NEW YORK (TheStreet) -- Shares of Linn Energy (LINE) are up 0.38% to $31.36 in morning trading Friday after the company agreed to trade 17,800 acres of its Permian Basin properties to Exxon Mobil (XOM) - Get Exxon Mobil Corporation Report for interest in about 500 net acres from the latter's South Belridge Field in California, The Wall Street Journal reports.
The deal, expected to close in the fourth quarter, is the second asset swap between the two oil and natural gas companies.
Linn Energy received a portion of interests in Exxon Mobil's Hugoton Gas Field in Kansas and Oklahoma in May. In return, Exxon Mobil added nearly 26,000 acres in the Permian Basin.
Separately, TheStreet Ratings team rates LINN ENERGY LLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate LINN ENERGY LLC (LINE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, increase in stock price during the past year and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 112.18% to $481.15 million when compared to the same quarter last year. In addition, LINN ENERGY LLC has also vastly surpassed the industry average cash flow growth rate of -5.07%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- LINE, with its decline in revenue, underperformed when compared the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 28.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Currently the debt-to-equity ratio of 1.87 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, LINE has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LINN ENERGY LLC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: LINE Ratings Report