Linn Energy LLC (NASDAQ:LINE) recently made a big move up from well under $0.50 to highs over $2 a share as speculators, day traders, momentum traders and shorts covering propelled the stock upwards. The move on LINE came as energy stocks across the board made huge moves up as crude oil made a significant rebound.
Since then LINE has come back down to where it started on continued fears of a possible Bankruptcy. The fact that LINE BOD granted 2016 target bonuses to top executives totaling more than $15 million which has recently come to light has not helped.
Linn Energy LLC (NASDAQ:LINE) 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.
LINE 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.
In August the Company named David Rottino as the companies’ new CFO. The departure of Kolja Rockov was a big deal; Mr. Rockov had been with the Company for 10 years during which he went on a buying spree, using mostly debt to purchase vast amounts of oil and gas properties quadrupling LINE’s debt load from just under $2.75 billion in 2011 to over $10 billion as of the end of 2015.
Many Investors in Linn Energy see the departure of Mr. Rockov as a good thing; back in January Mr. Rockov sold nearly half of his stake in Linn Energy, some 230,900 units, due to a margin call, according to the WSJ and a company disclosure.
The first 2 months of 2016 were a struggle for LINE who said they considered filing for bankruptcy protection due to a high debt level and continued weak oil prices. On February 8, 2015, the U.S. SEC closed its probe into Linn Energy’s $4.6 billion acquisition of Berry Petroleum with no action taken.
Also on March 1 LINE announced it filed a Form 12b-25 with the SEC which is a Notification of Late Filing with regard to its Annual Report on Form 10-K for the year ended December 31, 2015 to allow additional time to complete its financial statements and related disclosures.
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Currently trading at a $200 million market valuation LINE has been in steep decline over the past year seeing its share price drop over 95% as oil and natural gas prices moved lower. To be healthy, Linn needs $80-$85 oil; ultimately, we will have to wait and see for the redetermination and/or for Linn’s fourth quarter filing to get a better picture of the best course of action. Many see LINE with massive upside from current levels; the Company has a billion in cash in the treasury and a strong financial outlook for 2016 that things start to deteriorate in 2017 if nothing is done to reduce costs in some way. We will be updating on LINE on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with LINE.
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Disclosure: we hold no position in LINE either long or short and we have not been compensated for this article.