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Linn Energy, LLC Message Board

harehau 402 posts  |  Last Activity: May 27, 2016 10:33 PM Member since: Oct 10, 2006
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  • harehau harehau May 27, 2016 10:33 PM Flag

    I agree with your posts, I suspect Warren doesn't want WMB at the 1.87x all equity price, and WMB is calling him out on his statement on the last conference call and the claim that WMB is not trying to close the deal. I think it will take more than 1.87. I think he ought to go to 2x, suffer the dilution and would probably have the premier midstream franchise. Who knows what he really wants, he hasn't grown the co to the current size without some negotiating talent. Problem is those types usually have to do one more and bigger deal. And agree, not sure I want to take the risk of all of this in the courts. Seems he could get nasty surprise.

  • Reply to

    Are any of us objective here?

    by pjhatbpi May 27, 2016 9:50 AM
    harehau harehau May 27, 2016 3:00 PM Flag

    Stock prices of both moving up seems to indicate that market believes the deal is dead. Where is WMB's div announcement?

  • Reply to

    You think WMB is a buy at current stock price?

    by ashjames408 May 27, 2016 12:29 PM
    harehau harehau May 27, 2016 12:52 PM Flag

    Buy TEGP, GP of TEP, REX pipeline and Pony oil pipe. TEGP, only yields 4% now, but will increase div 60% this year, 40% in 17 and 18. They are MLP taxed as c corp, so div through 17 at least is tax deferred. Most are only focused on three week and not three years. Not sure you can find a better growth profile and more drop downs to TEP could raise those growth numbers.

  • Reply to

    How WMB's price could be cut in half

    by texasdeve May 17, 2016 4:54 PM
    harehau harehau May 27, 2016 10:36 AM Flag

    Just ignore him, he's got multiple aliases and is still angry about Williams Communications, no one else even remembers, over a decade ago. And he talks to himself a lot.

  • Reply to

    Are any of us objective here?

    by pjhatbpi May 27, 2016 9:50 AM
    harehau harehau May 27, 2016 10:34 AM Flag

    pj, I own both and like the assets of both. When first proposed and to some extent, thougth the combination would be a great franchise, if not the best. The issue for me now which most probably don't focus on is goverance, the MLP form and Warren's leadership. For that reason, I don't want the merger to happen. If it does, I'll have to decide whether to continue owning. I do think WMB has the upper hand and will probably prevail in the courts. But I don't want the merger so that isn't great. WMB's board should never have done this deal to you have to point in their direction, the activists on the board were not a good influence, imo. But it could turn out that the merger happens and ETE is a great investment over the next five years as shale growth comes back and I think it will. I'm just glad I'm not trying to guess the 60 day future. ETE fair value is $15 and WMB is $28, t he all equity exchange is 1.87x or $28. With the cash piece and $15 ETE, the value would be $31. At current ETE price, exchange value of stock/cash is $26. Biggest issue is the add'l debt which may or may not be a long term problem. Make the exchange 2x all stock and WMB value is $23 at today's ETE price. And the combined co could be a barn burner in a couple of years. But you still have the MLP and Warren. Bottom line is I'll vote no and see what happens. I would bet it never gets to court, too much at stake for both cos, more for Warren than WMB.

  • harehau harehau May 26, 2016 6:47 PM Flag

    Not much can be said. This borders on silly, enforcing the merger vs completing the merger. Warren had Welch out early trying to talk investors into a no vote. Warren has been trying to get out of this since prices crashed. He had deal and Williams didn't have any obligation to change it. Seems to me that neither side would want a judge to decide.

  • harehau harehau May 26, 2016 3:24 PM Flag

    According to IR, admittedly a few weeks ago, that was their statement, the institutional investors are in favor of the deal. The activists on the Board are in favor. These inst holders are only interested in the short term, imo.

  • harehau by harehau May 26, 2016 9:37 AM Flag

    By the end of the summer, CEQP should be $30. Oil is firming, nat gas should move up from here. Interest rates don't get out of control. 6% yield at 150% coverage, $40 unit price.

  • harehau harehau May 26, 2016 9:33 AM Flag

    pj, today, feels like WMB will prevail in court, it will go to a vote and 85% institutional investors will vote for it. I agree with you, the Warren factor is problematic. He could at the last moment offer a billion in cash or whatever and the deal dies. While Warren is suspect, he could put the two companies together and would look like great timing at oil gets to $70s next year along with $3 gas. Refinancing the $6 b in debt would be less of an issue. I don't trust the guy but he is a great deal maker. And after the merger, the rhetoric would end and the positive spin would begin. And all of this would be forgotten. I will probably vote no but our votes won't matter.

  • Reply to

    Vote

    by curl_rove May 25, 2016 1:00 AM
    harehau harehau May 25, 2016 9:47 AM Flag

    An issue is, not sure WMB can rec deal if the conv pref plan is still out there as well as tax opinion. Can't see the board taking on that liability. WMB is trying not to get sued and force Warren to live up to his obligations. Still think 2 for 1 with no cash would solve all of the issues. WMB gets more, debt is increased, tax opinion solved, conv pref plan goes away. Probably will go down to the wire. But agree with you that the inst holders will vote for the deal no matter what the small retail owners do.

