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Friday, May 18, 2007



I haven't been paying to much attention to this lately but the 10 year rate has been climbing and now sits at 4.78%. I know its very short term but its hard to argue with the charts.
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1 comment:

Anonymous said...

Greetings: I noticed the following post on Yahoo! in the LINE thread:

"I might be able to shed some light on the situation. LINE energy sells forward much of their production. For instance, they might sell 100% of next Fall's production at 9$ a mmbtu. This is nice as it gurantees a nice cash flow to service debt, pay dividends etc. At the end of the quarter, those hedges have a value on the open market that has increased or decreased.

Here is where it gets interesting.

If the price of NG has risen since the sale of this Fall's production, then Linn has an unrealized loss in the value of the paper that they hold. If the price of NG has fallen, the have an unrealized gain.

Since they have no intention of selling, but actually intend to deliver the specified NG, this is of no consequence.

In the Fall quarter, when they close out all of these contracts at the original specified price, the NG is sold for a profit and the contracts are worthless. But since they started the quarter at a diminished value (due to this quarter's write down) the contract loss will be less then the NG gain and the unrealized loss reported this quarter will return to the bottom line as next quarter's profit.

By the way, since the price of NG has risen, they can now sell next Winter's production at a still higher price. So long as the price of NG keeps rising, Linn can expect to take losses in the hedging market and keep producing gains in the cash flow - and their ability to pay dividends..."

As a LINE & EVEP investor, I hope this fellow is correct :)

---alan

5/19/2007 1:28 AM

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