In recent history where we have 6-7 billion people using energy (the last 15 years) of the earth's history there have been 5 oil price declines of a magnitude of 25%-50%. Each of those declines corrected within a period of 6-12 months. This 5th decline which is taking place in this panic selling of energy companies is now 1-2 months old and as history shows when prices get too high they correct and when they fall to much they correct. When demand drops prices also correct and when demand increases they correct up.
I do not have a crystal ball to determine when prices will climb but after every fall in modern economic times with a world population at 7 billion the prices corrected up within one year.
Yes, the U.S. is producing more oil and gas now but the world is going to be driving more cars, planes, ships, trucks and buses every year. The world population is not in decline and wind and solar does not power jets, cars, ships, trucks and buses.
I do not know if we will be back to $80 oil or $90 oil or $100 oil in 12 months but it will likely be one of those numbers. Investors need to stop buying in to all the fear about Linn Energy and other Energy companies. 90% of the companies in energy survived the previous fall in price and there is nothing different about this one.
The U.S. will produce more energy and it just means we can purchase 10% less energy from OPEC and Canada.
Linn is hedged for the next 12 months so all the talk about cutting or eliminating the dividend is foolish. Should management ask the drilling companies for discounts? Yes, of course. Should they reduce overhead and employee counts? Yes. Should they do more EOR and a little less drilling to reduce CAPEX? Yes.
But the fear mongering should stop. 2015 is going to be a mediocre year for energy and 2016 will be back to normal.
Everyone should calm down and take a breath.
2008-2009 is not 2014. The world banking system was close to an economic collapse, 2008 was as close to 1929 as you can get. 2014 is merely another oil cycle snap which has happened regularly. I do not think you can pick a bottom. Will Linn Energy continue to go down or has it reached the bottom, no one knows.
If you are going to purchase 1,000 shares or 10,000 shares the opportunity to buy low does not happen very often. Can you time it during the next month or the next three months before it starts in the other direction.
The point I wanted to make was that many companies have seen their share or unit price crash during the last 30-60 days and this is not warranted based on world demand for energy and the state of the world economy.
The U.S. economy is stronger today than it was a year ago and it is much stronger than it was two or three years ago. The same applies to China. These are the two big engines in the world. Russia is a basket case but its currency and economy do not want cheap oil and gas, so that is really a plus in my mind in terms of U.S. energy companies.
Should Linn reduce its distribution in 2015 and start to pay off $100 million in debt every month? That is a guestion for management. That strategy might bring the price of the units a little more stability.
The problem is that COS will have close to $2 billion in debt and price of oil is no where near what they need for breakeven, so they are paying out 80 cents a year in dividend and they will not earn that amount, If they are smart they will cut the dividend to 10 cents from 20 cents or eliminate the dividend for 2015.
When this stock drops below $1 there are delisting issues.
The board needs to quickly consider a 1-5 or 1-10 share reverse split to
avoid the regulatory mess.
As the equity vanishes in value what are lenders going to do?
the amounts spent on purchases by insiders is a joke. Come on, With what four insiders spent on buys you could not purchase an automobile only the CFO spent a significant amount, the other insiders purchased amounts of shares that are really a joke if they had confidence they would have all purchased six figure amounts of stock rather than less than $10,000 each.
only one of five insiders purchased a quantity of shares that showed any real conviction on the company. The argument could be made that 75% of the insiders have no real confidence in the company. When I make a purchase in any company I do not make a purchase unless the amount is $10k or more, less than that and there is no conviction that this is something worth buying and owning. PWE has had only one real insider purchase that showed conviction that I can make some serious money if this goes up in value. The other insiders in the company have showed no real conviction by buying any significant amounts in the company, hardly an endorsement!!!
They should be backing up the truck and loading up on shares if they felt the company was undervalued.
These shares have fallen to $10 and $14 twice during the last decade.
Why would it not fall to those levels again???
yes,I agree, especially the moment oil prices reverse course for a week of trading, but that could be months in the future, first there needs to be a bottom where oil prices stop falling.
How will Russia, Venezuela and other producers survive at $50 oil?? I think they stop selling the same volumes in order to undo the damage of Saudi Arabia. If XOM, CVX and these nations that are dictatorships cut sales by 5%, in my opinion the problem goes away. If they do not, these shares fall to $10-15.
