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Apple Inc. Message Board

whbog 5 posts  |  Last Activity: Feb 5, 2016 2:57 AM Member since: May 31, 2007
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  • Reply to

    Strategic alternatives

    by don1cobb Feb 4, 2016 5:40 PM
    whbog whbog Feb 5, 2016 2:57 AM Flag

    Unbelievable. You don't know anything about their hedges, do you? This company is done. They've drawn up what was remaining of their credit facilities in order to pay themselves before the bank pulled it. This means they can't be cash flow negative in the current quarter (which they will be) or they're done. Simple math. Companies like Linn need to go under so oil can bottom. Do not buy, do not hope. Game over.

  • Reply to

    At what price of oil does LINE breakeven?

    by iamnotvvorried Dec 21, 2015 11:44 AM
    whbog whbog Dec 22, 2015 2:48 PM Flag

    10% drop in global production???! That's crazy. Look at the numbers to realize how crazy that is.

    1. A 2% drop in global production would get the job done. Oil prices would spike pretty darned high if that happened -- and even that's not going to happen.
    2. Global crude demand should catch up to supply in 2017, just from global growth in demand, which is trending low right now.
    3. LINE will not be around to see the recovery in crude prices. LINE won't make it out of 2016. Hedges roll off and cash flow falls off a cliff in 2017.

  • Reply to

    So is LINE going bankrupt or what?

    by slivicola Nov 20, 2015 1:04 PM
    whbog whbog Nov 23, 2015 2:41 PM Flag


  • Reply to


    by dlw2244 Nov 23, 2015 12:54 PM
    whbog whbog Nov 23, 2015 2:24 PM Flag

    Higher NG prices do not help Linn. They are hedged much higher than current prices and they cannot cut production because they need to deliver on contracts in the hedge book.

  • Reply to

    Operating cash flow

    by classicnes4you Nov 23, 2015 1:35 PM
    whbog whbog Nov 23, 2015 2:21 PM Flag

    "In the first three quarters of 2015 LINN has over a billion dollars in operating cash flow, which will continue in 2016 due to the hedges"

    You are missing a few things.

    1) For 2016, oil is hedged 70%, compared to 90% for 2015, so for every dollar oil is below $90 cash decreases from 2015 by $1M per quarter per dollar. So at $40 crude, cash flow for 2016 will be $200M less than 2015. Just from having less hedged oil.
    2) NG is hedged at 100% for 2016, sure, but at 60 cents less per mcf than 2015 -- which is roughly $140M less in cash flow for 2016 than 2015. This happens no matter what NG does in 2016.
    3) 2017 is a looming disaster. Most crude hedges roll off and unless you think WTI gets back to $90 by the end of 2016, cash flow will be several hundred million less than 2016 and putting on hedges now is much more expensive than it was a year ago.
    4) Linn's crude production is flat at ~$570MM capex. Debt service is ~$550MM.

    So at $40 WTI, cash flow is reduced by $200MM + $140MM = $340MM for 2016 compared to 2015.
    At $50 WTI, cash flow is reduced by $160MM + $140MM = $300MM.

    They are already technically in default according to credit agencies as a result of the distressed exchange and the second lien notes they issued had a 12% coupon. Bankruptcy is looming by the end of 2016 or sooner. Chances are they will enter bk sooner than that to save the company from liquidation, but unitholders will get nothing.

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