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Linn Energy, LLC (LINE) Message Board

phonejerk 15 posts  |  Last Activity: Dec 15, 2014 5:45 PM Member since: Oct 19, 2001
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  • Reply to

    Deal Closed -- Just Released

    by virtualanalyst Dec 15, 2014 5:36 PM
    phonejerk phonejerk Dec 15, 2014 5:45 PM Flag

    Good news for any long. Don't expect a big price movement or anything but it's just a sign that things are progressing as normal which is what you want. All the turmoil and panic are market events but not really company events. People want managment to respond but there is really nothing to respond to. Price are down but that is what hedges are in place for. LINN is operating as normal and going forward with plans previously made.

  • phonejerk phonejerk Dec 15, 2014 3:40 PM Flag

    The "bigger investors" miss things all the time. They are probably smart to stay away at this point but only because it is painful in here right now and few can actually take this kind of pain. The ones that can stomach will end up making money in the end. If you manage a hedge fund or some institutional money you can't afford this type of volitility in your results so you stay out. But make no mistake at some point this is going to be a buy and that is going to be a long time before the big boys say so. Everybody knows that the time to be greedy is when everyone else is fearful but nobody hardly ever has the sack to actually do it. If the big guys were not saying to stay away than it woudln't be time to sack up and buy.

    It's not easy and it's not suppossed to be or else everybody would be doing it. I made a lot of money here in 2009 when others got scared and told everybody to stay away. I'm coming back in now and starting to take positions here because I see that same level of fear. The more my meddle is tested by the market the more I know I'm doing the right thing. Because like I said it's suppossed to be hard and everybody is suppossed to be saying to stay away. I've been doing this a long time and that is exactly how a great buying opportunity looks and feels every single time. If you don't second guess yourself a hundred times and if your nuts are not in your throat a few times than it's not the buy you think it is.

  • Reply to


    by fgddd Dec 15, 2014 11:50 AM
    phonejerk phonejerk Dec 15, 2014 2:53 PM Flag

    They would be required to disclose if the deal falls through as well. I would expect to hear something soon. The deal is likely still in place or they would have disclosed something.

  • Reply to


    by antiquetvguy Dec 15, 2014 11:30 AM
    phonejerk phonejerk Dec 15, 2014 11:59 AM Flag

    Stop and do the calcs on the hedges. They are 60% hedged on oil so 40% of that is vulnerable to the price drop. Oil makes up about 60% of their revenue. So 40% of the of that 60% is subject to oil prices. That equals 24% of their revenue which is subject to price flucuations. If prices on that 24% drop by half (they are not really that low at least not yet) then you have a decrease in revenue of 12%. Not great but not quite the hideous ugly picture people are making it out to be. Part of that 12% can be offset by reductions in spending. So you're loooking at a shotfall of less than 10% even if oil goes down to $45 per barrell and stays down there all of next year.

  • Reply to

    This oil thing will turn and ALDW

    by classshopper Dec 11, 2014 9:16 AM
    phonejerk phonejerk Dec 11, 2014 9:49 AM Flag

    I thoink now a days there is just so much computerized trading that says short all the energy stocks when oil is down. I saw an article saying none of the refiners are acting like they should in this envirment. There is no direct exposure to oil prices. Spreads could contract some in a lower price envriroment but the cost of capital goes way down when you're paying half of what you used to pay for your inventory.

    Once oil prices stabilize the selling should stop. Then it's just a matter of having a quarter or two of solid earnings to show that they really are not impacted by oil prices the same as prodcers and exploration companies.

  • phonejerk by phonejerk Dec 10, 2014 10:25 AM Flag

    At this point LINE has to be sitting on a massive amount of unrealized gains. I honestly don't think the Harold Hamm strategy is a bad idea here. Cash out the nearer term hedges at huge gains build up your cash reseves and hunker down. This gives you more fliexibility in your operations you can shut off higher cost wells if need be and delay cap ex if need be.

    Analysts don't like removing the hedges but frankly those contracts are probably worth more now in a panic than they will ever be. If you hold onto the hedges your earnings will be smoother over the next 12 months or so. But my guess is your actual total earnings over that period would be higher if you cash out the hedges now and plan your opreatiions accordinginglly. If this was a private company that didn't have to worry about what the street thought it would be a no brainer. I'd cash out all oil hedges in 2014 and 2015 right now and take the cash. Chances are oil will come up at least somewhat next year and you'll participate in that recovery by doing so. Then later in 2015 start evaluating what to do with your hedges in 2016. IF oil continutes to go straight down forr years and years you're screwed either way.

  • phonejerk phonejerk Dec 9, 2014 9:43 AM Flag

    Not over the next 6 to 7 months they don't. They need it to return to those prices by 2017. They are mostly protected on the downsdie before then. Currently they are 100% protected.

  • phonejerk phonejerk Dec 8, 2014 3:19 PM Flag

    The thing is they are hedged into 2015 pretty well. Less than 10% of their cash flow is really at risk with lower oil prices. The number increases to between 10 to 15% in 2016. So there is some risk but the market is overstating the risk out of fear. This kind of thing happens from time to time and it ends up being a buying opportunity. Some people will cave and lose a lot of money but the long term holders will be fine.

