Norris please look at the 17 comments under the article when you have time.
July 25, 2013, 5:49 p.m. EDT
Omega Advisors’s long-term stock picks
This ...[ calling a distribution a dividend.]
was NOT the "error(s)" that the readers were complaining about.
.......a correction was made which I mentioned, but you can still kinda figure out from the strong reader comments below the article some of what they originally wrote.
ops, you like that one best?
I like another comment there by Ruby and two by Fredrickson, but they are all pretty interesting....especially now looking back a few months.
You and [everyone else] will probably find the 17 comments under that article pretty interesting....feel free to post any comment you like the best.
From the looks of it some of the some of same readers from here commented about that article....with some fairly "strong" comments.
Easy to find it:
July 25, 2013, 5:50 p.m. EDT • CORRECTED
Omega Advisors’s long-term stock picks
Oh, and they did post a correction which is also worth reading.
ops...well, I see you are a reader...okay.....
When you are reading it, if you still bother to,....you might like this:
July 25, 2013, 5:50 p.m. EDT • CORRECTED
Omega Advisors’s long-term stock picks
Specifically, See the 17 comments under that article for some interesting reading.
Norris I do not know if that "targeted " number is prudent or not or even if that is how they do things.
I see so much going on that I almost do not know which will have more impact.
I see some of what you mentioned.
Like: NGLs prices rising
Oil above the hedge prices so that 16% (the put part) for 2014 looks like some added profits
Gas at a 5 year high& if it stays there for a while...over $6 and a percentage of 41% puts for 2014 should make Q1 2014....really good.
I think we will hear an update on Oklahoma Mayfield Hogshooters IP rates, about Permian basin production & exit rate for BRY (My guess is about 45,000boe/d) and something about granite wash drilling.
I think the main driver that I see that most seem to ignore is the acquisitions for 2014.
.....I agree with what Mr Amoss said last year after he revisited the info after the BRY info was out about Linn & M&A.
I am also very interested to hear about their Mississippi lime farm out agreement and anything about oil in Kansas since they have a large acreage in KS producing gas.
Linn is #1 in KS for gas in 2013 but SD is #1 in KS for Oil.
ops, Texas is the #1 state for OIL & Gas production.
And if you may have been wondering about Linn's gas production in Texas this may be of interest.
So, here is Texas:
2013 Texas gas production
#18.......... LINN OPERATING, INC.......... 77,707,912 (MCF)
It looks like Linn moved up in rank from #25 for gas production in 2012 in Texas, to #18 in rank for 2013.
With the new BRY Permian basin acreage and production, I expect it will move up in rank again in 2014.
How about Oil?
ronharv, I think you seem to be a little worried about things that you do not need to be worried about and here is specifically why.
Specifically....Slide #33 in the last presentation should eliminate the concern about dcf....take a peek when you have time and please let us know if that is any help.
Please also keep in mind that BRY closed on Dec.16 & I think one of the notes at the bottom somewhere says that BRY is not even included in the numbers yet.....so I expect Q1 numbers to look a bit better still because of the added BRY production, as well as higher prices for NGLs (unhedged-with direct benefit as prices go up) & also the oil & gas prices both now above the 2014 hedge prices.....and....how nice the puts work at times like now?
And, the 2017 oil prices do not (now) matter.
.....as I explained several times before.
..It is not even 2015 and way before 2017 more hedges will be added and not at a time when prices are low, but when they are higher.
...and I even posted a specific example demonstrating this and how Linn adds to their hedges over time.
You can see it again by searching my message history or we can find it and re-post it and you can also check what I described in the past presentations for verification on the hedging slides or in the hedging updates.
So, try not to worry to much about 2017 right now since it is only 2014.
That is a concern you have mentioned before. I wonder why you keep repeating it?
