By William Pentland, Contributor
James Kostohryz, a blogger at SeekingAlpha, has posted two excellent pieces showing how the investment logic of a Ponzi scheme has shaped the mess at Linn Energy, a master limited partnership focused on upstream oil and gas activities. …read more
Source: FULL ARTICLE at Forbes Latest
By Selena Maranjian, The Motley Fool
Filed under: Investing
Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some oil and gas stocks to your portfolio, the Market Vectors Unconventional Oil & Gas ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Market Vectors ETF‘s expense ratio — its annual fee — is 0.54%. The fund is very small, though, so if you’re thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF is too young to have a sufficient track record to assess. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
Why oil and gas?
Oil and gas exploration and production companies are worth considering because despite growing interest in alternative energy, we’re still quite dependent on good old oil and gas. The growing practice of fracking, in particular, is presenting great promise while also inspiring passionate opposition.
More than a handful of oil and gas companies had strong performances over the past year. Hess surged 25%, amid its transformation into a pure-play exploration and production company after it shed its downstream operations (i.e., refineries, gas stations, etc.). With the money it raises from divestitures, the company plans to significantly hike its dividend and pay down debt. Hess has also been a target of agitation by activist investment company Elliott Management.
Houston-based oil and natural gas company Linn Energy gained 6% and offers a hefty dividend yield of 7.6%. Better still, some expect further increases in the payout, due to recent income-generating acquisitions. The company specializes in buying mature, productive energy assets. It’s also admired for its successful long-term hedging and organic growth, and is seen by some as a very promising investment
Other companies didn’t do as well last year, but could see their fortunes change in the coming years. Chesapeake Energy slid 9%. Long reviled by many for questionable and regrettable management moves, it has been selling assets and addressing sizable debt. Bulls like its major presence in the promising Utica shale field, among other things.
Exploration and production specialist Whiting Petroleum shed 10%. It’s a major operator in the productive Bakken region, and its last earnings report featured record production and growing proved reserves. Management also expects double-digit production growth in 2013. Bulls like its well-positioned and sizable asset portfolio, and the company seems undervalued as well.
The big picture
Demand for oil and gas isn’t going away anytime soon. …read more
Source: FULL ARTICLE at DailyFinance
By Selena Maranjian, The Motley Fool
Filed under: Investing
Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.
Today, let’s look at Citadel Advisors, founded and run by Kenneth Griffin. It’s one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $65.3 billion in value as of Dec. 31, 2012.
According to the folks at InsiderMonkey.com, Griffin and his team use “a combination of advanced computer code, complicated financial algorithms and secrecy. Griffin was using quantitative, technology-based methods before many other firms had cell phones.” The company took a big hit of more than 50% back in 2008, and with an impressive 20% gain in 2011, finally surpassed its 2008 high.
Interesting developments
So what does Citadel’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Gulfport Energy and ADT. Other new holdings of interest include Linn Energy , a Houston-based oil and natural gas master limited partnership (MLP) with a dividend yield of about 8%. Some expect the dividend to rise further, due to recent income-generating acquisitions. The company specializes in buying mature, productive energy assets and has also been successful at long-term hedging. Its organic production growth has been strong, too. To some, it seems a very promising investment, but others are wary of its aggressive share issuance, upping its shares outstanding by 74% over the past five years.
Among holdings in which Citadel increased its stake were Halcon Resources and American Capital Agency . Halcon, an oil and gas company, is expected to grow by 30% annually over the coming years. It operates in the promising Bakken region (as well as in the Woodbine and Utica regions), and recently reported 2012 net daily production 128% higher than year-ago levels and proven reserves up 417%. The stock has averaged annual losses of more than 13% over the past five years, but management remains confident. In a recent presentation, it stressed its focus on cash-flow protection, noting that it aims to hedge 80% of its expected production over the coming 18 to 24 months.
