Linn Energy LLC(OTCMKTS:LINEQ) continues to see moderate volume as it sits just over its $0.15 base in recent weeks. The stock saw a big move in October as crude oil prices rose to 15 months highs. The stock was delisted from the NASDAQ on May 23 after filing for voluntary petitions for reorganization under Chapter 11 on May 11.
LINEQ is another victim of falling oil prices to land on the OTC with the extra Q attached. The stock had been in steep decline for some time now and the fact that LINE BOD granted 2016 target bonuses to top executives totaling more than $15 million has not helped Investors confidence.
Linn Energy LLC(OTCMKTS:LINEQ) is an independent oil and natural gas Company from Houston, Texas that has grown through 62 transactions totaling approximately $17 billion to over 1,800 employees spread across the United States since inception in 2006.
LINEQ controls oil and gas producing assets including properties in Texas, Louisiana, and Oklahoma. The operate the in the Hugoton Basin in Kansas, the Green River Basin in Wyoming, the East Texas Oil Field, the Brea-Olinda Oil Field in Los Angeles and Orange Counties, the Williston / Powder River Basin and the Permian Basin in Texas.
As of December 31, 2015, LINE had 7,304 billion cubic feet equivalent of estimated proved reserves, of which 28% were oil, 58% were natural gas and 14% were natural gas liquids.
Linn Energy was founded in 2003 and went public in 2006 raising $261 million in the IPO. Since then the Company has grown through acquisition buying the oil and gas assets of Dominion Energy, mainly in Oklahoma, for $2.05 billion as well as the holdings of BP for $1.2 billion in the Hugoton Natural Gas Area in southwestern Kansas that included 2,400 active wells on 600,000 acres anda gas processing plant.
More recent acquisition for LINE include the June 2012 purchase of 12,500 acres in the Jonah Field in southwest Wyoming from BP for approximately $1 billion. Also in February 2013 LINE acquired Berry Petroleum in a stock deal valued at $4.3 billion vastly increasing LINE’s holdings in California, Texas, Utah, and Colorado.
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On April 30, 2012, LINE created LinnCo LLC (NASDAQ:LNCO) for the sole purpose of owning of Linn Energy, incorporating it in Delaware as a limited liability corporation.
On May 11 LINEQ filed for Chapter 11 in order to implement a debt restructuring. The Company expects its operations across its asset base to continue in the ordinary course throughout the Chapter 11 process.
Under the Restructuring Support Agreement, the parties agreed to support a plan of reorganization for the Company that would include: (1) a new LINN $2.2 billion reserve-based and term loan credit facility on the terms set forth in the Restructuring Support Agreement, (2) the consensual use of LINN and Berry’s cash collateral to fund the Chapter 11 Cases under negotiated terms and conditions, and (3) the broad terms of a comprehensive restructuring of the Company’s indebtedness. The Restructuring Support Agreement will be filed as an exhibit to a Current Report on Form 8-K with the Securities and Exchange Commission on May 11, 2016.
The Company anticipates that the cash available to it during its Chapter 11 Cases will likely provide sufficient liquidity to support the business during the financial restructuring process. As such, the Company does not currently intend to seek debtor-in-possession (DIP) financing.
LINN has filed various customary motions with the Bankruptcy Court in support of its financial restructuring. The Company intends to continue to pay employee wages and provide healthcare and other defined benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms for goods and services provided on or after the Chapter 11 filing date.
In August LINEQ announced the final results of, and expiration of the subsequent offering period relating to, its previously announced offer to exchange each outstanding unit of LINN Energy for one LinnCo share upon the terms and conditions of the Prospectus/Offer to Exchange dated April 26, 2016 and the accompanying Amended and Restated Letter of Transmittal.
American Stock Transfer & Trust Company, the exchange agent for the Exchange Offer, has advised LinnCo that a total of 19,954,774 LINN units were validly tendered during the subsequent offering period and an aggregate of 123,909,317 LINN units (including LINN units accepted for exchange during the initial offering period), representing approximately 35% of LINN’s issued and outstanding units, were validly tendered and not validly withdrawn pursuant to the Exchange Offer and have been accepted by LinnCo for exchange.
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Currently trading at a $60 million market valuation LINEQ has been in steep decline over the past year seeing its share price drop over 95% as oil and natural gas prices moved lower. Many see LINEQ with massive upside from current levels; the Company has a billion in cash in the treasury and a strong financial outlook for 2016. LINEQ also has ready liquidity, a short position that needs to cover and crude oil prices rising to a 15- month high on Wednesday after a surprise U.S. inventory draw down, boosting energy shares and this trend is expected to continue. We will be updating on LINEQ on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with LINEQ.
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Disclosure: we hold no position in LINEQ either long or short and we have not been compensated for this article.