We don't know full extent of coverage yet, but it should be materially higher once all of the puzzle pieces are in place.
As I've said before, Linn is slowly rebuilding this company back into the mold that they abandoned several years ago. They are coming full circle and the unitholders are now the better for it.
Now leverage must be dealt with and growth prospects will once again be restored.
Yes, it was sandforbrains hubris that forced him to leave. His inability to deal with his imperfections. He deep need to seek approval from the board. He never received it, and he left like a petulant little 5 yr old. Stormed off pouting and muttering nonsensical gibberish.
They mentioned the Granite Wash in the release, but the reality is that it doesn't matter if they fund it with proceeds from the Wolfcamp II or GW.
The key item is that the interim financing goes away and they do not need to either issue equity or debt. This is about rationalizing the portfolio and removing the portions that do not fit well in an E&P LLC. Linn has proven that they could not manage a hybrid LLC. Now, we should expect results to be much less volatile and management should have a much easier time dealing with operations rather than on whether they are drilling dry holes. The original model was good and they are finally returning back to it after what can only be described as an ill fated foray into being a hybrid. Now with original game plan back in place, it should be back to arbitrage as usual.
Now now foolish Norris, you place far too much value on PV-10 numbers, when must never forget that future prices can decline, lowering PV-10. It is why things like you are so clueless. Forgot about going concern status, major oversight on its part.
Poor poor Norris. His only friend sandforbrains left him all alone on the board.
At least the board quality has improved without that nervous twit and his non-stop copy and paste. He was such a dumb clown. Always confused and getting things completely backwards. Finally his hubris was the end of him.
sandforbrains was a clown, seeking approval on the board. He got his rear handed to him in a paper sack, spouting off about things that he clearly had no understanding of.
He was quite good at copying and pasting though.
As for my political beliefs, no, I'm not a progressive. Wrong again (you have quite a track record going).
But the board is so much cleaner without the nitwit sandforbrains filling it up with his trash and 3rd grade level comments. A poor nervous twit that couldn't ever get anything right, and finally got so embarrassed that he had to tuck tail and run.
You see, now you've flip flopped again like a liberal. Yes, and lowering high interest rate debt is a positive. If you recall, I mentioned a refinance of high interest debt and then you argued against it, saying it was more prudent to buy back units, which didn't happen.
Yawn, I guess Kolja wasn't impressed with your plan.
Yes, we all know what the PV10 is.
I'd remind you of one very simple fact that you overlooked. Linn isn't in run off mode clown.
Depleting the reserves is not the intent and the bankers won't like it...you know, that $10 billion in debt (liability) that Linn is carrying around needs some assets to counter it..
Keep making us laugh clown. Maybe you can get sandforbrains to put on his cheerleader outfit and get out his pom poms.
Yawn. You like to gloss over that Linn choked on the Texas Hogshooter. You like to babble on about variability of the wells when you could just really say the wells were not economic.
You take a paragraph to say what could be said in a sentence.
As for voting, it is you sir clown that has at least (2) avatars (norrishappy and dadnorris1), so it is really you that needs the lecture on voting for youself! You are so easy to mock, it's funny.
As for short, no, wrong again (like always). I don't short, never have and have no intentions of shorting Linn or any other equity for that matter. But I did buy at $27 (clearly not the absolute bottom, but I never trust anyone that claims to buy at the absolute bottom and miraculously also claim to sell at the top).
Keep trying bozo, keep trying.
As for long breaks, you goofball clown friend, sandforbrains, has been absent for a long time. If he ever returns (hopefully not, he was a nervous twit) I'll be sure to remind him about his epic fail of an prediction regarding the distribution increase post Berry closing.
BTW, all your nonsense about me not liking Berry is ridiculous. If you will recall, I was one of the big supporters, because it provided a lot of nice high IRR oily PUDS to help them improve their capital efficiency (you know, not having to drill those dry holes in the Hogshooter).
Reserves need to be replaced. It's why they have maintenance capital.
Clearly you are the one that is confused (as usual).
Finally you see the light regarding the decline rate. A company of this size cannot afford to botch the Texas Hogshooter when the overall company decline rate is 30%, nor see their fabulous GW returns drop precipitously with the decline in NGL prices. Its taken you years to understand this seemingly simple matter, but alas, finally you see the light.
Linn learned their lesson. It is hard to recover when you are on the treadmill.It's much easier to recover when your overall decline rate is 15%. It also allows them to be far more selective in their drilling prospects
Now, with Linn divesting the bulk of their Wolfcamp and GW divestiture pending, we'll see much smoother returns and capital can be shifted to Berry's world class oily PUDs where execution risk is much lower and returns are higher.
Overall, these moves push Linn back towards the typical E&P model. The experiment of being a hybrid growth E&P/LLC is largely over. We will see much more low risk stuff like EOR (think waterfloods and CO2). Linn will let the c-corps take the risk and develop the unconventional plays, and will likely stick to buying high PDP packages.
