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  • Update For Bond And Equity Preferred Stock Basket Strategy As Of 7/31/15 [View instapost]
    I have been following 2 oil forecasters with widely divergent views on near term prices.

    One says oil dropping to low $30's- like $32.

    Other says oil staying around $45 to $50- about where it is now.

    I am inclined to go with the lower forecast, mainly because I expect oil to continue volatility- and not going up; therefore, likely to go down.

    By 2019, I am guessing we could easily see oil at $60-$70; but I doubt the $80 that Linn really needs. But what do I know. I am NOT an oil forecaster- just an oil guesser.

    I wonder if $60-$70 oil is good enough for Linn to survive without BK. If so, I do not really get the doom and gloom predictions right now.
    Aug 3, 2015. 03:31 PM | Likes Like |Link to Comment
  • Update For Bond And Equity Preferred Stock Basket Strategy As Of 7/31/15 [View instapost]
    When behavior is not rational by presumably smart people, I seek to figure out why.
    Can you think of any reason that Linn would NOT concentrate on the earliest maturities?
    I believe Linn has planned ahead much earlier than most investors give them credit for which usually includes lies to investors in the interim. For example, when they were cutting dividends and telling investors it was "safe", I believe Linn planned cuts far in advance.
    Maybe Linn has other plans to deal with the earlier maturities, like:

    1-Large enough common offering (super dilution) to pay off.
    2-A white knight like a PE firm to provide cash.
    3-Already planning on BK and just reducing debt as much as possible in effort to save executive jobs.

    Is it possible that sales of further maturities with lower rates are easier to buy and more of the debt holders of 8.625% April 2020 are not selling for a discount?

    Any other possibilities?

    Thanks South Gent for all the time you spend sharing your knowledge and experience.
    Aug 3, 2015. 03:26 PM | Likes Like |Link to Comment
  • Kinder Morgan's Debt Level Should Scare You [View article]
    Nothing to see here folks. A copycat of Brian Nelson to establish himself as a celebrity by venturing far out into left field. Just fear mongering. Conclusion is to "hold" a stock you just tried to scare investors into selling.
    Aug 3, 2015. 02:20 PM | 2 Likes Like |Link to Comment
  • Nokia sells HERE maps unit for $3.07B [View news story]
    I hear NOK wants to manufacture DeLoreans.
    Aug 3, 2015. 11:10 AM | Likes Like |Link to Comment
  • Nokia sells HERE maps unit for $3.07B [View news story]
    Yeah. What NOK really needs is to diversify into something they know nothing about- having failed at everything they do know something about.
    Aug 3, 2015. 11:09 AM | 3 Likes Like |Link to Comment
  • Update For Bond And Equity Preferred Stock Basket Strategy As Of 7/31/15 [View instapost]
    South Gent:

    The bond market is pricing a Linn BK for 2019-2020. But a lot can happen in 4 years. Oil prices will likely recover some- not to the $80 that Linn needs- but to $65 would help.

    When Linn lacks the cash to redeem senior notes when due. I think they will sell share offerings (more dilution for common) to raise more cash. I do not know if they can raise all they will need. But Linn also has good connections in financing. Maybe they can raise more cash via private equity.


    What happens if the senior note due date comes, and Linn just continues to buy notes at a discount until they are able to redeem what is left (at par) with available cash? Can the senior note holders just wait after default?
    Aug 3, 2015. 10:46 AM | Likes Like |Link to Comment
  • Linn Energy - When Might The Distribution Be Restored? [View article]
    Casey:

    I asked an investor who purchased a small amount of the discounted 8.625% April 2020 senior notes about that risk. He said he thought there was a risk that Linn's debts are greater than the value of their assets- but I believe that depends on the current oil price when the assets are valued.

    My opinion is that if Linn reaches a due date on the senior notes, they will sell additional share offerings (more dilution) to raise any additional cash they need to redeem the notes. Then the risk is that they do not sell enough shares for the cash they need.

    But I guess Linn could just continue buying senior notes at a discount and redeem past the due date as cash is available, if the note holders do not act on the default.

    Albert Alfonso said in one SA article, it would take 8 to 9 years for Linn to turn it around and get debt reduced to a satisfactory level. I do not see a distribution again until after that- if ever. I am more focused now on the issue of survival without BK, which depends on oil prices. I think that question of survival is uncertain right now and will continue for years- unless oil prices rise to a much higher level like $80.

