Actually odds are this is a great opportunity to buy LNCO at a nice intrinsic discount.
The ability of LINE management to guide 'DCF' above 1 means this is not a broken company. The BRY deal was a bit rich. Still as we see with the debt rating upgrade the distribution coverage is fortified.
As Sand points out Permian assets are very likely an undervalued asset.
What energy demand needs more than anything is a real American economic recovery pulling the world along. Obama will have to retire in a few years. It would be great for our investments if Reid is swept into retirement in 2014.
In which case the future for LINE would look very bright.
Oh what has Germany gain for the Global Warming religion? Their emissions are up as coal plants have to backstop the delusions alternative variable sources. The power grid is becoming increasing unstable. The coal plants which are best suited to base load have to be fired up and down. Inefficient and much more easily avoidable pollution.
Then yell at us we are not doing enough as our emissions are down. Crazy collectivists.
Critical take away
"The change allowed "substantial margin improvements," BASF said. When the conversion began operation in May naphtha cost about $100 for a barrel of oil equivalent, compared with about $30 for an equivalent amount of ethane."
"Germany's push to phase out nuclear for renewable energy has lifted electricity prices this year to 14.87 euro cents a kilowatt hour, about twice the price in some parts of Texas."
The Progressive lie that it can all be made up with efficiency is two parts their irrational religion and dissembling as they are saving the planet.
As large as these investments in American are, they are not nearly enough to absorb the tidal wave of ethane we are producing.
There is absolutely nothing wrong with large modern coal plants in America. If global warming is true, which observation shows is now very unlikely and even less likely to be significant, only economically viable clean technology which can be transferred to Asia is critical.
But the corrupt and lawless Obama regime has empowered the dishonest EPA to impose standards which are economically impossible. Which of course is breaking the law they are claiming to enforce.
Thanks to the Providence of clean natural gas America can add to the massive reductions in CO2 we have already achieved. We should own every value added energy and chemical manufacturing plant in the world. It will also be done with less pollution than anywhere else in the world.
Instead we are allowing religious delusions of Progressive to be imposed as the state religion for wholly defective and wildly polluting political corruption like corn ethanol
It is insane to be exporting light clean shale oil, natural gas, ethane and propane so the Progressives can have their bird chopping wind mills and corn ethanol state religion.
A example of BASF's new U.S. investments is its 60/40 joint venture with Total Petrochemicals & Refining USA, which produces chemical building blocks at a plant in Port Arthur, Texas. This year, it converted a steam cracker, which can produce as much as 935,000 metric tons of ethylene a year, to use a natural-gas feedstock, ethane, instead of an oil, naphtha.
The change allowed "substantial margin improvements," BASF said. When the conversion began operation in May naphtha cost about $100 for a barrel of oil equivalent, compared with about $30 for an equivalent amount of ethane.
BASF, which last year posted revenue of €72.1 billion, is deeply tied to Germany's Rhine River chemicals industry. Its town-size complex in Ludwigshafen is a sprawling web of twisted pipe, steam-belching cookers, distillation towers, specialty plants and laboratories that would span the length of New York's Broadway and fill much of midtown and lower Manhattan.
The centerpiece of the site is its steam cracker, a goliath the size of 14 football fields that distills oil and gas into component parts, especially commodity chemicals such as ethylene and propylene. These building blocks go into chemical derivatives used to make products as diverse as foam for insulation, padding for car seats, chewing gum, perfume, plastic wrap, pesticides and high-tech coatings for automobiles.
BASF first went on a shopping spree to gain scale in the U.S. and in specialty-chemical markets a decade ago. BASF acquired automotive-catalyst maker Engelhard Corp. in 2006 for $5 billion, forming the bulk of the company's U.S. business at the time, and Degussa AG's construction chemicals business for €2.7 billion. In 2009, BASF acquired Swiss rival Ciba Holding AG for 6.1 billion Swiss francs ($6.9 billion).