    I don't think you'll see a distribution cut but even if they did in theory it would only have to be 10% or less to fully cover next yerar's distribution. LINE was 100% hedged through the end of this year so they have yet to lose anything on the lower prices. The lower oil prices forecasted for next year are pretty meaningless. That can change on a dime most of the people that are saying that now were predicting $100/barrell a couple of months ago. That shows you how quicly things can change in the markets. If prices stay down LINE can chose to lower production on some of their higher cost wells. LINE isn't in as bad a position as people are making it out to be. They have always been conservative with their hedges and they are in lower cost regions than a lot of their competitiors.

  • phonejerk phonejerk Dec 5, 2014 11:49 PM Flag

    They are 60 to 70 % hedged on oil next year and 50 to 60% hedged in 2016. They are 90 to 100% hedged on gas both years. So the reality is they are closer to 85% hedged next year and 75% in 2016 when you factor in they are more than 50% gas. As someone else pointed out they could start hedging 2017 production in the $70's right now if they choose. Also oil won't go to zero so its not like they will lose 100% of their unhedged cash flow chances ae they will lose less than 50% of that cash flow. So my take is they simply are not as vulnerable to oil prices as the market is factoring in right now. Obviously if oil stays down for several years than they are in trouble along with most everybody else. Even if it does come to that I believe weaker hands than line will be shaken out and the market will self correct before they are ever in any real serious danger. Chances are this will be a relatively short term event and whatever losers there ends up being wont be large well hedged players like line.

  • Reply to

    LINE/LNCO Yield

    by ronharv Dec 4, 2014 1:58 PM
    phonejerk phonejerk Dec 4, 2014 5:42 PM Flag

    I agree it could go down 30% but I just don't see the risk/reward here on the short side. If they have a bad 4th quarter and if they cut the dividend you make 30%. If something happens in the other direction you could literally lose more than 100%. I'm not saying this thing is likely to double anytime soon but IMO it's a lot more likely to double in the next 12 months than it is to go to zero. The risk reward of being short here just makes no sense at all. If he did short at a higher cost as you suggest he should trake his profits and run. I woudln't be jumping to take a position one way or another but pigs get slaughtered in the market and shorting here is piggish for sure.

    Sentiment: Hold

  • Reply to

    LINE/LNCO Yield

    by ronharv Dec 4, 2014 1:58 PM
    phonejerk phonejerk Dec 4, 2014 3:21 PM Flag

    Just out of curiosity why do you think ti's a good short here? The easy money has already been made on the short side of things. The time to short is when the market is overly bullish on a stock not when everybody is negative. Props to anybody that shorted at $40 or whatever but I think it's kind of crazy to be short here. It's just a pure speculative play here no matter which side of the trade you're on. The only difference is the long side has a large upside and will get paid distributions to wait. I don't see a ton of upside in being short and you're going to be paying every month to hold the position.

    You say you think it will hit a new 52 week low which sure it could but that is a pretty small profit from these levels. Seems like you're taking on a lot of risk for a small gain here. I don't think this is a good short at all for a variety of reasons. I'm not sure it's a great long either but there is a least the potential to make an outsize return down the road.

    Sentiment: Hold

  • Reply to

    sold all--DONE

    by listen_jockers Oct 13, 2014 3:50 PM
    phonejerk phonejerk Dec 4, 2014 10:59 AM Flag

    Actuallly these kind of crazy calls are usually the sign of a bottom in a market. As soon as everybody agrees on the direction of a market it generally signals a bottom or a top. Around that time you also get crazy calls like $10 oil which is just silly and anybody with half of brain knows it. But people get irrational at capitulation time and normally rationale people start to hear that and and buy into it.

    Sentiment: Hold

  • phonejerk phonejerk Oct 15, 2014 8:00 PM Flag

    I'd assume about a 10% distribution rate going forward. I think they can beat that but that is a good conservative number. I like to put more weight on a full calender years distribution rather than a trailing 12 months. This is because my experience is companies plan their operations based on calendar years.

  • Reply to

    Hedges (from Linn Presentation)

    by ronharv Oct 14, 2014 4:00 PM
    phonejerk phonejerk Oct 15, 2014 2:07 PM Flag

    It would drop cash flow by pretty much the same amount. The 6% drop in revenue would be all profit and would flow through into cash flow from operations. That is assuming production levels remain as planned. It's not an overly pretty picture but it's not time to panic either. That isn't worse case scenario but I think it's on the more pessimistic side. I suppose oil could be below 80 a year from now but I think the odds are it will be higher than that.

  • Reply to

    Hedges (from Linn Presentation)

    by ronharv Oct 14, 2014 4:00 PM
    phonejerk phonejerk Oct 15, 2014 11:56 AM Flag

    It could potentially hit cash flows but who knows what price oil will be at in 2015 and 2016. As far as the asset sales they have completed most of what they were looking to do and their timing turned out to be very good. There is reason to be concerned but people get a little too dramatic over the ups and downs. They are fully hedged right now so the drop in oil has yet to cost them a dime in earnings. By my calculations a 20% drop in oil prices wich makes up 66% of revenue with roughly 40% of that unhedged means about a 6% drop in total revenue.

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