Well, I really see no concern for 2017 now unless you can enlighten me as to why, or if you really think that sometime before 2016 that you will probably not see oil prices for delivery in 2017 way above the $79.91 that you mentioned.
ronharv, I do not know why you seem to be concerned about dcf since the last few presentations say that they have more cash than they need for distribution plus....they reaffirmed guidance and posted the percentage above. They said that Q4 excess of net cash is 5% to 10% above distributions...see slide #33.
My concern is on slide #8 in the most recent presentation.
I expect either a comment about how "robust" the M&A environment is .....now that LNCO is a proven acquisition tool to buy up c-corps.....which seems a bit like code for we are looking to buy the next one.
OR, since slide #8 shows the last 4 years of acquisition totals as:
That implies (to me) that in 2014 they will buy more than the total was for 2013 since there seems to be an increasing trend.
So, that may imply that since there are only 4 CCs.....each one of the conference calls should have some info on what they will buy....because that is a lot to buy all in one year.
So, I expect to hear something about what they will be buying next.
Norris thank you for looking and for all of the detail.
That is the correct presentation, but please look at only the last 3 slides.
Norris, when you have time, please look at the end of the Feb. 14 2014 Linn presentation [the most recent one] and comment on what they did with the BRY revolver...etc.
You make a very good point with this:
"guidance did not include any improvement in ngl pricing"
I think that the next quarter will be even better because of the added production from BRY & the increased prices for gas & oil & NGLs for a longer time than the 2 weeks that were left in 2013 [bry closed on dec.16].
"Just because I do not think management will increase the dividend does not mean it is an unreasonable thought.
I think that they will increase the distribution.
........only because I have not seen anything anywhere saying that they will do anything other than what they already stated last Feb. 21, 2013 in the news release about the BRY closing and the distribution increase to follow it in the next quarter.
go5shawk, I do not agree and it seems to me that you missed the point.
What management tells you is what matters, not what you think that they should do or what they might do.
I also think that it does not matter much because it seems to be somewhat contrary to the posted Linn strategy where they state that you should expect them to be looking now to be buying more accretive acquisitions.
You will probably hear more about it during the conference call.
And on your concern about cash, in addition to the added revenue from the added BRY production & the increased prices for gas & oil since the BRY closing, ...... please see slides #36 & 37 with attention to the new cash after the BRY closing and what Linn did with some of that cash.
Now about this:
" As for your year old quote quote that Linn was intending to raise distribution in the quarter after the BRY closing, a lot has changed since that was written "
Well, there was also a $525 additional accretive acquisition in the Permian basin which added to production.
Still,....that may be true...except that there has been NO other information to support your preference and NO information that I saw anywhere that says anything other than the distribution will be raised in the quarter after the BRY closing as was stated on Feb. 21, 2013 in that news release....which is now....Q1 2014.
Please feel to post anything that you saw indicating otherwise......I would like to see it.
The reference is indeed a year old from the news release of Feb. 21, 2013....BUT there is nothing since then to indicate otherwise that I saw.....except what you posted as what you think they should do.....which may be how you feel but really does not matter.
This is the relevant part of that news release:
"The recommended increase is anticipated to take effect in the quarter immediately following the closing of the transaction, "
richardleeds, you make some interesting points and here is where to see some examples.
On valuations first.
Linn paid roughly about 17,000/acre to enter the Willisoton basin/Bakken in 2011 which seemed about the highest price at that time....well, recently Oasis just paid about $40,000/acre.
Oasis & Continental are some of Linn's operating partners in ND.
Statoil paid about $8,000/acre to buy BEXP a while back.
After Linn entered North Dakota and after BEXP was bought, Continental resources discovered & published about the multiple benches of the Three forks. Then the USGS updated their 2008 recoverable reserve estimate to now also include the Three Forks.
And then Continental also published their own Williston basin oil-in-place estimate of 903 Billion barrels which exceeded the 2000 estimate by Leigh Price of 503 billion barrels,
Continental also had a recoverable reserve estimate first of up to 24 billion barrels of oil and later at up to 45 Billion barrels recoverable oil.............and they used a 5% recovery rate.
Continental shows a short video from their webpage about Ecopads and walking rigs which is very interesting.