"That helped us to grow in the U.S.," Mr. Engel said. Its U.S. sales have doubled in the past decade and may grow at least 5% a year through 2020 without acquisitions, he said.
Among its newer investments is a U.S. formic-acid plant to supply its businesses in North and South America. The investment "might not have happened would we have natural-gas prices of $10 or more," said Mr. Engel. The plant will replace imports from Europe and Asia.
Next up: BASF is considering a new ammonia plant in the U.S. in a joint venture with Norway's Yara International AS YAR.OS -3.71% A. The plant, considered for the U.S. Gulf Coast, would produce ammonia for BASF.
"It is basically a make-or-buy decision for us," said Mr. Engel. "We would replace buying ammonia in the market and paying the usual margin."
The U.S. is also more conducive to developing new growth industries. Last year, BASF moved its global headquarters for plant biotechnology from Germany to Raleigh, N.C., because of restrictions on biotech research and public opposition to the technology in Germany.
LUDWIGSHAFEN, Germany— BASF SE, BAS.XE +0.50% a nearly 150-year-old German company whose operations sprawl across this Rhine River city, is shifting more of its production and research investment to the U.S. to ride the nation's economic recovery and shale-gas boom.
The world's largest chemical maker by sales says the move is designed primarily to take advantage of America's cheaper energy and greater support for emerging biotechnology research. It comes amid a wave of U.S. investments by chemicals and fertilizer makers cashing in on its plentiful shale gas.
"At this point in time, the overall framework—if you consider all the factors including economic growth, the cost of raw materials and the cost of energy—is more favorable in the U.S. than in some European countries," said Hans-Ulrich Engel, BASF's group finance officer and chief executive of its North American division.
BASF has estimated it could save €500 million ($688 million) a year in energy costs if its massive chemicals plant here was instead in the U.S. The company isn't thinking of moving the 148-year-old operation abroad, but it is building up existing plants along the U.S. Gulf Coast and may launch new production there in coming years.
BASF has doubled its investment in its U.S. plants to an average $1 billion a year in 2012 from about $500 million a year in the decade to 2010. It also has earmarked about $4 billion in capital spending in the U.S. through 2017.
The lure: cheap electricity and natural-gas prices. Thanks to discoveries of shale-gas in Texas, North Dakota and Pennsylvania, the U.S. price of natural gas is about $4.30 a million British Thermal Units, about one-third of the price paid by German industry.
Germany's push to phase out nuclear for renewable energy has lifted electricity prices this year to 14.87 euro cents a kilowatt hour, about twice the price in some parts of Texas.
The U.S. economic rebound and cheap energy is luring new investment from businesses ranging from Egypt's Orascom Construction Industries SAE, which plans a $1.4 billion fertilizer plant in Iowa, to South Korea's Hankook Tire Co. 161390.SE +1.32% , which plans to break ground next year on its first U.S. factory, an $800 million investment in Tennessee.
New York, December 17, 2013 -- Moody's Investors Service upgraded the senior unsecured notes ratings of Linn Energy, LLC (LINE) to B1 from B2, the Corporate Family Rating (CFR) to Ba3 from B1 and Probability of Default Rating (PDR) to Ba3-PD from B1-PD. Moody's also affirmed LINE's SGL-3 Speculative Grade Liquidity Rating.
Good stuff from the merger.
Trading clearly is not efficient. But it would be rational and logical to return to parity. Premium would be a good reason to switch back.
The big winner for the mutual fund is now transformed into one of this years big losers.
Big year end reporting near.
As the actual LNCO float is small compared to the shares the funds will be getting for bry, it would not take a great deal for forward selling to move the current price.
It is a good time to add some LNCO, if you like Linn Energy.
I agree it is very unlikely this discount will persist beyond the New Year.
Hopefully we can put all this Obama SEC supported short attack in the past. The real open question for all American oil producers is the sharply backward oil market. Calls to export whole oil are being. A few splitters are coming on LINE but even this capital investment is lagging.
