LINN Energy reported Q1’15 results, increased production
LINN Energy (ticker: LINE) reported its first quarter results today, growing production despite a 65% decrease in 2015 capex compared to 2014. The company’s production increased by 2% to approximately 1,201 MMcfe/d, according to the company’s press release. “Production in the first quarter was positively impacted by efficient operations across our portfolio particularly our Jonah, Permian and California assets,” said LINN’s Chairman, President and CEO Mark Ellis.
Total revenue for the company was approximately $917 million for the first quarter. The company reported a net loss of approximately $339 million, or ($1.03 per unit), during the same time period. The loss included cash impairment charges of approximately $533 million, and non-cash gains related to changes in fair value of unsettled commodity derivatives of approximately $149 million.
“LINN outperformed LOE guidance expectations by 8% during the first quarter,” said Ellis. “All-in, we’re targeting combined run rate cost reduction and LOE, G&A and capital cost of approximately $100 million to $150 million on an annualized basis.” LINE is targeting LOE reductions of 5% and capital cost reductions of 10% to 15%.
The company is targeting greater capital efficacies as prices remain well below their peak last year. In February, LINN announced a 65% reduction in its 2015 oil and natural gas capital budget to approximately $520 million, compared to $1.5 billion allocated in 2014. Of the $520 million budget approximately $183 million was attributable to the first quarter. The company’s 2015 capital program is primarily focused on optimization projects, including steam flood development and enhancement in California, as well as efficient optimization, workover and recompletion opportunities across its asset portfolio.
During the conference call, the company reaffirmed its focus on California, saying that production is already above forecasts. “We’re really focused around California becoming more efficient and continuing to drive out cost from the system,” said Ellis.
Maintaining strong liquidity
The company expects to maintain its strong borrowing base after its May redetermination. In the press release, LINE said it anticipates liquidity of $1.3 billion, assuming anticipated borrowing base reductions and amounts outstanding as of March 31, 2015. Pending approval from its bank group, LINN expects a 10% decrease in its borrowing base, lowering it to $4.05 billion from its current $4.5 billion.
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