What do you mean by a "solid company". They were not profitable on the most recent financials and the cash flow does not cover the dividend.
I have lost 75% of my investment in this company over the last 3-4 years. There is no reason for new investors to really be enticed to vote when management is still in place that has made mistake after mistake. Why would there be investor demand for this company.
sorry, I did not mean "vote" I meant "buy". Why would a new investor want to purchase shares? Management is unimpressive, operations are weak, copper prices are weak. Shares go up in price when a company is increasing profits, improving the balance sheet, etc. Not happening here.
As a shareholder that has owned this company for several years I would suggest staying
away. The company lost $20 million in the last quarter. Costs of production are running
$2.50-2.75 per pound. The company has a quarter of a billion dollars in debt. With
copper under $3 there is no reason to own this mediocre mine and mediocre management.
Earnings have been declining in recent quarters and management did a horrible job of
lining up support for its previously planned gold mine and was denied permits. Now they
want to build another copper mine. With what money? And with demand not very significant
and where price of copper is stagnant and costs are high for copper production in North
America compared to South America mines.
why pay down debt when none is due other than small amounts. They just sold 7% of the company for $4 billion. The best buy in the market right now is CHK. Do the math. They need to buy all the shares they can during the next six months as energy prices usually stay down after a fall only 6-12 months.
Cheap fuel is going to cause a lot more driving all over the world during the next year. People taking trips at half price for a gallon of gas in 2015. The price will correct itself as each producer drill less wells in 2015.
Pickens is the same guy that threw a ton of money in CLNE (Clean Energy) to sell natural gas to trucking companies and automobiles. His judgment over the last five years is not what it was when he was on his game. He has lost a ton of money over the last five years with his holdings.
What are high on!!!
CHK just sold 7% of the company for around $5 billion.
Look at the market value of the entire company and analyze, analyze, analyze.
CHK sold off 7% of its assets for $5 billion. The buyer expects to make a profit on its purchase. So waht is that 7% really worth. Then equate that divestiture to what CHK is retaining for development over the next 20 years.
Remember, the worlds airplane fleets for cargo and passenger planes is going to double over the next 15 years and they burn lots of jet fuel, not wind or solar. China's and India's car, bus and truck fleets will double in size over the next 10 years and 95% of the cars sold will burn diesel or gasoline.
The trend is the friend of the energy producers forget this temporary over supply vs. demand. These situations have reversed themselves after 12 months. Energy producer wealth is build over each decade not each 12 months.
When CHK sold off the 7% of the company for $5B, the buyer had plenty of oil and gas engineers, geologists, economists and accountants from within the industry help them with their due diligence before they spent the $5 billion. I wonder what number they came up with in terms of return on investment? Most big oil and gas producers will not spend money unless they see a double digit annual return on their investment: I am talking 10% and up. In addition to paying $5 billion for acquisition, the buyer still has to spend a great deal of money to drill each well in the future inventory. I am thinking this purchase is going to cost not $5 billion but closer to $7-8-9 billion.
When CHK closed on the sale of 7% of the company this week, we need to remember that the buyer not only spent $5 billion on the purchase but they also have billions more to spend on the purchase to develop it over the years. I am thinking they had to commit not just $5 billion but possibly a few billion more. We also know that energy companies expect a double digit annual return on their investments. They are not interested in a 5-9% annual return on invested dollars.
So what did the buyer company expect this $5 billion acquisition would really return to them?
Take that number and apply it to the remaining 93% of production, land holding and other assets held by CHK and the SHORTS are going to be in deep trouble as other investors beside Carl Icahn realize what CHK is really worth once the rating agencies give them an investment grade rating.
When all the investors start making a run into CHK sit tight for the ride. It may not be for another six months but hold on.
company entered two development projects on two major skyscrapers that are performing terribly. Also they own 49% of several student housing projects that they do not control. No major investor wants to take on the two lousy performing high rise high end projects where they only own a minority interest nor do they want to take on the dozens of student housing locations where someone else owns the majority interest.
Who wants to be a passive investor in under performing real estate?