Further a surfeit of American light oil could put pressure on ngl prices.
Like everything there is nothing like a real economic recovery to firm energy demand. But given the weakness in the electricity trading markets, that is not now nor does the energy market see it in the next few years.
No the units backing the LNCO shares are not counted until they leave barn with the done deal.
Otherwise it is just treasury equity. Does not go into calculations.
Not going to happen unless the price goes up.
We are going to have more light shale oil then we can use as well.
We need new capital investment in refining and value added chemical manufacturing.
I would not like to export whole oil. But it would be better than killing the oil industry as Obama has managed with the natural gas industry.
Obama unfortunately can no longer build the 'certainty' necessary for our companies to make the massive investments in America. Worse still it now takes five years to get new investments approved.
Now that Obama has whipped the House of Saudi into public statements of America betraying them, now is the time to begin construction. We do not have any more time for the wholly defective and completely immoral corn ethanol corruption.
The light shale oil and natural gas are clearner than corn ethanol corruption. Cleaner than most grades of oil.
House of Saudi would certainly want to keep the price of oil up as much as possible. Better to cut production 20% and cheap these extremely prices.
Base Opie you are not limited by your potential but by your choices.
Rube Ron could pick up an Econ 101 book. Ron could pick up random walk down wall street. Ron could pick up basic security analysis.
But this knowledge would interfere with his faith of self absorption. Perhaps conflict with his faith in unscientific observation as the path to mystical understanding.
The idea that there is no shame in poverty, if Individual efforts are made to escape it is thousands of years old. Self helping poor are easy to help and bring the greatest joy to those who can help.
I am for doing good to the poor, but I differ in opinion about the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it.
I agree with Ben. Patronizing you, Ron the entire OLB is not Love. Nor is your emotional condition in any way connect to your right to free speech.
People who make a choice to be less than their full human potential are impossible to lead out of poverty. You are quite right you have a right to live in a lower order of existence. Like Jon Stewart's random #$%$ happens so everything is either 100% accident or 100% determined.
He is concerned about freedom being defined by no limits to complete Libertine. He does not believe all Human Beings are Gifted Liberty or self agency. I know very primitive. But Jon is pretty old and does not like to change anything.
There is one race. Human Beings.
America is the only peoples on earth which define ourselves together by acceptance of a simple proposition.
God gifts Life, Liberty and the Pursuit of Happiness. That our government is instituted to secure those rights.
As all Enlighten people understand the soul is not fed by the material, our capitalized general Welfare means economic opportunity. Vast opportunity so every American can develop gifts into talents and chase their dreams as a unique Individual.
Jon Stewart see what you did to your audience?
The young and inexperienced as well as the mentally feeble take it all seriously!
Mad Who believes Mr. Payne would make a bigger than life super sized with the Spirit Santa! So he is a little young for the part, it is the spirit which counts!
Management executing on a smooth integration and we should be around $35 fairly easily.
BRY has wide margins on production so even though the oil market is backward cash on sales can be hedged in.
Merry Christmas all. Nothing wrong with getting most of the return as cash in pocket.
Now now base Opie -
It is Christmas time and you have declared your faith in Christ. Maybe it is time to show some good cheer? A little good will towards fellow people?
For the Antediluvian secular pagan 2/3 media demi-god Jon Stewart and his ancient ever repeating War On Christmas, No One is simply the Ghost of Christmas present. Talk about getting in a rut and doing the same thing over and over for decades!
There is always the chance Jon Stewart will decide a true Festivest Pole should be made out of something other than empty beer cans. As he claims to be absolutely convinced Santa is a secular creation he could put on the Santa suit; Mr. O sent over, and tell children passing the mouth of the cave Happy Holidays. Heck he could demonstrate his festivest conviction during the show and giveth the audience nothing but Happy Holiday wishes.
