LINN Enegy's market cap

[Chena47]

Dan would you update your profile of Linn Energy. Thanks

[dan_s]

LINE is no longer in our High Yield Income Portfolio, so it is not on the schedule for a profile update. I will update my forecast model and post it to the website later today.

[dan_s]

I have updated my forecast model for Linn Energy (LINE) and posted it to the EPG website. Take a hard look at row 47.

Linn has a lot of debt, BUT .....
> 100% of their natural gas production is hedged through 2017 ($5.12 for 2015, $4.51 for 2016 and $4.48 for 2017)
> 90% of their oil production is hedged at $87.77/bbl for 2015
> 70% of their oil production is hedged at $90.44/bbl for 2016
This makes it very easy to forecast future cash flow from operations. Adjusted earnings (ignoring non-cash mark-to-market on derivatives) should be positive for the next two quarters (very close to what First Call is forecasting today).
Their hedge book has a cash value of more than $1.6 billion

Linn is generating free cash flow today that is being used to pay down debt.

I see no reason why this MLP will go bankrupt. It has plenty of liquidity and it can sell non-core assets to raise more money if necessary. What they have in SCOOP and STACK has significant market value.

I think they stopped paying dividends to use the money to buy back their publicly traded debt at a big discount. A much better use of the money for the long-term benefit of the unit holders.

First Call's price target of $5.45/unit looks reasonable to me.

[Chena47]

Thanks Dan for the update.