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  • Linn Energy - Is A Rebound On The Horizon? [View article]
    The speculator method of pricing oil is showing a major fault in the process. No oil producer in the world is able to either make money or for the really cheap oil, they can't meet their social program costs without using savings. Oil exploration is an expensive and risky proposition. The disconnect between demand and supply is really quite minor and doesn't support the low oil price. The Saudis have deep pockets, but the rest of OPEC is in a position of cutting social programs which creates a rebellion of the populace and chaos. World demand is going nowhere but up and even at high prices it will continue to go up. The world refuses to do without it.

    I can't help but think that some major producing country will just have had enough and set a price for their oil. Russia, for instance, produces 9 mbpd, far, far more than the oversupply number. Grumpy and unhappy customers would be forced to pay their price or do without. Other struggling counties would see the benefit and set the higher price for theirs, too. The OPEC poor will split from OPEC if necessary. They aren't too happy with the Saudi's anyway for increasing production and driving the price down. Something has to give and when it does, Oil will go back up faster than it went down. Meanwhile, we can only hope that the oil companies don't go belly up for all the wrong reasons.
    Aug 18, 2015. 12:06 PM | 4 Likes Like |Link to Comment
  • Bloomberg: BP seeking bids for $2B in U.S. pipeline operations [View news story]
    I know few agree with me, but I really believe oil prices will rebound far faster than most think. Speculators deal with greed and will do silly things to make money. They all know oil is far below it's value and are just waiting for a chance to buy futures and still scared to do it.

    I can totally understand BP wanting out of the US. Our system of never ending penalties make it obvious that anything in this country is a huge liability and especially for companies not based in the US.

    I would never underestimate the value of pipelines, either, for those buying. The only oil segment doing well is in that industry and they are in the best financial position to acqirre them. The bidding might surprise folks. It wouldn't surprise me to find that Exxon would be interested and wish to diversify more.
    Apr 21, 2015. 11:04 PM | 4 Likes Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    Hi rip. I can never make sense of anything out of EIA. I think part of the problem is they are always working on numbers that are several months old.
    Their latest report this week briefly mention the refining capacity issue and admitted they didn't know our capacity for light oil, but would publish that in a "future report". The admitted it is a significant issue. It's been growing our surplus for months and they are just now figuring it out? My guess is we are limited to about 8.2 million bbls per day and the refineries have reached their limit. Conversion to handle more is capital intensive and slow, anywhere from 2 to 5 years. I see no option but to allow US exports and the sooner the better or we will quietly destroy our oil industry. I am not sure that exports are even a priority for Congress. Probably because they rely on EIA data or maybe because they are just generally clueless about most things.
    Apr 9, 2015. 10:49 AM | 1 Like Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    Thanks, rip. I had found other articles from a year or so ago that discussed the problems, costs, and long time frames that refineries face in trying to reconfigure for our lighter oil. I guess what bothers me is that so many people are blaming the surplus on "guesses" and ignoring the real issue of refining capacity. I thought the link below did a good job of explaining the refining issue.
    Apr 4, 2015. 03:40 PM | 1 Like Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    Kinderer, I guess I do want to chose my term as they are totally different things. Rig count refers to new drilling and is really a cap ex issue. As long as some keep drilling, output will increase until the count is so low that it doesn't make up for the existing well decline curves. I have seen no reliable info on any wells being shut down whether low producing or not. I think Liz Ann is awesome and she is one of few that make sense of chaos. I did find more proof that our growing surplus is refinery related and not a problem that can be easily fixed. It is expensive and takes 2 to 5 years, so I have changed my position on exports. If we don't allow them, we will be forced to shutter many wells when there is no place to store oil and we can't refine but a portion of our output.
    Apr 4, 2015. 03:20 PM | 1 Like Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    Somebody correct me if I am wrong, but rig counts are drilling rigs and not a count of producing wells. In other words, your term of "the least productive wells" makes no sense. Maybe you mean rigs in the least productive fields are the first to go, but you would then think those rigs would be snapped up by the better fields. It is still a cap ex issure. Rig count is a leading indicator of increased production as those new wells go on line. I saw an piece by Liz Ann Sonders on Schwab that said exactly what you did regarding the least productive wells and tried to send a note about it. She admits to not knowing much about oil and I am sorry she attempted to talk about it.
    Apr 3, 2015. 01:24 PM | 3 Likes Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    Yes, they have to dilute it to flow in pipelines, but not much of their oil flows through pipelines and most goes by rail. If nothing else, I am surprised at how hard it is to get info on refining in general. I have read unconfirmed articles that claim that refineries have fixed amounts of different grades that they can handle and that it is difficult and expensive for them to change that mix. For instance, they my need heavy crude from Canada in some amount because they are set up for some amount of it. I am hoping to get an education in refining. The EIA was of little help.
    Apr 3, 2015. 01:05 PM | 2 Likes Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    I have heard the contango argument, but it makes less sense every day. We are consistently putting about a million bbls/day in storage and that number hasn't varied for months. I just can't believe that speculators are that consistent and the growing storage is part of what is holding WTI down. I am still leaning toward a refining capacity limit being the cause and it would explain the consistency.
    Apr 3, 2015. 12:46 PM | 1 Like Like |Link to Comment
  • Linn Energy: The Distribution Could Be Heading Lower [View article]
    OK, a question for the group. We keep hearing about an oil surplus in storage and yet nobody explains it. I considered several reasons: refinery contracts for foreign oil, some upstream companies holding with hope for a better future price, and that refineries just don't have the capacity to process our lighter crude.

