Linn and BRY are dealing with the SEC on a merger. The SEC was closed last week and chances it will be closed next week, so nothing is going forward until the Congress decides to pay its employees. Once before when Clinton was president, the government closed for about a month.
Could happen again as the Republicans think they accomplish something by sending federal workers home. All previous shutdowns of the government by the Republicans resulted in paying those federal workers when they were sent home. Seems pretty stupid to me to shut down the government, send home 800,000 workers, they do no work and then they get paid. What kind of sense is that?
How can you tell how something is a good deal when management of STON has offered no information other than it is paying almost $100 million to lease the property for 60 years with an upfront payment of tens of millions.
You are showing your lack of research. "The DTV collapse will happen sooner than later".
The president and executive vice president spoke at two conferences during the last month. They indicated that they are on target for the projected growth numbers for the year and total subscribers world-wide has reached 37.5 million subscribers. They continue to predict that subscriber growth will continue to grow by 1 million or more customers per year.
You do not seem to understand that sports programming is the major driver of TV.
DTV has little competition from cable when it comes to offering the hotel chains a package where hotels have 100-200-300-400-500-600 or more tv's that need to be hooked up. Hilton, Sheraton, etc. want get the best price for their tv hook-ups when they deal with one carrier nationwide and the cable companies have a problem there as each of the six major cable companies do not operate in every city. DTV operates up in the sky.
The same applies to all the major health clubs in the country. I belong to one which has 70 televisions hooked up to DTV at each site they operate. Multiply that by 100 locations and growing. The ownership does not want each location to have a different cable company and a different contract to deal with. They want one company that can supply all of their locations. The health club gets a better price and DTV controls a huge number of subscribers.
DTV might be expensive but it provides the best sports packages.
Your comment about the company collapsing shows that you do not understand the business or this company, nor why the #1 investor in America keeps increasing his share purchases in DTV.
DTV does not want the cheap customer that wants a service for $10-20 per month. Just like BMM and Mercedes do not want to sell a car for $20,000. Some companies target the big spenders for a product and those companies are usually more successful than the companies that target the cheaper customer, Nokia v. Apple.
You are wrong. DTV's executive vice president and president have both spoken at financial conferences during the last week and they indicate that is not the case. In fact they indicated that their total subscriber numbers are increasing per projections and they now have a total of over 37.5 million subscribers world wide.
DTV has the superior customer base and most sports bars and hotels I have frequented use DTV over the other carriers due to their superior sports coverage.
For the home viewer such as myself, they have a DVR that can record 5 shows at one time while my neighbors have COX and my mother has Time Warner and they can only record two shows at the same time.
In addition the DTV box (one box) allows you to broadcast the signal to five televisions in one house off one box, while the cable carriers require one box for each tv. Bottom line DTV has superior technology.
Thanks for the positive comment.
If the BRY-Linn Energy deal does not go through watch all the posters on the BRY board complain about the collapse of the share price. No major company is going to purchase BRY or as I previously mentioned it would have happened. So what is an oil company worth that is on the small side, no dividends and no real production growth. In comparison to the dividends from Chevron, BP, Statoil, Eni, Shell, Exxon, and others, BRY has what attraction for investors????
I looked at the most recent balance sheet.
The plant was acquired for around $400 million.
The stock is selling for three times the purchase
price of the plant.
That makes no sense to me. Why pay triple the
cost of the plant? How long will you have to earn
a 10% dividend or a 12% dividend to pay back
the price of that plant if you purchase the stock
at the current price? It looks to me that after 30 years
the dividends returned will equal the price of the plant.
That looks pretty darn expensive to me.
BRY shareholders will probably see their shares drop $5+ per share if they reject the deal.
So what do they risk if they approve the deal? I do not see a loss of $6 per share because it will take a month to close the transaction. The surviving entity would likely see the share price increase.
Linn Energy offered 1.25 shares which will carry a dividend of close to $4 per share per year. Why would they offer more. That is a hell of good dividend for each share of BRY. Furthermore as I mentioned a bank just loaned Linn Energy $500 million last week for 3.2% interest. That says a great deal about the strength of the Linn balance sheet. Why would they offer more to BRY shareholders when BRY and Linn have in house appraisals that show a share of Linn is worth $30-50 dollars.
Linn and BRY have 20 years of energy in the ground. BRY predominantly in oil and Linn in natural gas liquids and natural gas. The prices of this energy are only going to go up over the next 20 years. As a combined company this will be a monster. Separate from each other and they are just average producers that no one else would probably acquire in my opinion. Otherwise, with all the oil and gas acquisitions over the last few years they would have already been merged. IMO. Without the merger I think each company will fall about 10-20%.
The board and management want this deal.
It is a tax free exchange and provides BRY
shareholders with 1.25 shares of Linn
Energy equivalent units. That distribution
for one unit is worth around $3.00 and at
1.25 the distribution is worth $4.00. Also,
as soon as the insiders and institutions
vote yes, the price of Linn and LNCO will
go up. It is a double win.
In addition, Linn Energy was just able to
borrow $500 million for 5 years at Libor
plus 2.5%, for a total interest rate of 3.2%.
Not many businesses have the ability to
borrow at 3.2% except the ones which
the bank's loan committee falls in love with
in terms of financial statements of the borrower.
BRY has to borrow $200 million pretty soon
and Linn can probably borrow at a cost 3 points
below BRY and that will save about $6 million
a year for BRY. So over ten years that amounts
to $60 million in savings. The two companies
together are a strong oil and gas operation.
The values of which will increase substantially.
The deal is a no brainer to me.
