Let it go to $25. I'm still getting my distribution, and this stock will be back in the upper 20's in short order.
All of our political leaders are bought and paid for. Neither side work for the people. IMO, they are all #$%$ holes.
Exactly Dolfanluv, what's the point in having different parties if you don't negotiate? Might as well call him king Obama.
So what? They have still been a strong mlp the last 3 to 4 years. Still keeping up with their distributions, what more can you ask for. It's a multi billion dollars corp. Do you think it can't handle a fine from the sec? It's to big to fail.
Let's ignore the noise from dissenting opinions on LINN's accounting practices, and let's also forget the company is still in the midst of an informal SEC inquiry. What are the basic reasons why an investor would own units of LINN Energy or shares of its affiliate LinnCo (NASDAQ: LNCO ) ?
Reason No. 1: Double-digit distribution
Let's face it, reason numero uno why someone would invest in LINN Energy is the yield. The company throws off some serious coin every single month. Investors buying today could lock in an 11% yield with LINN and about 10% with LinnCo. For investors looking for a hefty supply of monthly income, there aren't very many options. Investors could choose Vanguard Natural Resources (NASDAQ: VNR ) monthly payout, but at 9% it's quite a bit less. Not only that but Vanguard Natural Resources is nowhere near the size of LINN, which is the tops in the sector.
Reason No. 2: Secured cash flows
LINN's secret sauce is its hedging program. LINN hedges 100% of its production for four to six years with a combination of 70% swaps and 30% puts. The swaps lock in margins while the puts provide some upside if commodity prices rise. No other producer hedges as much production for as long as LINN does. Using Vanguard Natural Resources again as an example, it only hedges 85% of its production.
Those with a negative opinion of LINN have pointed to how LINN accounts for its hedging practices as a reason to sell. Yet I think its important to look past this to see what LINN is hedging in the first place. LINN is producing oil and gas from more than 19,000 oil and gas wells. These producing wells are the core of LINN Energy.
Provided it closes its deal for Berry Petroleum (NYSE: BRY ) , LINN is a company that will hold 6.6 trillion feet of natural gas equivalent reserves. It's also expected to produce from those reserves for the next 17 years. To put that in rough context, 5 trillion cubic feet of natural gas is enough to meet the needs of 5 million households for 15 years. Put another way, LINN Energy itself could supply the energy needs for an area the size of my current home state of South Carolina for nearly two decades. LINN hedges to simply ensure it has stable cash flows as it meets America's energy needs.
Reason No. 3: Great growth prospects
LINN is an acquisition machine with more than 50 deals under its belt at an announced value of nearly $15 billion. In addition to the transformative Berry transaction that it's still trying to close, the company just recently announced another $525 million deal to lock up more oil and gas assets in the Permian Basin.
The company sees a very robust market over the next few years as an increasing number of exploration and production companies shed mature assets to rebuild balance sheets or fund growth projects. For example, LINN played a role in helping the beleaguered oil giant BP (NYSE: BP ) repair its balance sheet last year. The company engaged in two separate transactions with BP that saw LINN acquiring over $2.2 billion dollars in assets. BP needed the money to help repair a hole in its balance sheet that sprung after its disaster in the Gulf of Mexico. Further, with so many oil and gas exploration companies in need of cash to fund aggressive drilling programs, LINN should continue to have its hands full in its quest to consolidate the mature oil and gas wells these companies no longer want.
LINN might be in the spotlight these days for its bookkeeping, but at its core it's an income-focused oil-and-gas company. Investors with a long-term mindset should remember that. This is a real company that owns real oil and gas wells and really does produce income. Bottom line: Investors looking for income that's secured by oil and gas production that will grow by acquisition should consider buying LINN.
Even More Premium Stock Picks
Dividend stocks are everywhere, but very few provide the right combination of growth, value, and sustainability to make them worth owning. This report highlights nine companies that boast this unique combination and is a must-read for any
Last night I had Enbridge ENB CEO Al Monaco on the show. Enbridge is the premier growth pipeline company in North America, with expected earnings-per-share growth of 10-12% over the next five years, a remarkable number for a company that transports oil and gas. That growth will allow it to give you a predictable 13% increase in dividends for that period. Given the company's track record of giving you a total shareholder return of 20% return over the past five years vs. a 1% return for the S&P Toronto index, that promise of dividend growth seems very realistic.
During that period, Enbridge expects to spend $36 billion building out pipelines from all of the new shales as well as from hard-to-reach Canadian oil fields, of which $26 billion has secured funding. Right now it is working $4 billion in pipeline projects.
That makes Enbridge among the largest employers in the United States and, when you consider all the ancillary jobs created by laying down pipelines, this Canadian company may be the largest single current hirer in the country. In fact, it's a jobs machine.