    The latter seems most likely as we converted the refineries to handle heavy crude decades ago when US production was in decline and then even more modifications to handle the very heavy crude from Canada.

    If it is refining capacity and too difficult to easily fix, then why not mix Canadian crude with our light oil in storage until it is heavy enough to refine?
    The growing storage problem is depressing WTI and maybe the world market because of perception. if we could refine all we produce it should have a positive effect on oil prices.

    Apr 2, 2015. 10:29 PM | 5 Likes Like |Link to Comment
  • Linn Energy Bows To Reality [View article]
    Oil is a commodity and it moves as such. I would not be surprised to see WTI at 65 by summer and end the year at 80. Most of the folks forecasting the pice of oil don't seem to have a clue, the range being from 30 to 100 by year end. I think the ones at 30 are history and the ones at 100 are closer, but dreaming. I am happy with any stock that is surviving current and past prices. I wouldn't bet much on 10 years from now, but for the next couple of years, I fully expect oil to recover very nicely. The gamblers that determine price will switch horses in a heartbeat when the futures start moving up. It will be interesting to watch.
    Feb 23, 2015. 03:52 AM | 9 Likes Like |Link to Comment
  • Linn Energy Fails To Make The Bold Decision [View article]
    I think people need to relax. The fall in oil was abrupt and steep, but not much has really changed in the world. We don't have a glut of oil in the market and demand will more likely go up with low prices. We really have no substitute for oil in the short term or even much longer than that. There may be a time to exit oil stocks, but this isn't the time and they are more likely to rise as abruptly as they fell. I find it odd that people are talking about low oil staying there until 2016. I guess fear sells, but they picked a bad one on oil. I think oil will go up almost as abruptly as it went down and probably by spring or early summer this year.
    Jan 20, 2015. 10:40 PM | 13 Likes Like |Link to Comment
  • Bank Of America: Get Out Now, The Bank's Coffin Is About To Be Nailed Shut [View article]
    I have zero love for banks for sure and own none of them. They have too high a tolerance for risky investments and too low a tolerance for loans to small/medium businesses that the low interest money was intended for to grow the economy.
    That said, Lumber Liquidators is a poor measure of anything. They only sell flooring, a market that has become more competitive. Home Depot and Lowes seem to be doing just fine with a far, far, wider diversity that is more reflective of the market for housing renovation. I have never been impressed with the LL stores, help, or merchandise and suspect they have a problem not associated with anything related to the economy. To me, it's like looking at Sears long downfall trying to relate it to the economy rather than their old stores in aging centers and their failure to change their business culture.