Such expression would not bother a true secular humanist. But of course a true secular humanist is supportive rather than hostile to Reformist ideas like Individual Liberty. For logically if a person has rights it must be logically individual rights. Nor would a traditional secular humanist think it amusing that some clown put up empty beer can tower next to a thought of peace on earth good well to people.
But Progressive Collectivists are not rational logical beings. By their choice. Ah personal choice and the Truth of Individual Liberty. The Blessing Ordained in our Constitution.
Yes Base Opie this is the hallmark of the Progressive condition.
25% Unemployment in Spain? All housing and nothing to do with a wild irrational orgy of Alternative Energy.
BY claiming it is 100% housing by bad banks all other discussion is deemed uncivilized.
Mature rational people seek understanding not assumptions which 'protect' their primitive religions. Going all the way back to Jon Stewart and the antediluvian secular heroes of renown.
Merry Christmas. I hope the OLB is doing well too. Although odds are given the stuff the trooper chatters about all year - very very improbable.
Base Opie care to comment on VLO? That was the subject of much posting by the entire OLB. ;)
Long investing is not a zero sum game.
As a practical matter the rational investor would expected the inefficiency to disappear once the BRY deal is completed.
1) It ends the question of shorts for this round at least.
2) It greatly expands the trading volume of LNCO reducing a good portion of pressure of a larger owner base and smaller float.
There are sustained inefficiencies like KMP and KMR. The discounts can get very wide when investors are feeling uncertain. When they are feeling positive that discount can close to 1% or less. Individual transaction cost are not so low selling a few units after a year is not material trading friction. In the real world KMR format in fact has less trading friction compared to KMP partnership and tax handcuffs of ordinary recapture.
In short rational investors working with understanding see opportunity in these rare market inefficiencies. It is why we can do a few points better than averages over time.
The Progressive like Rube Ron; in the technical condition of Jon Stewart, sees it as a self justification to claim the markets are not efficient. Contrary to all available repeated and repeatable scientific investigation.
In the condition of Jon Stewart, emotions no matter how self absorbed and therefore anti-social, are as valid as seeking truth and understanding. Their equality means abusing government force if one person is emotionally disturbed. Even if the emotions are by definition of selfish and base.
Be an American. Take action. Go to church find an America with the Spirit who happens to be black for the community. Be an even better American and take the Spirit beyond the community.
The austere logic of our American Reformation did not include official Christmas. The Awaking which ended slavery did. As long as Americans strive to be good we will remain great, not perfect.
Going back to the Antediluvian heroes; like Jon, is logical how?
Rube Ron once again demonstrates the Progressive mentality of hubris-tic assumption as the basis for delusional and dishonest public posing. The technical term for this condition is Jon Stewart.
Reasons LNCO could trade at a large inefficient premium to LINE.
1) LINN Energy has been under sophisticated, connected and powerful short attack. Barrons had a fine reputation and is read by an older base which owns mlps. The SEC launched a never ending investigation even as they had to approve the S4 as fairly stated and accurate. The short attacks of this time focus on weakened companies which can be damaged by the very act of artificially driving down the 'share' price. LINN energy was idea as a good portion of the valuation was the ability to use a low cost of capital to make accretive acquisitions. Exactly what the original BRY deal put to bed until the SEC stepped in with their now know to be pointless investigation. It would be ignorant to assume market efficiency in this occurrence.
2) Many institutions and funds can not buy partnerships. BUt they can buy the corporate format LNCO. So the ownership base for LNCO is much larger in terms of money. Money is the votes in an equity market. More money chasing a certain type of equal ownership can easily cause a premium.
3) the number of LNCO units traded or the float is much smaller than the number of partnership units. This combines with item two.
4) All things equal it is logical to assume the institutional and funds have superior information to individual investors and therefore are more 'rational'. The LNCO price would be the more efficient. Especially as the tax tail on partnerships makes them far less liquid in trading.
All of this and more is why an expert analysts asked the CFO what he thought was driving the premium. There is no absolute answer the Progressive in their delusions believe they hold. The rational cognition of limited information is reality.