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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.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.