  • Reply to

    commodity prices

    by harehau May 25, 2016 8:47 AM
    harehau harehau May 25, 2016 9:02 AM Flag

    Actually, the price today is better than the price at the end of Sept. And e and p s in the process have lowered costs. Absent the $6 billion and Warren, this would be a good combination. Still think a 2 for 1 all equity would solve all of the issues. Tax opinion, $6 billion add'l debt and conv pref plan. Would bet Warren has plans to integrate the assets. $60+ oil and $3+ gas would get the US shales back to growth, the Permian and STACK/SCOOP, EF, Niobrara and Marcellus, Utica and Haynesville all can make good returns at $60+. ETE fair value is around $15 today, 1.87x gets WMB value to $28. Even at that exchange with no debt, this co could be the premiere franchise. But it still takes you back to Warren and the MLP form which doesn't give much shareholder protection. Even without the tax opinion, I would guess the vote is positive, the institutional investors won't care about the taxation, could be wrong. Today, i would vote no but not sure it will matter.

  • Brent oil is $51 for December and WTI is not far behind. Nat gas will get stronger. By the time of the vote oil could be $60. That's better than when the deal was made.

  • Reply to

    Harehau

    by pjhatbpi May 24, 2016 12:59 PM
    harehau harehau May 24, 2016 4:13 PM Flag

    Again I own both cos but a bunch more WMB than ETE. Warren's behavior should be an issue for ETE owners imo. Would guess he has done his last big deal. Most cos won't even talk to him, my guess.

  • Reply to

    Harehau

    by pjhatbpi May 24, 2016 12:59 PM
    harehau harehau May 24, 2016 4:10 PM Flag

    Seems disingenuous to claim an issue with the tax opinion. They had to structure it in certain way so that it wasn't a taxable exchange, otherwise they could have just traded ETE units for WMB stock, a taxable deal. Your chief legal officer should be gone, along with your CFO. Seems he has played loose with the deal and seems to me a court will side with Williams. We will find out.

  • Reply to

    Harehau

    by pjhatbpi May 24, 2016 12:59 PM
    harehau harehau May 24, 2016 3:52 PM Flag

    You would think so, that would be a critical issue, in every deal. The chief legal officer saying a light bulb went off, what the hell does that mean. But I don't know the reasons for not producing one now. Thought maybe the cash portion is a much greater piece than initially. That issue doesn't smell right to me but the firm they are using is a major player. Seems to me Warren is playing too close to the edge and a judgement could go against him that would be a big number. But I'm not a lawyer. The conv plan seems an easy one to me. And he claimed over and over on the call that the deal will not close without the tax opinion. Guess the question for me now is will he let it get to court or will he offer something. The longer he goes, seems the higher the number. High stakes poker?

  • Reply to

    Harehau

    by pjhatbpi May 24, 2016 12:59 PM
    harehau harehau May 24, 2016 3:18 PM Flag

    pj, what's your lay of the land? The q div announcement should be this week. We will get another div even if it wasn't deserved.

  • Reply to

    Harehau

    by pjhatbpi May 24, 2016 12:59 PM
    harehau harehau May 24, 2016 3:13 PM Flag

    Absent the management issue at ETE, Warren, with gas fundamentals still looking good and $60 oil probably on the horizon, the combination of the ETE and WMB could be a knock out in a couple of years. But you can't overlook the Warren factor, unfortunately. Still think it dies, I sense WMB board doesn't want to hook up WMB owners to Warren, but they want to extract some cash before he caves. And both cos do relatively well.

  • Reply to

    New Recovery High!

    by mizzou1966 May 23, 2016 10:45 PM
    harehau harehau May 24, 2016 3:07 PM Flag

    Seems today is a buy opp. Can't see reason for sector move down, interest rates?

  • Reply to

    Harehau

    by pjhatbpi May 24, 2016 12:59 PM
    harehau harehau May 24, 2016 2:56 PM Flag

    Have been traveling and jus read the report of the vote, trial dates. I still don't think this gets done but the lawyers would have a better view. The trial starts 6/20 and the vote is 6/27 and Warren says the deal won't close without a tax opinion. I would guess the conv pref plan WMB wins, how does he get rid of it. Will the court deal with the tax opinion, would think not but it may be part of WMB's claims. I guess I don't know enough to reach a conclusion. Seems Warren would cough up some cash to WMB and not run the risk of a ruling against him, that could be a big number. Will have to watch for any analyst comments. I'm not selling either company so it will be what it is, still think they both are better off stand alone. Just heard GS Currie talking about strengthening of nat gas, which would be good with a related oil recovery.

  • Reply to

    New Recovery High!

    by mizzou1966 May 23, 2016 10:45 PM
    harehau harehau May 24, 2016 12:02 PM Flag

    This one will be hard to trade, return will come from holding for couple of years, growth 60%, 40%, 40% through 18. You can't find another MLP that has that growth profile. It might trade down to 2% yield, $42 but would imagine it trades in 3% yield range. With the growth, dist should be $2.20ish end of 18, at 3% yield, $70plus unit value. Even 4%, $55. Seems this is a good bet in the MLP sector, although most want higher yield, this is a growth story and long term hold. And no k1 and tax deferred div through next year at least. And seems they have a more drop down opp which would boost the value. Buy and forget is my advice. But most want to trade.

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