NEW YORK (TheStreet) -- Linn Energy (LINE) was falling 1.6% to $28.61 Friday after selling $2.3 billion in assets to pay for its acquisition of Devon Energy  (DVN - Get Report) assets.

The oil and gas company sold $2.3 billion worth of land and facilities in two separate deals, according to Bloomberg.

Linn Energy sold 145,000 acres in the Granite Wash and Cleveland plays in Texas and Oklahoma to FourPoint Energy and EnerVest for a total of $1.95 billion. In a separate deal, the company sold 7,200 acres in the Permian Basin in Texas to Fleur de Lis Energy for $350 million.

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"One of our goals for 2014 was to maximize value for our Midland Basin and Granite Wash assets in order to reduce the capital intensity and decline rate within our portfolio," Linn Energy Chairman and CEO Mark E. Ellis said in a statement. "Today's announcements largely accomplish this goal."

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 -5.18%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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

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