I fully understand PV10.
Your antics are old, tired and pointless. Even stinky old sandforbrains did a better job than you, and he was a hopeless clown.
And despite your never ending claims that I don't know what I am doing, I continue to make very good gains, year in and year out, being primarily invested in a host of midstream MLPs/GPs/LLC as well as a variety of other blue chips.
Sorry, keep trying son. Keep trying. You are very good at making accusations, but very inept at proving them. Not once, not one single time, in the nearly 5 years I have been posting on this board have you ever been able to correct anything of mine that you claim was incorrect. Purely innuendo. It's how you operate.
Yes, that is precisely the big picure. It is all about pushing Linn back to the traditional E&P model, having a diverse portfolio (both in commodity mix, but also geographic basins) and having a large base of low decline, steady, mature legacy reserves that can be easily maintained and with predictable production decline profiles.
The ridiculousness of an E&P LLC having an "average" decline rate of 30% is finally over with...
I don't think CHK and LINE are really analogs to be compared directly, one being a c-corp that until recent years was primarily focused on natural gas and was driven primarily by aggressive drilling in the shale basins. Linn is an E&P LLC focused on growth primarily through acquisition of highly PDP reserves and they seek to mitigate risk through hedging. Now, Linn did stray some from the original plan, turning more into a growth vehicle with massive growth capital budgets but eventually they hit obstacles and have now corrected and are returning back to the original arbitrage mode.
The other thing is this, CHK's valuation was more based on future growth expectations whereas Lin's is based on cash flow. Also, CHK was putting every penny that they made, and typically much much more into drilling every year.
But the point is relevant, Linn must manage their debt load. It is presently too high compared to their current EBITDA. 2014 is a year of transition, where you will see multiple acquisitions and divestitures, lots of moving pieces. By early 2015, the picture ought to be much more clear. It will be a "new and improved" Linn. They will have digested Berry, the XOM and DVN deals and divested most of the capital intensive Wolfcamp and Granite Wash. Overall company decline will be hopefully sub 20%, ebitda ought to be up materially (driving down debt/ebitda metric modestly) and with the benefit of Berry's high IRR properties, capital efficiency should improve, all meaning a more manageable portfolio with less need for aggressive growth. Hopefully coverage ratio will be well above 1.10x as well, meaning no real worries about attacks from Hedgeye etc, since 1.10x coverage means nearly $100 million in cash that can be used to finance some growth, and coupled with modest borrowings, means far less reliance on the capital markets and the need to raise equity for moderate growth.
So, it is important then that Linn operate with more than a 1.0x coverage ratio, that they term out there debt to lengthy maturities, that they refinance higher debt when opportunity strikes. It is why companies have a CFO. It must be actively monitored and managed. It is also why many of the investment banking houses prefer them to operate with a leverage ratio around 3.0x rather than 4.5x. Higher leverage is not as forgiving. But I think most will be pleasantly pleased to see that management has gotten the message and that leverage will begin slowly trending down as they do 1031 swaps, turning non producing acreage and divesting relatively newer (i.e. higher decline) production for more predictable declining long lived production that is further down the hyperbolic decline curve.
That should read EPA buddies. not EPD buddies. Big typo there! EPD being my largest holding by a long shot..I am definitely pro EPD and anti EPA!
Sorry, not a believe in global warming. I'll let bozos like Al Gore and Obama's EPD buddies be the champions for that smoke and mirrors game.
All rationale scientist will tell you that the earth isn't warming up, at least over the last 10+ years. Each year that passes provides even more data that the warming is a hoax.
Sorry to burst your bubble Norris, but you must have forgotten that I am not a liberal. I don't support our current puppet regime. Sorry.
Actually I doubt anyone has forgotten about Kinder Morgan. KMI is doing quite nicely. As Kinder so eloquently put it on the call, "you sell and I'll buy and we'll see who is the better for it in the long run".
Kinder was also fond of closing his annual reports and conference calls with "the best is yet to come"..
And yes, he was always right. He delivers, like clockwork. He made me a pile of money on the first KMI and is making me good money on the 2nd coming of KMI. The days of monster growth are over due to the large size, but KMI is now a nice compounding cash flow machine.
I have no clue why anyone would bet against Rich Kinder. In my opinion, his only real peer was Dan Duncan who had extraordinary vision and also the incredible ability to surround himself with talented and driven individuals that he would claim are far brighter than him (but he had the money!). One might argue that a relatively newcomer to the game would be Kelcy Warren.
Yes, I;m making good money on Linn/LNCO thanks to their epic mismanagement and now recovery.
To bad sandforbrains isn't here today to loan us his calculator and figure out our nice returns for us like a good little lackey.
I guess he is still moping like a 5 yr old because his prediction of a distribution increase the Q after Berry closing never came to pass. Epic fail on his part, but it is to be expected from trivial peons. It did not know how to respond after having egg on its face, so it went away like a petulant little child.