You are correct, the insiders, mutual funds and ETFs see the total return of owning LNCO shares for the next 12 months. In my mind that is rising LNCO shares, $3.00 dividend, etc.
You hit the nail on the head. Individual retail shareholders of BRY should sell BRY shares at this time and take the current price and buy, LNCO shares with the proceeds, then they get the best of both worlds, the higher BRY price and the benefits which accrue to the new entity which will result in LNCO shares increasing as soon as the BRY shareholders approve the deal.
The insiders of BRY also control a large block of BRY shares and they are voting for the sale. When you add in the mutual funds and ETFs that own shares that are voting for the merger, the smart money is going to control the vote, not those retail shareholders that are disgruntled as some of the posters on this board that do not understand the benefits of the transaction.
(1) $1.50 per share payment to Linn Energy for rejecting offer the BRY board approved.
(2) Linn is the largest upstream MLP in the U.S. (bigger than all the next 9 combined).
(3) Without the offer BRY shares will fall to the pre-merger price.
(4) BRY shareholders will miss out on $3 in dividends during the first 12 months after
rejecting the deal with Linn.
(5) Linn's borrowing costs are below those of BRY. Linn just obtained a half a billion
dollar loan this month at 2% below BRY's borrowing costs and BRY has $200 million
coming due in the next 12 months. Does BRY want to keep borrowing and paying
$2 million more interest for each $100 million of debt?
(6) As soon as the BRY shareholders vote to approve this merger, the Linn units and
shares will rise and the differential in price will close to parity or close to parity. Why
risk a financial loss of $6 or more per share.
When you add up all the costs to a BRY shareholder rejecting the deal, I predict a loss
to each shareholder of $6-10 per share from the payment of the penalty to Linn for
breaking the deal the BRY board approved, the lost dividend/distribution for a year of
$3, and the decline in share price of BRY after they reject this deal.
BRY shareholders have to realize that BRY received no other offer for the company
that was acceptable to the board. That says a great deal.
As a retired CPA I would suggest that all shareholders vote for the transaction to merge
with Linn Energy's corporate entity in a tax free exchange.
Sorry, STON is down 20% from its high while the market is currently at its high for the year.
CHK is not concerned about the shorts.
Six insiders have each purchased six or seven figure sums of the stock recently.
Carl Icahn has increased his holdings over the last six months.
The company management and key shareholders want to operate
CHK with an employee count that is similar to Apache and Devon.
I expect that company payroll is going to decline by 25% over the next
six months, drilling costs are going to drop and oil production is going
to go up.
I would not be surprised to see CHK sell off its oil services and drilling
companies in 2014 and another 25% of the employees will be gone at that time.
As these events take place over the next 6-12 months the shorts should
be taken care of.
Rome was not built in a day. Give the new team of executives 12-24 months.
So far they have accomplished significant steps in 6 months.
Carl Icahn invests most of the time to sell to a buyer at a higher price. Usually a much higher price, that is why he is worth $20 billion plus. He owns almost $2 B of CHK. He would like to sell that stake for $3B or $4B.
Everything can be bought at a price. The two largest owners of CHK bought it to sell it to someone or to sell their shares down the road at a higher price. It is hard to unload $5 billion in CHK for $7-10 Billion unless you find the right kind of buyer.
The Koch brothers make around $10 billion in cash flow every year and are worth $70 billion combined. They own chemical companies and would love to have a natural gas supply where they freeze the price for the next 10-20 years.
Also, the largest oil trading company in the the world is privately held, owned by 150 partners. Their revenues are greater than Exxon Mobil.
These two private concerns could take out CHK without any concern for shareholders of their own and no financing issues. I am not saying it is going to happen but it could.
Shell and Chevron are building large natural gas plants outside the U.S. Each plant and port is costing around $40-50 billion dollars. That is just one project for each company.
Those two companies could acquire CHK, either one alone or the two could make a joint offer to split the business. Those two public companies are operating in areas that are much more problematic than operating in North America.
I would like to see CHK remain public and not subject to a takeover, but when I see two shareholders that own 25% of the company combined and they are not stupid owners but much brighter than those of us on Yahoo, what the hell do they expect.
The ten oil field service and drilling operations probably do not make CHK much money. They probably also employ 25% or more of the 12, 000 employees CHK has. If Apache and Devon operate with half that number of employees or even less, I would not be surprised to see CHK sell those companies in 2014. If they do that a good deal of overhead is gone to the acquiring company that would have synergies that CHK does not have. Companies in the same services and drilling can operate without the executives and corporate staff that operate those CHK divisions.
The joint ventures are not an impediment to a buy-out. Obviously you do not understand the oil industry. A good percentage of wells are drilled with others. I own 1-2% of 22 wells drilled with Noble Energy.
Most oil and gas drillers like to share the cost of drilling and developing wells. Who do you think are CHK's partners in drilling wells and joint ventures? Some of the names are Statoil and Cnocc, some of the largest energy company's in the world.
I do not see a sale but I see other companies entering into more joint ventures with CHK. I could be wrong, but Carl Icahn invests in companies to make them over and sell them at higher prices. He does not invest for 10-20 years like Warren Buffet. Since Carl owns 10% of CHK and Southeastern Asset Management owns 15% of the company, we are owners that invested not to hold for 10-20 years but to make an investment and eventually sell it for a good profit.
I think you are wrong and these two investors are right about CHK. It is being reorganized over the next couple of years for a sale at a much higher price.
DOW & S&P 500 are up 15% this year while Stone Mor is down 20%.
That is a 25% difference in performance. What does that tell you.
Would you sell to take a loss?