    Your comment on QE made no sense either. We have been on a course to reduce QE every month since last year and while the market paniced for a day or two when they first announced the plan, the sheep stopped being spooked and we will end QE very quietly in Ocotober when they have finally phased it out. Do you really expect that last 10 billion going away to install panic in investors when it has been the same amount of reduction for months? It won't even affect long term interest, for many reasons, not the least of which is that they won't flood the market with sales of what they bought. We may not like the Fed or what they attempt to do, but they aren't stupid and will divest themselves of their Tbills by letting the short term ones mature and sell the 10 year ones a little at a time or just hold them until maturity if rates don't naturally rise.
    While ending QE won't hurt us, neither did it really help anything. Banks took the almost zero interest loans and didn't loan any of it back to anyone to help the economy. I think the Feds were quite surprised. The QE bond buying program was supposed to raise Tbill rates and it had virtually no effect, so they were surprised again. Still, it was a no harm, no foul, approach that people will study forever. It may yet pay off when Tbill rates eventually go up and banks finally let loose of the cheap money they bought.
    The surprise that seems to escape everyone is that the huge bailouts of so many industries is mostly paid off. We tend to remember the huge bailout number and will just gloss over the real and minor cost of doing it. We are actually still making money on the Fannie/Freddie loans, now over our intial costs by a lot in interest and they may still pay us back the orginal loan. If calmer heads looked at the wider and more devastating effects of just letting the financial and auto industry to fail, they would see that we did that one correctly at virtually no long term cost and the ecomony is in far better shape than it could have been.
    Banks are still a worry not because of things mentioned, but because they continue to do stupid things with their money no different than they did before that caused this whole mess. Ride them up if you wish, but put a tight stop on them. Better places for you money in any maket.
    Jul 12, 2014. 07:51 PM | Likes Like |Link to Comment
  • Refiners slide sharply lower after U.S. widens oil export potential [View news story]
    Another article said that the loss of refineries in Iraq would drive up the price of gasoline everywhere and that would improve refinery margins.
    Jun 25, 2014. 02:32 PM | 1 Like Like |Link to Comment
  • Linn Energy: A Return To Normalcy [View article]

    I like the oil sector, but not anywhere near enough to have 100% of my portfolio in it. I may have 20-25% in it in numerous stocks and even that makes me somewhat nervous.

    It would also be nice to read far more comments that stop the political nonsense of blaming Obama for the horrible results of the last Bush administration.
    Jun 14, 2014. 11:21 AM | 3 Likes Like |Link to Comment
  • Linn Energy: A Return To Normalcy [View article]
    I am somewhat confused about your comment on the MLP sector on those taking on risk while chasing yields. There are many other options on yield, including many I own in other segments. From my viewpoint my others are far more risky than the MLP sector. I also own far more boring stocks that produce far less dividend return, but struggle to increase value and have no tax advantage or deferment. It seems in my portfolio, that the MLPs are doing fine in growh and give me great distributions to buy any other stock I want. Most of them are very well run and the owners have far more at stake than I do. Worst case, their value will fall, but they will continue to beat any other yield in percent over purchase price and make selling them less painful as they drop.

    Maybe it is because I am older than most, but I think most MLPs, including Linn will pay me well for a long time. I think risk is based far too much on the past and most don't pay attention to that, either. It becomes a question of whether the industry is in a growth period, or merely hanging on and struggling to maintain market share.

    From my years of observation, we can't do without oil, and there continues to be less of it available and we are tapping the last of it by fracking today. We have no more Saudi fields that pump unlimited barrels and it is getting harder to find and extract what we do find. I see no future when oil will not be in demand, regarless of all other forms of portable energy. I see far more risk in investing in a stock that pays much lower dividends and can go the way of many companies that are either gone or about to be. I will happily put my trust in oil over the fickle trends in consumer options over where they eat, what they wear, or what they buy to entertain themselves.

    Put far more bluntly, we depend on oil or gas to generate electricty, coal being a far worse option for many reasons. The pictures of China should give us a clue. Our ability to make things more efficient will help us move to solar, but we are decades away from it making a dent in petroleum. Experts are everywhere in the price of oil in the near term, but I think they would all agree that in a little longer term we will find the cost of oil going up a lot and I will be happy with all of the oil related firms I own. Petroleum is the only protable fuel we have. Take advantage of those that produce it, refine it, or transport it. I think it will turn out to be the most profitable segment for years. I just don't see the MLP sector as risky, much less compared to the others.

    Jun 12, 2014. 03:44 AM | 19 Likes Like |Link to Comment