Lower Production From Linn Energy & Enerplus May Keep Hefty Dividends Safe
August 10 2011 - 8:16AM
Marketwired
With the markets in the midst of a correction, investors are
looking at high yielding dividend plays as safe havens. Companies
in the Oil & Gas sector have posted surging top lines in recent
quarters, leading several explorers to begin boosting dividend
payments. The Bedford Report examines the outlook for companies in
the Shipping Industry and provides investment research on Linn
Energy, LLC (NASDAQ: LINE) and Enerplus Corporation (NYSE: ERF)
(TSX: ERF). Access to the full company reports can be found at:
www.bedfordreport.com/LINE
www.bedfordreport.com/ERF
Oil stocks have taken a tumble over the last week, as crude
prices have plummeted and a report on the services industry raised
new concern that the economy is faltering. The US government's
Department of Energy had revealed that American crude reserves
climbed by 1.0 million barrels in the week ending July 29 --
suggesting weaker demand in the world's biggest crude-consuming
nation.
Greg Priddy, director of global oil at consultancy Eurasia
Group, told The Wall Street Journal that "the evidence accumulating
of very slow growth in the US economy and substantial demand
destruction... the main risk in the crude oil market over the next
quarter will be to the downside."
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The drop in oil prices has been particularly hard on oil
producers, many of which boosted production in recent quarters in
hopes of capitalizing on higher oil prices.
Canada's Enerplus "fortunately" was forced to cut its production
guidance for the remainder of 2011 due to unusually wet weather at
some of its properties. The company forecasted 2011 production of
76,000-78,000 barrels of oil equivalent per day (boe/d), down 2000
boe/d from its prior outlook. Last Friday the company announced
that it earned C$268 million, or C$1.50 a share, in the second
quarter, up from C$76.5 million, or 44 Canadian cents a share, a
year ago. Presently Enerplus pays an annual dividend of $2.20 a
share for a hefty yield of 8.2 percent.
Linn Energy pays an annual dividend of $2.76 a share for a yield
of around 8 percent. Last month Linn Energy posted a quarterly
profit that fell short of market expectations, hurt by lower prices
and a shortfall in June production due to bad weather.
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