ConocoPhillips Message Board

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They argued unrecognized costs of put contracts Linn Energy has put on to hedge its natural gas production at $5 per mcf undermine the company's ability to fund its dividend. Barron's and Hedgeye both questioned whether the costs of those put contracts, a weak quarter of energy production at Linn Energy and its capital expenditure even put the company at risk of lowering its dividend.

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Cooperman argued Linn Energy has capitalized the costs of its energy hedges in accordance with Generally Accepted Accounting Practices (GAAP). Non-GAAP metrics such as earnings before interest, taxes, depreciation and amortization (EBITDA) that are often cited by Linn Energy and investors, by definition, would not include the capital expense of put contracts, Cooperman's letter stated.

Finally, Cooperman highlighted that independent third parties Citigroup and Credit Suisse have valued LinnCo (LNCO_), a subsidiary Linn Energy is using to acquire Berry Petroleum, at $35.92 a share and $39.64 a share. Those valuations are well above Linn Energy's current share prices and, according to Cooperman, take into account any tax liability the company would face in its proposed acquisition.

"[We] are of the view that the shares are undervalued and offer an attractive total return proposition -- dividend plus change in capital," Cooperman wrote in a follow up e-mail to TheStreet.

Currently, Linn Energy is a battleground stock in an energy sector filled with activist investor dramas, CEO change and corporate breakups.

At issue is whether Linn Energy can maintain or even expand its high-yielding quarterly dividend payout of 72 cents a share and whether a potential drop in the dividend would chip at the company's valuation.

Barron's and independent research firm Hedgeye Risk Management both argued that Linn Energy isn't properly expensing its costs to put on energy price hedges, which have so far helped the company either maintain or grow its dividend for 29 consecutive quarters.

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Rgchjr, you may or may not be correct when you post, "My assessment of COP is that it was poorly run." It doesn't matter to me. I bought COP when they announced the spinoff of PSX. After the spinoff, shares of COP were paying dividends in excess of 5%. That rate has decreased, not because COP decreased it's divvies, but because the pps of COP has jumped higher. Furthermore, the shares of PSX have almost doubled in value since the spinoff.

Rgchjjr, why are you being so critical of a spinoff that made so much money for it's shareholders?

Pham, I'd never consider selling my OXY shares. I plan on leaving them to my heirs. I began investing in OXY in the early 1990's and invested about $20k in the shares, for about 1,200 shares. The shares split once to become 2,400. Their current value is around $217k. And during the time I have owned these shares, the dividends have more than paid off the cost basis for my investment so, in a way, I really got the shares for free. This year, OXY will pay me $6.1k in dividends, $500 a month.

And there's one hidden advantage to never selling my OXY and leaving the shares to my heirs. Despite the value of my shares multiplying 10 fold, when I leave them to my heirs they will be tax free. The state and federal governments won't get their 30% tax cut of the profits. All the money will stay in the family and that's important in this era of economic uncertainty.

All of us OXY shareholders would like to know more about Chazen's plans to increase shareholder value. The pps has been stagnant for quite some time. But it's early, give Chazen a chance to formulate his plans and then we'll see. And of course, while we're waiting, we have the dividend income to rely on.

Besides owning OXY shares, I also own shares of COP. COP recently completed a spinoff of PSX and sold other assets to increase shareholder value. And COP's plan did substantially increase shareholder value.

Lionelman, the credit is limited to $300 for a single taxpayer and to $$600 for married. These are figures that are too small to consider when investing in ERF on a large scale. Lionelman, either you don't know what you're talking about or you are trying to save face with your wrong information about double taxation of ERF divvies.

Lionelman, I believe that your answer is wrong. If a U.S. shareholder owns shares of ERF, outside of a tax-deferred retirement account, then Canada will tax any dividends at a minimum rate of 15%. Then the U.S. can also tax the dividends at either an ordinary or qualified gains rate, depending upon how long you've owned the shares.

The U.S. shareholder of ERF can get back some of the taxes, they pay to Canada, by claiming a 'foreign tax credit' when they file their federal returns ($300 max for singles and $600 max for marrieds).

But It's definitely double taxation on the divvies, by Canada and the U.S.. And this double taxation definitely reduces the value of the dividends.

And that gain doesn't include any dividends that CSX paid out.

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Panelists said containers most likely to be shipped through the new Panama Canal would be filled with so-called discretionary cargo - material bound for U.S. markets outside the Southwest. For now, much of that cargo flows through the Ports of Los Angeles and Long Beach and then onto rail cars traveling eastward. In the future, it is possible some of that cargo could flow through the canal and then be unloaded from ships in eastern ports like Houston, Texas and Savannah, Ga.

"This is an incredibly complex matter," O'Connell said. "We can anticipate some diversion but the true extent of it? It's still up in the air. Ferdinando Guerra, associate economist at the Los Angeles County Economic Development Corp., told the committee the state also must prepare for increased competition from ports in Canada and Mexico, in addition to East Coast ports. Guerra said. "This is a very complex issue that involves many critical related factors that will ultimately determine how much of our market share is lost. It's not a matter of if. It's a question of how much market share we will lose."

According to materials distributed at the hearing, 40 percent of total containerized cargo entering the United States arrives at California ports. Less

Stockminder, I invest in other companies besides utilities. But there a couple of really neat things about investing in companies like Xel. Firstly, if you let the dividends reinvest themselves, then your total cost basis is covered in the space of about 10 years. Secondly, if the utility is a good company, the pps will also rise over time. Thirdly, after 10 years of reinvesting your dividends, you may decide to use your dividends to pay your utility bills.

My experience in 'long term' investing in Xel, and reinvesting the dividends, has been nothing but good news for me. It was if I'd made Xel a loan of $10k and they paid back the loan five fold, with divvies and pps gains. I still choose to reinvest my dividends but, if I needed the money, I could use the divvy payouts to pay my Xel utility bills for the rest of my life, without decreasing the value of my shares. Win-win situation for the long term investor. But you must be steady and patient, plenty of ups and downs over a long term investment period. But the divvy reinvestment takes away the worry.

Good luck to all Xcel long investors, no guarantee of success but they sure did alright by me.

Actually, the pps for Xel dropped to below $6 a share in the 2002 timeframe, about 4 months before I invested at $10 a share. Xel overextended their debt by gambling on a large internet play and lost. There were questions as to whether or not Xel would go belly up. Obviously they didn't and obviously I wish that I'd bought more shares at $10, but I didn't. Hindsight is always 20/20. But I'm satisfied with my Xel returns and absolutely refuse to look back and wish that I could have made more, don't be greedy.

I bought 1,000 shares of Xcel when they were in financial trouble in 2002. My cost basis was between $10-$11 pps, for a little over $10,000. Over the last eleven years I have let the dividends reinvest themselves into more Xcel shares, so now I own 1770 shares. At today's current pps of $31, that makes my shares worth over $54,000. Plus, Xcel currently pays me over $1,900 annually in dividends, which I continue to reinvest. This annual divvy payout represents about 19% of my original cost basis. I continue to reinvest the divvys into Xcel and will leave the shares for my heirs.

I believe that's what they mean by long term buy and hold investing in conservative utility stocks.

Pshonore, since there is question on this board as to whether LNCO's dividends are treated as taxable dividends or ROC, I went to the company's home page for the answer. LNCO's dividends are definitely treated as dividends and not ROC for tax purposes. Here is the information from LNCO's home page:

Tax Considerations
• Cash distributions from LinnCo treated as dividends to the extent that LinnCo has earnings and profits ◦Taxed at dividend tax rate