I see only one risk to this terrific growth story: the environmental opposition to both the creation of new pipelines and to the kind oil, so-called dirty oil, that Canada produces. I see this risk because Enbridge pointed it out for us on its terrific two-day analyst presentation. They did it on a terrific slide called the energy dilemma where they contrasted the need for energy with the vocal opposition to what they do. This despite industry-wide recognition as the best in class in system safety and reliability.
But the company did have a pipeline rupture in July of 2010 that caused 843,000 gallons of crude to pollute the Kalamazoo river, a beautiful stretch of water that's a tributary to Lake Michigan.
That was terrible. It basically defined the pipeline business in North America and has been the poster child for all that's wrong with pipelines. I think it is Exhibit A against Keystone.
Given that environmental destruction, and it was undeniably destructive, there is tremendous political resistance to this method of transport. So what's happened? It's not like we are keeping the 6-7% oil growth in this country in the ground. We're just shipping it differently, mostly by rail. But there is so much of the stuff that it is likely that we will have to send the so-called dirty oil from Canada overseas.
Despite the bountiful new supplies of energy we are still importing 6 million barrels a day from non-North American sources. Where does that come from? The big three: Saudi Arabia, which is responsible for 13% of our imports, Venezuela, 9%, and Russia, 5%, according to the latest bulletin from the Energy Information Administration.
Without political resistance, it is possible that in a couple of years' time we couId be all North America. Right now we are helping to prop up two regimes that I think most Americans would regard as our actual ENEMIES, Venezuela and Russia, particularly over the Syrian issue, and Saudi Arabia, which makes us hostage to any shutdown from any antagonistic regime in the Middle East tinderbox.
So the choice is clear: create more jobs and make us energy secure vs. the oil spills that pipelines, by far the most efficient and most lasting and arguably, given several recent oil train accidents including one that killed five people in Quebec, the most efficient and safest way to transport oil.
Yet, the political opposition to these initiatives is incredible. We would rather buck up enemy regimes and create almost no jobs than risk these pipelines. To me it is an incredible gap in common sense, but it is only increasing.
Now I still believe Enbridge will hit the numbers. But the bigger issue is how come no one, not even the military, is making the case for bringing in oil from Canada vs. importing oil from these rogue countries. Some complain that we would be bringing in so-called dirty oil from Canada, but we have ample refinery capacity to make it this oil as clean as that foreign oil from Russia, Venezuela and Saudi Arabia, particularly with the new energy technology from Honeywell HON .
So, it happens much more slowly than it should and we help prop up these regimes, all because we would rather take oil from overseas than risk another oil spill.
This is the kind of logic that prevails right now, a non-debatable issue because any politician who makes the case for jobs and energy security seems to be a target of campaigns by environmentalists.
All I ask is why isn't it weighed? Why don't we at least have the discussion?
Again, either way, Enbridge remains a terrific, consistent growth vehicle.
I just think it's too bad that no one has the guts to talk about jobs created and energy self-sufficiency vs. helping Venezuela and Russia and reliance on the dangerous Middle East.
5 Vehicles Thieves Will Love You for Driving
On Oct 9, 2013, Zacks Investment Research downgraded oil and gas pipeline operator Enbridge Energy Partners, L.P. (EEP) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
The partnership delivered a negative earnings surprise of 40.9% in the second quarter 2013. The long-term expected sales growth of Enbridge is set at a negative 2.77%.
The impact of the Cushing crude oil storage terminal outage, a low cash balance and rising natural gas and liquids inventory are acting as a growth deterrent for Enbridge Energy.
The partnership’s cash balance dwindled 88% to $27.3 million as of Jun 30, 2013 from $227.9 million as of Dec 31, 2012. The 2010 Michigan oil spill has also been weighing on Enbridge’s financials.
The high capital expenditure required for Enbridge’s ambitious growth plans over the next few quarters may reduce cash distribution growth.
The partnership was also slapped with charges in Jul 2013 by the Environmental Protection Agency for permit violations for the discharge of hydrotest water in 2010 related to the Alberta Clipper Pipeline.
In addition, Enbridge’s midstream natural gas business is likely to remain depressed in the upcoming quarters. The Energy Information Administration estimates a 5.5% decline in petroleum products prices in 2014 from 2012 which will affect Enbridge’s returns.
Other Stocks to Consider
However, all industry players are not doing as badly as Enbridge Energy Partners. Stock
I own EEP. Zacks just downgraded the stock. Since then, it's gone up. That should tell you something.
We are in the green on relatively high volume. I'm wondering if investors are getting tired of all the B.S. with the sec and the bry deal and are ready to move on, with or without the deal.
Everyone knows the debt ceiling has to be raised, but not without drastic spending cuts. I don't mean from S.S. and medicare. We have paid into those programs. They need to cut all the waste and fraud for starters. They always want to take away from the people who need it most.