So Cramer comes out with another brilliant prediction, price of oil is either going up or down. I can see why he is so valuable to CNBC.
" IF you buy the stock and by 2017 oil hasn't rebound, will there be a line left?"
I think Line can hang beyond 2017 and is one of the reasons why they are suspending the distribution, preparing for the worst. First round of debt isn't due until mid 2019.
I think more damage in SP has been from retail than institutions. Retail always seems to over react. I'm sure the funds who have a $5 threshold have sold but I wouldn't be surprised to see that the "big boys" added, when the smoke clears and 13F's are filed later.
I don't think anyone but the shorts see it as a positive. Now there are also those who think this great fall in SP is over done and if you have the nads, could be a great entry point or an opportunity to dollar cost down. Unfortunately it will take patience and time. What Line did with the pending distribution halt was put themselves in position to wait this thing out as long as financially possible.
6.50% senior notes due May 2019 ------------- $ 1,200,000
6.25% senior notes due November 2019 -------- $ 1,800,000
8.625% senior notes due April 2020 ---------------$ 1,173,619
6.75% Berry senior notes due November 2020------$ 275,177
7.75% senior notes due February 2021 --------------$ 994,000
6.50% senior notes due September 2021------------- $ 650,000
6.375% Berry senior notes due September 2022------$ 572,700
Enron was a scam, period. They intentionally hid debt and went so far as to hire accountants and staff to cover up losses from bad deals. Line is a victim of poor judgment with their aggressiveness in making acquisitions and over leveraging before the oil crunch but they are not guilty of trying to under report it or cover it up. It's all right there in their 10Q if your interested.
Line's current stock price has no effect on the daily business. Stock prices are artificial and are often wrong they over shoot in both directions. I remember back in 2009 GM was trading for ONE DOLLAR and is now over $31. What were goofballs like yourself saying back then. Line is not like Enron and you know it, IDIOT.
Analyst Actions: Linn Energy Downgraded to Sector Perform At RBC Capital Markets, Price Target Cut To $5
BY Midnight Trader
— 9:32 AM ET 08/03/2015
09:32 AM EDT, 08/03/2015 -- Linn Energy, LLC ( LINE ) shares were downgraded to sector perform from outperform by RBC Capital Markets, and the firm lowered its price target to $5 from $15.
"White cited the U.S. independent EOG Resources, which told investors in May that it could earn a higher return producing oil in Texas at $65 a barrel then than it did at $95 in 2012, thanks to new technology and other cost-saving measures."
The point is new technology is bringing the costs down so much that profit can be made on much cheaper oil. The shale industry will not need $100 oil to survive in the future.
Although the port city has little crude of its own its mercantile economy depends to a large extent on the wealth and economic activity that is created around in Abu Dhabi, Saudi Arabia, Qatar and Kuwait.
These energy superpowers create the economic activity which sustains Dubai and its large service economic which rests on the industrial port of Jebel Ali and the emirate’s position as a transport hub. When oil is trading at $100 per barrel this model works well. International companies base more of their employees in Dubai and this in turn creates demand for real estate and services such as banking and leisure.
However, with oil now trading at around $50 per barrel and some forecasters warning that crude may even drop to levels much lower Dubai’s economy is once again looking extremely fragile.
The International Monetary Fund (IMF) warned recently that Dubai was once again loading up on debt. According to the fund GREs have increased their net debt positions to around $93bn (£60bn) over the last year, while the emirate’s total debt is arguably unsustainable at around 102pc of gross domestic product.
At the same time some key drivers of Dubai’s economy are beginning to stutter. Real estate - a key driver for the economy and one partly linked to expat employment - is in reverse. According to JLL transactions fell by almost 70pc in the second quarter.
Of course Dubai will also be able to fall back on the financial support of Abu Dhabi and the wider UAE. However, the fall in oil prices is now taking its toll on the entire federation. According to the IMF, the UAE’s fiscal balance will turn negative this year for the first time since 2009 with a deficit equal to 2.3pc of GDP expected.
Although this isn’t calamitous and the UAE as a whole has billions of foreign currency reserves the falling oil prices is clearly a major risk.