    I have been saying all year that the distribution would be eliminated and I thought that by September was a fairly good bet. I also do not believe this was a recent decision. I believe Linn knew they would eliminate, when they made their last share offering, which was not a nice thing to do to those share investors. But I think the days of supporting investors claiming Linn acts for shareholder interest is over.

    Thanks for article. I like the graph on the senior notes.
    Aug 3, 2015. 09:39 AM | 3 Likes Like |Link to Comment
  • Was Linn Energy's Drop Warranted? [View article]
    Williams an MIC may be great examples, but I do not think the same applies to Linn.

    Linn has been poorly managed. They have a historical track record of paying too much for assets (like the BRY deal) and selling assets too cheap. Those over payments have contributed to the high debt level.

    I am just suggesting that Williams and MIC may have been better investments than Linn when their prices collapsed.
    Aug 2, 2015. 08:36 PM | 5 Likes Like |Link to Comment
  • Was Linn Energy's Drop Warranted? [View article]
    Linn has depended on investors to invest in company due to high yield- which no longer exists. But if they now add to that by wiping out shareholders, will investors invest in Linn again with this management in the future?
    Aug 2, 2015. 08:26 PM | Likes Like |Link to Comment
  • Was Linn Energy's Drop Warranted? [View article]
    Agreed.

    In my opinion, the absolute and unlikely worst case scenario might be debt holders talking a 50% haircut, if for some reason they did not get new common shares. But how often in a BK do you see cuts that deep? Greece maybe.

    If you buy a bond right now at 35% discount, you pay 65% of face value. That means a 50% haircut would only cost 15% of face value, or 23% of your investment; note that about 2 years interest would cover that. That is really your risk in an absolutely worst case scenario that is highly unlikely- in my opinion.

    The only caveat to that is that some say Linn's debts are greater than the value of their assets and that depends on the volatile price of oil at the time the assets are valued.
    Aug 2, 2015. 08:22 PM | 3 Likes Like |Link to Comment
  • Was Linn Energy's Drop Warranted? [View article]
    That did not happen with HERO whose assets are old mostly jack up drill rigs that need to be replaced. In their BK reorganization, current shareholders get 3%, and debt holders get 97% of stock with new shares. New HERO will be debt free and able to get new debt to finance new rigs.

    I would say their debt converted to new shares is worth much more than 5 cents on the dollar.

    I do not believe most E&P energy companies in BK will fare as bad as other types of companies, because they still have oil assets in the ground. But they will get hurt if those assets are valued on current low oil prices- like a big difference if valued at $30 oil over $60 oil.
    Aug 2, 2015. 08:13 PM | 3 Likes Like |Link to Comment
  • Was Linn Energy's Drop Warranted? [View article]
    Danny:

    If the elimination of dividend was priced, why did it drop so much?

    On 9/30/15, when they actually do eliminate, I will bet that the price drops again.

    That said, I do appreciate your positive article since most have been more negative.

    I do wish some SA writers would write analysis and explanation of the senior notes which are selling at a 35% discount.

    Re. oil prices, I have been following 2 different forecasters. One predicts oil prices falling to low $30's, like $32, and the other just under $50 to as low as maybe $45. But oil price forecasts are all over right now.
    Aug 2, 2015. 11:34 AM | 6 Likes Like |Link to Comment
  • Linn Energy's Brilliant Move Is Bullish [View article]
    Daniel:

    The SA article by Albert Alfonso is much more negative stating it will take 8 to 9 years for Linn to turnaround and get it under control.

    Thanks for a more positive article.
    Aug 2, 2015. 09:53 AM | 1 Like Like |Link to Comment
  • Midland Basin Pure Play Lynden Energy Remains Unknown And Undervalued [View article]
    ValueMan:

    The potential of a spin off of Mitchell Ranch does concern me. Very often for Canadian based companies, US shareholders can not legally participate in such spin offs. What US shareholders receive is some petty cash dividend worth far less than the spin off.
    Aug 1, 2015. 02:01 PM | Likes Like |Link to Comment
  • Midland Basin Pure Play Lynden Energy Remains Unknown And Undervalued [View article]
    I own LVLEF at $.79 and like it long term. I would average down if it falls lower.

    Right now my problem is I am following disparate near term oil forecasts from 2 different forecasters:

    One says the oil price will drop to low $30's like $32.

    The other believes oil will hover around $50 and only drop to $45.

    That is a big difference. But oil forecasts right now are all over the place.
    Aug 1, 2015. 01:46 PM | Likes Like |Link to Comment
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