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User 4542301

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  • The Simple Math Behind Linn Energy [View article]
    @BuffDonor,

    " Therefore, the remaining undiscounted revenues remaining in the producing properties that can be used to retire other debt is significant. It can be used to support a new secured note offering that will retire all near term debt and stretch payments over a much extended period. Try that one on for size."

    At current energy prices, there is little to no equity in the company. Liabilities are close to equal to total assets. So, I don't know where you are pulling this "undiscounted revenues remaining in the producing properties to retire other debt" from.

    At 12-31-14, the estimated FMV of LINE's energy assets was $12.654 billion. As I understand it, that is all the estimated revenues to be realized from the oil and gas reserves, discounted at 10%. Oil and gas have declined by about 35% from the values used in the estimate, a little more actually. So, $12.654 billion times 65% equals $8.225 billion (current estimated value of energy assets). Add $2.5 billion in derivatives, plus other assets listed on 3-31-15 10-Q of $1.2 billion equals $11.925 billion. Total liabilities are $11.794 billion. So, basically zero equity. So I have no idea where you are pulling your "remaining undiscounted revenues" from. You can't borrow against value that doesn't exist.

    http://1.usa.gov/1HzAWZj
    Jul 9, 2015. 10:32 AM | 2 Likes Like |Link to Comment
  • The Simple Math Behind Linn Energy [View article]
    Daniel,

    LINE may be 100% hedged on Nat Gas for 2016, but at an average/mcf of $4.51 versus being hedged at an average of $5.12 this year. And with being 25% less hedged in 2016 versus 2015 in oil, that tells me that without a significant acquisition or oil prices rising significantly, that LINE can't maintain its current distribution through 2016.

    LINE has said that its production will decline this year, adding even more pressure.

    This is a highly risky company, IMO, totally dependent on the price of energy to maintain and grow its distribution.

    As to paying down debt, we'll see what 2nd Qtr. 10-Q looks like. Line has never paid down debt in the past, including 1st Qtr 2015.

    I honestly don't see much of a future for LINE without energy prices rising significantly.
    Jul 8, 2015. 10:35 PM | 2 Likes Like |Link to Comment
  • Come On, Let's Face It, Linn Energy Is A Steal At $9 [View article]
    " In a good Oil market, it would look average or better."

    LINE's policy, as stated in Feb of 2013, was to maintain a hedge portfolio of between four to six years. Yet, in the middle of 2014, LINE was well hedged for only 2015. What happened to their policy? I don't agree with your assessment. Too much debt, LINE has never paid down its long term debt, and not enough hedges to protect it from an extended downturn in oil and gas prices.
    Jul 8, 2015. 02:44 PM | 2 Likes Like |Link to Comment
  • Linn Energy: It's About Time To Go On The Hunt [View article]
    @noknownlimits,

    "LINN is well hedged through 2016. "

    No, only through this year. In 2016, LINE is only 65 % hedged on oil, and 100% on nat gas, nothing on NGL. What the 100% hedge on nat gas doesn't tell you is that for 2015 LINE is hedged 100% on nat gas at an average of $5.12/mcf. In 2016, LINE is hedged 100% on nat gas at $4.51/mcf. So, unless oil and nat gas prices rebound in 2nd half of this year or sometime in 2016, revenue will decline significantly without a major acquisition. How do they fund a major acquisition of several billion dollars with the debt load they have?

    They have made partnerships with two other companies because they are unable to fund the projects by themselves, and those partnerships see most of the revenue going to the partners initially.

    LINE is NOT well hedged in 2016 and beyond. Time is ticking and oil is tanking.

    http://bit.ly/1D1ln5l
    Jul 8, 2015. 02:33 PM | 3 Likes Like |Link to Comment
  • Come On, Let's Face It, Linn Energy Is A Steal At $9 [View article]
    Let's wait and see if its long term debt increases or decreases in 2nd Qtr. It increased by $100 million in 1st Qtr. Diluting current unit holders is not a good way to pay down debt, IMO, It needs to be done through earnings, rather than paying out distributions. Paying down senior notes which have a 6% or so interest rate by issuing new units which have a yield (interest rate) of anywhere from 8% to 13% (currently 10.2% rate based on book value) is NOT a good way to pay down debt. That is expensive for LINE and for unitholders. I think it shows how much stress LINE is under currently.