American Capital Agency offers investors a huge dividend yield topping 15%. Some worry that the dividend may get reduced (as has happened with some mortgage REITs), but its CEO has offered reassurance by buying more than $500,000 worth of shares for himself recently. In the meantime, the company has boosted the proportion of its portfolio that isn’t likely to suffer from borrowers refinancing and prepaying mortgages. Be wary, though, as there are some aspects of the company that aren’t too appealing, such as its significant use of leverage). My colleagues have questioned some of management’s moves, too.
Citadel reduced its stake in lots of companies, including Skyworks , which is a semiconductor company supplying, among other things, radio chips for iDevices. Its focus extends beyond …read more
Source: FULL ARTICLE at DailyFinance
By Tyler Crowe and Aimee Duffy, The Motley Fool
Filed under: Investing
MLPs are all the rage in the energy sector, and several companies want to get into the game by spinning off assets into an MLP strucutre. But Fool.com contributor Tyler Crowe sees a few companies trying their hand at the other direction and spin off some of their assets into C corporations. Linn Energy was one of the leading companies to try its hand at spinning off a C-corp with its IPO of LinnCo back in October. Now some others are looking at it as well.
In this video, Tyler and Aimee Duffy discuss how these moves not only help companies raise more capital, but how they also provide a vehicle for institutional investors to get in the game and facilitate acquisitions. Investors should keep a sharp eye on upstream MLPs like these — not only because of share dilution, but also because some of the risks the upstream sectors has that could pose a larger threat to an MLP.
The growing production of natural gas from hydraulic fracturing and horizontal drilling is flooding the North American market and resulting in record-low prices for natural gas. Enterprise Products Partners, with its superior integrated asset base, can profit from the massive bottlenecks in takeaway capacity by taking on large-scale projects. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool’s brand-new premium research report on the company.
var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Tyler Crowe and Aimee Duffy“, contentId: “cms.23704”, contentTickers: “NYSE:EPD, NASDAQ:LINE, NASDAQ:LNCO, NYSE:BRY, NYSE:VNR”, contentTitle: “Why Are These MLPs Spinning Off C-Corporations?”, …read more
Source: FULL ARTICLE at DailyFinance
By Business Wirevia The Motley Fool
Filed under: Investing
Law Firm Brower Piven Announces Investigation of Berry Petroleum Company Proposed Acquisition
STEVENSON, Md.–(BUSINESS WIRE)– The securities litigation firm of Brower Piven, A Professional Corporation, has commenced an investigation into possible breaches of fiduciary duty to current shareholders of Berry Petroleum Company (“Berry Petroleum” or the “Company”) (NYSE: “BRY”) and other violations of state law by the board of directors of Berry Petroleum relating to the proposed acquisition of the Company by Linn Energy, LLC (“Linn”) and LinnCo, LLC (“LinnCo”). The firm’s investigation seeks to determine, among other things, whether Berry Petroleum‘s board of directors breached their fiduciary duties by failing to maximize shareholder value.
According to the press release announcing the proposed acquisition, Linn and LinnCo will acquire all of Berry Petroleum‘s outstanding shares for total consideration of $4.3 billion, including the assumption of debt. The proposed acquisition is structured as a stock-for-stock merger of LinnCo with Berry Petroleum, followed by the acquisition of Berry Petroleum‘s assets by Linn. The Company’s shareholders will receive 1.25 common shares of LinnCo for every Berry Petroleum common share they own. According to the companies’ joint press release, the consideration to be received by the Company’s shareholders is valued at $46.2375 per Berry Petroleum share based on LinnCo’s closing price as of February 20, 2013. According to Yahoo! Finance, the high analyst price target is $50.00 per Berry Petroleum share.
If you currently own common stock of Berry Petroleum and would like to learn more about the investigation being conducted by Brower Piven, you may email or call Brower Piven, who will, without obligation or cost to you, attempt to answer your questions. You may contact Brower Piven by email at hoffman@browerpiven.com, by calling (410) 415-6616, or at Brower Piven, A Professional Corporation, 1925 Old Valley Road, Stevenson, Maryland 21153. Attorneys at Brower Piven have combined experience litigating securities and other class action cases of over 60 years.
