LINN Energy LLC (LINE) is a U.S. independent oil and natural gas exploration and production company.
Its assets are spread over the Mid-Continent, the Rockies, the Permian Basin, California, the Hugoton Basin, Michigan, Illinois, and east Texas.
LINE went public in a 2006 initial public offering (or IPO) that raised ~$261 million. It valued the company at ~584 million. It claims to be the first independent oil and gas limited liability company (or LLC) to go public.
Today, it has a market capitalization of ~$10 billion.
LLCs and MLPs
The U.S. Small Business Administration (or SBA) describes an LLC as “a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.”
The SBA informs us that “unlike shareholders in a corporation, LLCs aren’t taxed as a separate business entity. Instead, all profits and losses are ‘passed through’ the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.”
Master limited partnerships (or MLPs) offer similar exposure to energy companies. Check out our series on MLP basics here.
A low cost way to gain diversified exposure to U.S. energy MLPs would be through the Alerian MLP ETF (AMLP).
LINN Energy today
LINE describes itself as “a top-15 U.S. independent oil and natural gas development company, with approximately eight tcfe of proved reserves—pro forma for announced 2014 trade, acquisitions, and planned sale of Mid-Continent assets—in producing U.S. basins as of December 31, 2013.”
LINE’s average 2Q14 production was 1,131 million cubic feet of gas equivalent production per day (or mmcfepd). It consisted of:
- ~44% natural gas, or 493 mmcfpd
- ~39% oil, or 75 thousand barrels per day (or mbpd)
- ~17% natural gas liquid (or NGL), or 32 mbpd
It estimates 3Q14 production to average between 1,210 and 1,260 mmcfepd. It guides full year 2014 production between 1,217 and 1,268 mmcfepd.
LinnCo (LNCO) is an LLC. It was created to raise capital for LINE’s acquisitions and growth strategies. LNCO only holds units in LINE. It doesn’t have any other operations. So, LNCO’s performance is completely tied to LINE’s performance.