    Keep feeding the kool-aid, Kirby.
    Jul 8, 2015. 03:50 AM | 2 Likes Like |Link to Comment
  • Come On, Let's Face It, Linn Energy Is A Steal At $9 [View article]
    I'd love to see the analysis of how Raymond James valued LINE at $14 to $15 per unit. Current FMV of all assets is about equal to all its liabilities, at current oil and gas prices, meaning little to no equity.

    Oil and gas have declined by about 35% from the 12-31-14 valuations in link. $12.654 billion times 65% equals $8.225 billion (current value of energy assets). Add $2.5 billion in derivatives, plus other assets listed on 3-31-15 10-Q of $1.2 billion equals $11.925 billion. Total liabilities are $11.794 billion. So, basically zero equity. $15 per unit in value? How?

    http://1.usa.gov/1HzAWZj

    How you get to $15 per unit seems like disneyland to me.

    LINE is only 65% hedged on oil in 2016, just six months away. Even if oil is at $70/barrel then, which I doubt, that will still be $20 /barrel less in revenue than they are getting now for 90% of their production. Less revenue for cap ex and distributions. Sounds like another distribution cut in 2016, to me.
    Jul 6, 2015. 06:41 PM | 2 Likes Like |Link to Comment
  • Come On, Let's Face It, Linn Energy Is A Steal At $9 [View article]
    LINE's energy assets were worth $12.512 billion at 12-31-14. That was with oil valued at $89.95, NGL at $39.50, and natural gas at $4.20. Obviously, those prices are far above the present prices of each product. The hedges add about $2.5 billion. LINE's long term liabilities are $11 billion. At present energy prices, LINE's debt is worth more than its energy assets and LINE's total FMV of all its assets is about $11.8 billion to $12 billion versus all liabilities of $11.8 billion. And you believe LINE is undervalued?

    http://1.usa.gov/1HzAWZj
    Jul 6, 2015. 10:55 AM | 5 Likes Like |Link to Comment
  • Come On, Let's Face It, Linn Energy Is A Steal At $9 [View article]
    "Debt level and cost level are being addressed as well..."

    Omg, talk about cheerleading. LINE's long term debt increased in Qtr 1, it did not decrease. Look at the balance sheet for heaven's sake.
    Jul 6, 2015. 10:21 AM | 7 Likes Like |Link to Comment
  • How A Part-Time Uber Driver Can Buy A Tesla [View article]
    Mario,

    To say that cars do not cause road damage is simply bunk. The city street I live on has had to be redone several times over the last 30 years, and there are no trucks that drive on that street, and few trucks drive on the old Seymour highway (now a city street) which has constant repairs done to it due to the city traffic. 4,000 pounds on the pavement causes gradual wear of the road. That, combined with heat, rain, snow, and ice causes a road to deteriorate, without any trucks, whatsoever. The gas tax largely pays for maintenance of the roads.

    If the electric car becomes the norm rather than the exception then those car owners need to pay their share of taxes to take care of the roads, period.
    Jul 5, 2015. 06:29 PM | 2 Likes Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    Food for thought. We may not see $70 barrel of oil again until 2020:

    http://bit.ly/1M1DKMD

    http://bit.ly/1M1DHQW

    http://bit.ly/1M1DKMG

    I was called crazy when I provided a link to Kiplinger's comments back in mid 2013.
    Jul 4, 2015. 12:55 PM | Likes Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    No investment in oil or gas currently. Without an increase in demand for oil to offset the over supply provided by US fracking, a new dynamic in the oil demand/supply situation in the last 6 years, the long term outlook for oil and gas appears more stable to me than it did previously. That would mean not so much volatility when disruptions in supply occur because the US can turn on the spigot during those times. And if demand should increase worldwide, the US has the supply to meet that demand, which we didn't have prior to fracking.