They have info on the advances as you mention in their presentation and the cost savings with their 14-well pad.
This was posted and will also be of interest to see what may be on the way for the Bakken area:
"Forty-Eight Wells Per Spacing Unit -- Lynn Helms
Yesterday it was noted that Lynn Helms had said that in the better Bakken, it might take 48 wells per spacing unit. I had not seen the source for that statement.
Another reader was gracious enough to provide the link (see below). This is an incredible briefing provided back in January, 2013. I am amazed that the regional print media did not pick up on this. If any of them did, I missed it. Forty-eight wells/spacing unit in the better Bakken is simply staggering, and when this does not get a headline in the regional media it speaks volumes about local coverage of the Bakken."
coochy, on this:
"I'm not sure what you're getting at."
sure you are....
They have lots of puts shown on the hedging info and......not adding more puts for now is very different than "would no longer use puts" as you posted]
It seems pretty clear as I re-read it.
Not to you?
You posted a statement that was clearly incorrect..[" "would no longer use puts"[......and I pointed out exactly what was incorrect.
And they are currently benefitting from those puts which you can see from slide #27.
This that you now post is the statement by Linn which you post as maybe what you should have posted before.
" They said "LINN has not purchased any puts in 2013 and currently has no plans to do so."
that does not mean what you posted which was:
" "would no longer use puts"
They mean different things....right?
BECAUSE THEY ARE USING PUTS .......And...they show lots of puts on their presentation and hedging updates.
They have lots of puts shown on the hedging info and......not adding more puts for now is very different than "would no longer use puts" as you posted...
.....which might have a different result in a rising price environment, like now, since the price of gas is over a buck higher than the 2014 average gas hedge price posted on that slide [#27].....and 41% of the gas will be of some added benefit to Linn in 2014.
......and if you do ever look at slide # 27 then you will also see the two different types of collars that were added for the oil hedges also.
So, thank you for reminding us about the changes concerning the puts.
It seems that you may need to study up a bit on Slide #27 in the last Linn presentation with specific attention to the percentage of PUTS which are now at 41% for 2014 natural gas and then also hear the detailed explanation by Mr. Rockov from his presentation at Enercom.
so you have a good fundamental understanding about just how Linn hedges "differently" and how that part of the hedging derivative mix (the puts) allows for some added profits when gas goes above the average hedge prices [see Slide #27 in the most recent Linn presentation].
you will have a pretty good understanding to then try to do a back-of-the-envelope calculation by estimating the percentage of current production that is gas and using the charts on slide #27 to help to clarify what to expect.....(the same Linn presentation has the production numbers).
Please post the numbers you use in the back-of-the-envelope calculation so we can check what you find.
then we can repeat the back-of-the-envelope process for the oil (16% puts for 2014) and try to see what that looks like too.
We all wait with anticipation to see your numbers.
I do not know what this means:
"my thoughts are were is the available cash flow going in light of bry but more important in light of all the recent price increases"
and I doubt anyone else knows....and I assume it was intentionally written that way.
what is this?
"sand at chk they have been concentrating on ngl s I don't see why linn isn't following a similar focus"
What makes you think whatever that comment is trying to say?
Is that comment some kind of soft-bash-vague- implied dig of some kind?
What specifically are you talking about?
this part is incorrect:
"They stopped using puts several quarters ago"
You really should go take a quick look at slide #27 in the latest Linn presentation to see exactly what the derivative mix is and notice the percentages and the hedge prices for the all of hedges for 2014 & the other years.
Norris, do you know (or anyone else know) about what the new percentage for Natural Gas Liquids is ....of Linn's total production.
...... back in 2011 it was at 17% but that was before some big changes like the BRY deal and the two BP deals (Hugoton & Jonah) and a few other acquisitions.
I have no idea what it is now or how much it would mean to potential added profit as NGL prices go higher since the NGLs are not hedged.
............has anyone recently asked IR what the percentage of Linn's total production is made of NGLs?