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

To: GVTucker who wrote (96996)	2/20/2008 8:59:05 PM
From: Ed Ajootian	Respond to of 206203

GVT, Linn Energy (LINE) -- Correct, he just tweaked the projections and raised the target yield to 9% from 7.75%, which of course lowered the target price. The full report has been uploaded to finance.groups.yahoo.com for anyone interested. He shows a fascinating bar chart comparing the Enterprise Value per mcfe of proved reserves of Linn to other benchmarks, as follows: Linn Energy.....$2.12 E&P MLP's.......$2.79 E&P C-Corps.....$3.11 Acquisitions....$2.43* * weighted average of mid-continent transactions > $10 M from '07 to the present, per Herold database This shows better than ever how rediculously undervalued Linn is at this time. If Linn were to garner only the same value per mcfe as its peers, the stock would be priced at about $29/share. I would argue that Linn should trade at a premium to the average MLP/LLC, since it is the largest one and therefore has the most diversified asset base, which should translate into less risk. I initially was surprised to see that C-Corps were valued higher per mcfe than the MLP's. With an MLP you get steady cash flow, whereas with a C-Corp you're only hope (other than the large companies) is capital appreciation. On the other hand, C-Corps have the exploration upside, whereas MLPs don't. I'd be curious to hear what your or anyone else's thoughts are regarding this difference in valuation.