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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: farmerboy who wrote (96822)	2/15/2008 8:12:23 AM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206325

farmer, Linn Energy (LINE) -- Thanks very kindly for sharing that, its most helpful. I like the way these guys think, calling for '08 EBITDA to come in at $580 M vs. Lehman's call of $544 M. If Citi is right, Linn would generate distributable cash flow of about 18% more than their distributions, assuming the $2.52 distribution rate stays fixed. To get from EBITDA to distributable cash flow I'm subtracting $125 M for interest and $115 M for mainenance cap ex (each of which are per Lehman). I also would point out that Citi's numbers are conservative given that they have not changed their '08 estimates since their last report (which apparently was on 2/1/08) even though natty prices have gone pretty idiotic since that time. As mentioned they stand to benefit a bit from higher natty prices due to the use of some puts in their hedging. As shown at exhibit 2 of the Lehman report, Linn has $7.99 puts on about 11 BCF of gas production for '08. So if you figure gas will average $9 vs. $7.99, they stand to pick up another cool $10 M of EBITDA or so.

To: farmerboy who wrote (96822)	2/15/2008 9:34:24 AM
From: Philip W. Dunton, Jr	Read Replies (1) \| Respond to of 206325

Thanks for posting the Citi company flash, Farmer Boy. Beyond the Citi report, it is interesting to note that the professional short sellers, aka hedge funds, have been playing the pending release of the PIPE units on the short side. There has been a huge increase in LINE's short interest since November. At some point, these short seller have to buy to close out their short positions. In the meantime, they have to pony up the quarterly payout. This could make for some interesting price action in the near future.