Brower Piven, A Professional Corporation
Stevenson, Maryland
Charles J. Piven, 410-415-6616
hoffman@browerpiven.com
KEYWORDS: United States North America Maryland
INDUSTRY KEYWORDS:
The article Law Firm Brower Piven Announces Investigation of Berry Petroleum Company Proposed Acquisition originally appeared on Fool.com.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a …read more
Source: FULL ARTICLE at DailyFinance
By Tyler Crowe, The Motley Fool
Filed under: Investing
With natural gas prices falling, we’ve seen several companies try to move their portfolios more toward liquids. Vanguard Natural Resources is going in the opposite direction. What does this company see that the others don’t? Let’s look at this company bucking the industry trend and see what it means for investors.
You say goodbye (to gas), and I say hello
The best way to understand the contrarian approach of Vanguard is to look at Chesapeake Energy . Before the natural gas boom, Chesapeake had gobbled up millions of acres in these emerging shale plays. Then, when natural gas prices sank in 2012, the value of these assets tumbled and the company struggled to service its debt load. So Cheaspeake has gone to great lengths to change its drilling strategy toward a more liquids approach, which is starting to pay off. Chesapeake has increased its liquids produciton by more than 41,000 barrels of oil equivalent in 2012.
Then you have Vanguard. Before 2011, the company was highly leveraged to oil production in mature, proven fields and was producing only 35% natural gas. With so many companies looking to offload their gas assets based on current prices, Vanguard has been a buyer. In 2012, it purchased more than $760 million in assets from both Antero Resources and Bill Barrett in the Arkoma, Piceance, Wind, and Powder River basins. The combination of these two purchases increases Vanguard’s natural gas production to about 65% of total production in 2013.
Why does this make sense? Simply put, the purchase price. These assets were purchased when the market value for natural gas was at its near lows, so the price to produce from them is much lower. Lease operating expenses for Vanguard dropped from $17 per Boe in the fourth quarter 2011 to just over $9 per Boe at the end of 2012. This means the company generates a return at lower natural gas prices.
Echoes of another MLP?
Since the end of the previous quarter, Vanguard has come to an agreement with Range Resources to purchase $275 million of producing assets in the Permian Basin. This would make for just over a billion in purchases over the past 12 months. According to the company’s most recent conference call, that pace may not slow either. Vanguard’s management hinted that it expects to close on as many deals as in 2012, potentially even more.
Its pace of acquisitions is reminiscent of another exploration and production MLP: Linn Energy . With such a similar appetite for acquisitions, it makes it a little less surprising that Vanguard has stated that it’s considering a move similar to Linn’s spin-off of LinnCo . This move not only allowed Linn to generate a large chunk of capital to fund some of its investments, but it also gave the company a vehicle for institutional investors to invest in the company. As of right now, Vanguard’s management believes that it can fund most of its acquisitions through more conventional methods. In the event that it plans to start going after …read more
Source: FULL ARTICLE at DailyFinance
By Tyler Crowe, The Motley Fool
Filed under: Investing
Whenever a company is in the midst of a major transformation, there are lots of risks along the way that could potentially turn sour. So, as investors, we try to mitigate this risk by digging deep into these respective companies so we have as clear a picture as possible. InterOil has flown under the radar for a while, but it has big plans to capture the Asian natural gas market. Is InterOil an unspoken gem that the market is undervaluing? Or are its ambitious plans too big for the company to handle? Let’s take a better look at these questions to get a clearer picture.
Undervalued?
One of the reasons InterOil doesn’t get much attention is its location. The entirety of the company’s natural gas assets are on the island nation of Papua New Guinea. This doesn’t make them any less valuable, though. The company owns leasing rights to almost 4 million gross acres in the country. A study done by GLJ Petroleum Consultants estimates that the company’s acreage has as much as 6.0 trillion cubic feet of recoverable reserves.
If the company’s estimates are correct, it is quite possibly one of the most undervalued assets around. This would give the company a market cap value of about $0.62 per thousand cubic feet equivalent of reserves. Compare that with Linn Energy‘s 4.7 Tcfe of proven reserves and market cap value of about $1.87 per thousand cubic feet equivalent of reserves.
