Energy Prospectus

The spike up November 1, 2013 was due largely to a LINE/LNCO announcement that the Division of Corporation Finance of the SEC has advised that it has no further comments on Amendment No. 6 to the Joint Registration Statement on Form S-4 for the BRY - LNCO merger. In other words there are no more regulatory roadblocks to the LINE/LNCO merger with BRY.

I now believe the odds of the merger going through are 60/40. Regardless, I think there is significant upside for those of us that own LINE, one of our High Yield Income Portfolio MLPs.

I took a hard look at LINE on Tuesday (10/29) after they released Q3 results. My forecast mode can be found under the MLP Tab.

First Call's price target is now $33.23 per unit. I think it is worth $40/unit, even without the merger with BRY.

BTW LINE pays dividends monthly and the annual yield (based on the Nov. 1 closing price) is 11.7%.

IMHO if the merger with BRY is confirmed, this MLP could spike to over $40/unit.

Read this:

http://seekingalpha.com/article/1799672 ... urce=yahoo

This is very important to note: This will be the first time in the history of mankind that an MLP has merged with a public C-Corp. If this deal closes, it could open a floodgate of MLP/C-Corp mergers in 2014. The reason is simple: It allows the shareholders of a mature C-Corp to do a tax free exchange of their stock for an MLP's publicly traded "units" that pay very high cash distributions.

Why is this such a big deal? Because dividends from a C-Corp are fully taxable and the cash distributions from an MLP are at least partially tax sheltered. IMHO this is a very big deal, especially in a country that this going to continue to raise income tax rates on "the rich".

I think Denbury Resources (DNR) is a prime candidate for a merger just like this.

Or Congress might start taking a harder look at MLP tax structure to recoup monies. Remember what happened in Canada when BCE wanted to turn into a royalty trust, the whole sector was turned upside down. Just a thought.

I think there is very little chance of that happening. They would have to mess with Subchapter K of the IRC, which has been around for a long time. There are a lot of partnerships.

Plus, the government probably gets more tax revenues from the flow-through of taxable income to individuals in higher tax brackets.

Canada knows they screwed-up going after the Royalty Trusts. I caused a lot of capital to pull out of Canada.

While your points are valid, you also may be underestimating the stupidity of our elected representatives...................

Good point. Washington seems to be more concerned with the name of their football team than what's good for the economy.

I now believe there is over a 90% chance this deal will close. This is HUGE for LINE and also very good news for all mature C-Corps. Other MLPs will take a look at buying other C-Corps.

“The last week or so it looks like they made some progress getting the SEC stuff in order and so that should be out of the way and now you have an offer that is higher than the current stock price,” said Jason Wangler, an equity analyst at Wunderlich Securities Inc. in Houston. “I think it’s pretty open and shut.”

The deal is structured as a merger of Berry with LinnCo followed by the acquisition of the Berry assets by Linn Energy. The total value of the deal is $4.9 billion including debt, the statement showed.

BRY's assets are approximately 75% oil, which when combined with LINE's current
portfolio will increase the total portfolio to 54% liquids, up from 46%. Additionally,
the combined portfolio is expected to have a lower overall corporate decline rate as
BRY's assets have a meaningfully lower decline rate (~15%) than LINE's current
portfolio (~25%). The addition of BRY's low-decline assets also offers increased
optionality when formulating future capital budgeting decisions.