2015 11:32 AM Flag

    Houston-based Linn Energy LLC (Nasdaq: LINE) announced on July 6 that it has finalized partnerships for future developments and has sold assets in Texas.
    According to a statement from the company, Linn Energy signed a definitive agreement to sell its remaining assets in Howard County, Texas, for $281 million to an undisclosed buyer.
    The property, located northeast of Midland, Texas, in the Permian Basin, includes approximately 6,400 acres for horizontal drilling and 133 gross wells, the statement said.
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    The sale became effective on May 1 and is expected to close in the third quarter. RBC Richardson Barr acted as financial adviser to Linn for this transaction.
    In two other statements released on July 6, Linn announced that it has finalized alliances that were announced earlier this year after the company, like many in the energy industry, slashed its 2015 budget in half.
    According to a statement, Linn signed a definitive agreement with Houston-based Quantum Energy Partners in which Quantum agreed to commit up to $1 billion of equity to fund acquisitions and development of oil and gas assets.
    Linn will manage the assets in exchange for reimbursement of general and administrative expenses.
    The company also announced that its agreement with GSO Capital Partners LP, the credit platform of New York-based Blackstone Group LP (NYSE: BX), to fund development projects has been finalized. GSO has agreed to commit $500 million over five years.
    New York-based Jefferies LLC acted as financial adviser to Linn in both of these agreements. Los Angeles-based Latham & Watkins provided legal advice to Linn in the agreement with Quantum, while Houston-based Vinson & Elkins provided legal advice to Quantum.

    Sentiment: Hold

  • by garrh Jun 12, 2015 11:17 AM Flag

    Linn Energy (NASDAQ: LINE) has been incredibly volatile in 2015. The company's units have been up more than 35% at various points in the year, but right now, units are up just under 3%. Here are three things Linn could do to push its unit price back to those heights and beyond.

    1. Start using DrillCo
    One of Linn Energy's strategies has been to seek out private capital to fund growth. So far this year, it has successfully netted $1.5 billion in private capital. One piece of that private capital is the company's $500 million DrillCo venture, which provides the company with capital to drill wells without spending money from its own balance sheet.

    So far, Linn has yet to use any of this money as it is searching for the right opportunity to invest the capital. One opportunity it could pursue is to use DrillCo to drill wells on the company's remaining 6,600-acre position in the Midland Basin. When asked on the company's first-quarter conference call about using this acreage position for DrillCo, CFO Kolja Rockov said that while it was continuing trade dialog, the company also has "a number of different development opportunities now that we can pursue the value on that," with DrillCo being one option.

    Putting DrillCo to work either drilling on its Midland Basin acreage, or at some other spot, could provide a boost for the unit price since this is no-cost growth for Linn Energy.

    2. Make a deal using AcquisitionCo
    Linn's other private capital funding vehicle is its AcquisitionCo venture, which provides it with up to $1 billion in equity capital for acquisition funding. It is a vehicle that, with leverage and Linn's contribution, provides the company with a war chest of upwards of $2.5 billion for acquisitions.

    Using this vehicle to make a deal could drive Linn's unit price higher as it provides relatively low-cost growth with lots of upside. Rockov noted on the first-quarter conference call that the company plans to use AcquisitionCo to acquire assets that might not be a perfect fit for Linn Energy's low production decline business model. Instead, the company will use AcquisitionCo to acquire a company earlier in its life cycle, then as the decline rate of the acquired assets moderates, Linn can drop those down into its own portfolio, meaning built-in growth for the company.

    3. Using its buying power to acquire a rival
    The intention behind AcquisitionCo is to buy assets or companies that don't currently fit within a low-decline MLP business model, such as an asset based on horizontally drilled shale wells. That leaves all other acquisition opportunities open to Linn to buy for its own account. The company has said that its preference is to use equity to make acquisitions in this environment, and one really compelling opportunity would be to acquire smaller upstream MLPs in a unit-for-unit exchange. That would fit with recent trends as the upstream MLP sector has seen a lot of consolidation in recent months, with three notable deals over just the past few months.

    One MLP that looks like a perfect fit for Linn is Legacy Reserves (NASDAQ: LGCY). The upstream MLP is already operating as many of the basins as Linn, as Legacy has core areas in the Rocky Mountains, Permian Basin, and the Mid-Continent. In addition to that, Legacy Reserves has a relatively strong balance sheet, which means an acquisition wouldn't negatively impact Linn's credit metrics.

    Another reason Legacy Reserves looks like a compelling fit is because the company has a solid position in the Permian Basin, which Legacy has noted would be best developed in a DrillCo. In fact, the company said it has the potential to spend $500 on initial projects over the next few years, which just happens to be what Linn has available on its own DrillCo. Acquiring a company like Legacy Reserves would make a lot of sense for Linn Energy, as it could improve its balance sheet and its opportunity set, which could also boost the company's unit price.

    Investor takeaway
    Linn Energy's unit prices have been quite volatile over the past year. However, by using its private capital or making an acquisition, Linn Energy could excite investors, which would push the unit price higher.

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    Sentiment: Hold

3.36-0.05(-1.47%)Oct 9 4:00 PMEDT