Just keep an eye out for abandoned supercars at the airport.
“Most of the shale oil and gas is produced from a relatively small percentage of the shale wells and a fairly small percentage of the fracks in each well,” White said in an interview. “When the industry learns to drill more wells like the best wells and to make more fracks productive, you will see a vastly greater amount of oil and gas produced in the United States at the same total cost.”
“This is a topic I discuss weekly and almost daily with senior executives of the service companies and the oil and gas industry,” White said. “There’s a lot of progress being made. In this sense, that is the next big chapter in the shale revolution.”
As an example, White cited the U.S. independent EOG Resources, which told investors in May that it could earn a higher return producing oil in Texas at $65 a barrel then than it did at $95 in 2012, thanks to new technology and other cost-saving measures.
“They’re producing more oil per dollar spent,” White said of EOG, which he noted is not one of Lazard’s clients.
Among the innovations coming down in cost is micro-seismic technology that interprets sound waves to more precisely guide the direction of drilling and the application of fracking, he said.
The energy research firm Wood Mackenzie offers a similar outlook in a new paper that draws a comparison with the lull in Gulf of Mexico drilling following the blowout of BP’s Macondo well in 2010 and a government moratorium on new wells.
“Operating practice and company psychology changed when players stopped running on a leasing treadmill and increased their focus on basin science,” Wood Mackenzie said.
Once offshore drilling resumed, the average size of discoveries was 30 percent larger, even as the number of discoveries fell by half, according to the analysis, which credits producers with using the slow-down to enhance the ways they vet prospects and design wells.
“Today’s tight oil wells are better producers than those drilled only a few years ago,” Wood Mackenzie said, referring to shale formations. “Expected ultimate recoveries have grown by over 10 percent each year with the application of better drilling technology, more robust modeling and experienced asset teams.”
With the “pencil-sharpening” exercises only increasing in the oil and gas sector, those improvements in ultimate recoveries will continue onshore as well as offshore, it added.
Said White: “If the last 10 years have been a shale revolution with a lot of excitement and celebration, then over the next 10 years we’ll be watching the revolutionaries pay greater attention to the critical task of deploying technologies that steadily lower the average cost of production.”
Hey Ron I know the stock price has been devastated the past few days mostly because of the news about suspending the distribution but if the company continues to pay down debt at discount with this money isn't the company on more solid ground than they were before the announcement. I remember having a conversation here with you several months back about this very same thing and we both agreed that it would have been the prudent thing to do back in January. Also the Drillco deal will pay Linn 15% working interest immediately while GSO gets 85%. Eventually Linn will get 95% but time length to achieve this is impossible to quantify. Anyway I would rather give up the distribution now and strengthen the balance sheet for a nice SP move later than collect a nickel or dime for a year or two until Linn closes the doors for good. This is going to take some time and hopefully this strategy will allow Line to hang around long enough to catch oil on the upswing.
From Linn's website:
GSO will fund 100% of the costs associated with new wells drilled under the DrillCo Agreement and is expected to receive an 85% working interest in these wells until it achieves a 15% internal rate of return on annual groupings of wells, while LINN is expected to receive a 15% carried working interest during this period. Upon reaching the internal rate of return target, GSO's interest will be reduced to 5%, while LINN's will increase to 95%.
"Doubling down tomorrow or Monday"
by goskiing99 • 18 hours ago
"May as well; if by some miracle it does survive it would give me a shot at break even. It's only $$"
I guess it's safe to say you haven't pulled the trigger yet? When you do, (wink wink) are you going to start telling us how rosy Linn's future look's?
David Kelly, chief global strategist at J.P. Morgan Asset Management, said this week "that a $29 billion decline in oil exploration and mining activity in the U.S. cut economic growth by 0.7 percent in the second quarter, a sizable chunk for an economy that grew 2.3 percent."
I agree, I can live without that .10 for awhile and watch that debt roll off. When oil eventually starts to head back to historically normal range Line will be a combination growth and distributor of cash. That's why I'm adding here, another 1000 at $4.05 today. Just don't tell me wife")