    I think the oil/gas paradigm has been rewritten with fracking.
    Jul 4, 2015. 11:59 AM | Likes Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    Land of M and H,

    Kiplingers Mag forecast a 30% decline in the price of oil 2 years ago, citing the slow down in world demand for oil, coupled with the increased production. I don't see circumstances changing anytime soon. A bet that oil will go above $70 in the next 3 years is a real gamble, IMO.

    That isn't going to change LINE's prospects that much, given its depleting assets, the need to acquire several billion a year to keep growing, and its debt load. Not a pretty picture in my view. To grow the distribution they need the capacity to acquire more assets than what they are able to, IMO. They simply don't generate sufficient internal cash flow.

    Do an analysis of their cash flow from ops, investing cash flows, and amounts borrowed and paid back since they went public. It's an ugly picture of insufficient cash flow from ops to pay for its assets.
    Jul 3, 2015. 09:30 PM | 1 Like Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    Do the math yourself. I provided the link.

    As I have stated several times, the repurchase of senior notes was a swap for more debt, not less. Read the 1st Qtr cash flow statement: Repayments of debt $280.287 million, proceeds from borrowings $395 million.

    Total non-current liabilities at 12-31-14 $10.879 billion.
    Total non-current liabilities at 3-31-15 $10.999 billion.

    Read it yourself.

    http://1.usa.gov/1CeMU8D

    If oil stays about where it is at in 2016, LINE will be hedged 25% less then, which means less revenue.

    LINE is not worth anything close to $14 or $15 a unit. And its assets are being depleted, meaning they are worth less as time passes and oil stays where it is now. Its debt has a current fair market value in excess of its assets.

    FACTS, not FUD. The debt is a time bomb for LINE. Saying they don't need to pay it down, given the current circumstances, isn't credible to me.

    The possibility is a distribution cut or suspension in 2016 if oil doesn't rebound. The rig count is up for the last two weeks. Producers are figuring how to operate at lower prices. Translated that means more supply.
    Jul 2, 2015. 08:32 PM | Likes Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    LINE's energy assets were worth $12.512 billion at 12-31-14. That was with oil valued at $89.95, NGL at $39.50, and natural gas at $4.20. Obviously, those prices are far above the present prices of each product. The hedges add $2.1 billion. LINE's long term liabilities are $11 billion. At present energy prices, LINE's debt is worth more than its assets. LINE's unit (stock) price is not worth anywhere near $14 or $15 per unit.

    http://1.usa.gov/1HzAWZj

    Even if oil recovers to an extent, LINE's is so leveraged that using more debt to acquire assets looks questionable to me. IF oil recovers, the decline in value of its hedges will offset the increase in value of the recovery. What will LINE use to acquire more assets? Equity issues that dilute current unit holders?
    LINE is highly risky. IF oil doesn't recover within 12 months, I think you are looking at the distribution being suspended. The debt has to be paid down.
    Jul 2, 2015. 11:02 AM | 3 Likes Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    " But it doesn't seem as if it's going out of business,"

    Given its debt load, the fact it has never paid debt down since it went public, and the fact its debt is now more than its assets are worth, I wouldn't be so quick to assume it will stay in business. Raymond James is off the wall to me.

    How much do they have invested in LINE/LNCO? 537,500 shares according to Fidelity. Maybe they are significantly underwater with LINE and fear a fall to $5 or so if it breaks support.

    The balance sheet makes no sense that it is worth anywhere near $14 or $15 a share. That's just crazy. A negative value makes more sense because the debt value is more than the asset value.
    Jul 1, 2015. 05:56 PM | 3 Likes Like |Link to Comment
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