Here’s the catch: Not all of InterOil’s 6.0 Tcfe are proven. Since its inception, InterOil has spudded 14 exploratory wells on all of its its holdings. While some of the initial production rates on these wells have been exceptionally high, they were immediately shut in. It is difficult to determine metrics such as the decline rate and the estimated ultimate recovery for these wells without their having produced for some time. It’s also hard to determine the full potential of a 4 million-acre site based on a dozen exploratory wells and seismic mapping. While the potential for something great is there, it’s still too early to give a final verdict on Interoil’s prospects.
Overreaching?
InterOil currently has two business segments that generate revenue for the company: its midstream and refining segment, and its retail and marketing operations. So far, almost all of the profits from these segments have gone into exploration and production. It has also used the sale of interest stakes in some of its upstream assets to help finance both its upstream operations and its initial efforts to build an LNG export facility. Unfortunately for the company, the proceeds from these operations aren’t enough to fund its plans at a very rapid pace. This is why the company has for quite some time sought out partners to execute this strategy. It found two last year. Both the Papua New Guinean government and Colombian E&P company Pacific Rubiales took minority interest stakes in some of its exploration fields.
Still, this isn’t quite enough. The company will need a large injection of capital …read more
Source: FULL ARTICLE at DailyFinance
By Business Wirevia The Motley Fool
Filed under: Investing
Law Office of Brodsky & Smith, LLC Announces Investigation of Berry Petroleum Co.
BALA CYNWYD, Pa.–(BUSINESS WIRE)– Law office of Brodsky & Smith, LLC announces that it is investigating potential claims against the Board of Directors of Berry Petroleum Co. (“Berry Petroleum” or the “Company”) (NYS: BRY) relating to the proposed acquisition by an affiliate of Linn Energy LLC (“Linn Energy“).
Under the terms of the transaction, Berry Petroleum shareholders will receive only $46.24 in cash for each share of Berry Petroleum stock they own. The investigation concerns possible breaches of fiduciary duty and other violations of state law by the Board of Directors of Berry Petroleum for not acting in the Company’s shareholders’ best interests in connection with the sale process to Linn Energy. The transaction may undervalue the Company and will result in a loss for many long term shareholders. For example Berry Petroleum stock traded at $55.74 as recently as February 28, 2012 and $60.24 on July 25, 2011. In addition, an analyst has set a $50.00 per share price target for Berry Petroleum stock.
If you own shares of Berry Petroleum stock and wish to discuss the legal ramifications of the proposed transaction, or have any questions, you may e-mail or call the law office of Brodsky & Smith, LLC who will, without obligation or cost to you, attempt to answer your questions. You may contact Jason L. Brodsky, Esquire or Evan J. Smith, Esquire at Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by e-mail at investorrelations@brodsky-smith.com visiting http://brodsky-smith.com/544-bry-berry-petroleum-co.html, by calling toll free 877-LEGAL-90.
Brodsky & Smith, LLC
Jason L. Brodsky, Esquire
Evan J. Smith, Esquire
877-LEGAL-90
investorrelations@brodsky-smith.com
http://brodsky-smith.com/544-bry-berry-petroleum-co.html
KEYWORDS: United States North America Pennsylvania
INDUSTRY KEYWORDS:
The article Law Office of Brodsky & Smith, LLC Announces Investigation of Berry Petroleum Co. originally appeared on Fool.com.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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b.type=”text/javascript”;b.async=!0;b.src=(“https:”===c.location.protocol?”https:”:”http:”)+
…read more
Source: FULL ARTICLE at DailyFinance
(Reuters) – Oil and gas producer Linn Energy LLC said it would buy Berry Petroleum Co in an all-stock deal valued at $4.3 billion including debt, giving it more exposure to lucrative liquids that will help it raise production by 30 percent. Berry shareholders will receive the equivalent of about $46.24 per share, a 19.8 percent premium to the stock‘s closing price of $38.59 on Wednesday on the New York Stock Exchange. (Reporting by Swetha Gopinath in Bangalore; Editing by Roshni Menon) …read more
Source: FULL ARTICLE at Yahoo Business
