HOUSTON, Nov. 4, 2014 (GLOBE NEWSWIRE) -- LINN Energy, LLC (Nasdaq:LINE) ("LINN" or the "Company") and LinnCo, LLC (Nasdaq:LNCO) ("LinnCo") announced today financial and operating results for the three months ended September 30, 2014, and the Company's outlook for the remainder of 2014.
- Increased average daily production 51 percent to approximately 1,245 MMcfe/d for the third quarter 2014, compared to 823 MMcfe/d for the third quarter 2013;
- Increased oil, natural gas and NGL sales 74 percent to approximately $937 million for the third quarter 2014, compared to $538 million for the third quarter 2013;
- Distributions paid to unitholders of approximately $241 million, compared to $171 million for the third quarter 2013;
- The Company fully covered its distribution and generated excess of net cash provided by operating activities after distributions to unitholders and discretionary adjustments of approximately $88 million for the third quarter 2014, compared to an excess of net cash of approximately $2 million for the third quarter 2013 (see Schedule 1, footnote 6); and
- Net loss of approximately $4 million, or $0.02 per unit, for the third quarter 2014, which includes non-cash gains related to changes in fair value of unsettled commodity derivatives, including the reduction of put option premium value over time, of approximately $423 million, or $1.28 per unit, and an impairment charge of approximately $603 million, or $1.83 per unit, related to the divestiture of certain high valued unproved properties in the Midland Basin.
Recent business development highlights include:
- Closed first Exxon Mobil trade on August 15th;
- Closed Devon assets acquisition on August 29th;
- Closed Pioneer assets acquisition on September 11th;
- Announced a second assets trade with Exxon Mobil on September 18th;
- Announced the sale of assets in the Granite Wash and Cleveland plays to privately held institutional affiliates of EnerVest, Ltd. and FourPoint Energy, LLC on October 3rd;
- Announced the sale of certain Wolfberry properties to Fleur de Lis Energy, LLC on October 3rd; and
- All pending transactions are expected to close in the fourth quarter 2014.
|Average daily production (MMcfe/d):||Three Months Ended September 30, 2014|
Mid-Continent:Third quarter 2014 production in the Mid-Continent region averaged 289 MMcfe/d. On October 3, 2014, the Company announced the sale of its position in the Granite Wash and Cleveland plays located in the Texas Panhandle and western Oklahoma to privately held institutional affiliates of EnerVest, Ltd. and FourPoint Energy, LLC for $1.95 billion. The Granite Wash and Cleveland properties include approximately 145,000 net acres and 195 MMcfe/d of average production for the month of September. LINN is running a 4-rig drilling program and has planned to spend approximately $210 million of capital on these assets in 2014. Proceeds from this sale and the announced sale of certain Wolfberry properties are expected to ultimately finance a portion of the Company's Devon and Pioneer assets acquisitions, which closed in August 2014 and September 2014, respectively. LINN's sales are expected to be tax efficient upon successful completion of reverse like-kind exchanges under Internal Revenue Code Section 1031. The Granite Wash and Cleveland plays transaction is expected to close in the fourth quarter of 2014, with an effective date of September 1, 2014. California: Third quarter 2014 production in California averaged 29 MBoe/d which is flat from second quarter levels, but up 14 percent since the beginning of the year. Both the Diatomite and New Steam Floods assets have been performing above their respective type curves during 2014. The Company's California properties continue to deliver high rates of return and strong free cash flow. On September 18, 2014, LINN and Exxon Mobil announced their second trade this year, in which LINN will receive Exxon Mobil's interest in its Hill property located in the South Belridge Field in California's San Joaquin Valley, in exchange for a portion of LINN's Permian Basin properties. The field is currently producing approximately 3.4 MBoe/d with a shallow base decline of approximately 10%.
"We are very excited to add these ideal MLP assets to our portfolio. Our California team continues to perform well and they are eager to begin developing these highly coveted, underdeveloped assets," said Mr. Ellis.Proved reserves for the Hill property are estimated to be approximately 27 MMBoe, 51 percent of which is developed. LINN has identified significant upside potential through optimization projects, increased steam injection and extensive down spacing from more than 300 future drilling locations. LINN currently estimates total resource potential for the Hill property to be approximately 67 MMBoe. Permian Basin: Third quarter 2014 production in the Permian Basin region averaged 154 MMcfe/d. Since May 2014, the Company has closed or announced the divestiture of approximately 90% of its Midland Basin acreage and over 50% of its production. LINN continues to see strong interest in a trade or sale of the remaining approximate 8.0 MBoe/d of production and 6,600 net acres, which are prospective for horizontal Wolfcamp drilling. LINN had budgeted approximately $280 million for development of the Midland Basin properties in 2014. Hugoton Basin: Third quarter 2014 production in the Hugoton Basin region averaged 201 MMcfe/d. The Company is running a one rig drilling program and continues to implement optimization projects in the field. After closing the first Exxon Mobil trade and the acquisitions of assets from Pioneer and Devon, LINN is now the largest producer in the field with pro forma net production in the region of approximately 275 MMcfe/d, approximately 1.6 million net acres and two natural gas processing plants. The Hugoton Basin region will become LINN's second largest operating area by production and the Company plans to continue growing through low-cost development and improving operational efficiencies. Third Quarter 2014 Results LINN increased production 51 percent to approximately 1,245 MMcfe/d for the third quarter 2014, compared to 823 MMcfe/d for the third quarter 2013. This increase in production is attributable to acquisitions completed in 2013 and 2014 as well as the Company's capital program . Total revenues and other for the third quarter 2014 were approximately $1.4 billion, compared to approximately $495 million for the third quarter 2013, which includes non-cash gains related to changes in fair value of unsettled commodity derivatives, including the reduction of put option premium value over time, of approximately $423 million and non-cash losses of $99 million, respectively. Lease operating expenses for the third quarter 2014 were approximately $192 million, or $1.67 per Mcfe, compared to $87 million, or $1.15 per Mcfe, for the third quarter 2013. Transportation expenses for the third quarter 2014 were approximately $53 million, or $0.47 per Mcfe, compared to $36 million, or $0.47 per Mcfe, for the third quarter 2013. Taxes, other than income taxes, for the third quarter 2014 were approximately $67 million, or $0.58 per Mcfe, compared to $36 million, or $0.48 per Mcfe, for the third quarter 2013. General and administrative expenses for the third quarter 2014 were approximately $75 million, or $0.66 per Mcfe, compared to $45 million, or $0.60 per Mcfe, for the third quarter 2013, which includes approximately $9 million and $8 million, respectively, of noncash unit-based compensation expenses. Depreciation, depletion and amortization expenses for the third quarter 2014 were approximately $290 million, or $2.54 per Mcfe, compared to $209 million, or $2.76 per Mcfe, for the third quarter 2013. Interest expense, net of amounts capitalized, for the third quarter 2014 was approximately $154 million, compared to $104 million for the third quarter 2013.
The Company reported a net loss of approximately $4 million, or $0.02 per unit, for the third quarter 2014, which includes non-cash gains related to changes in fair value of unsettled commodity derivatives, including the reduction of put option premium value over time, of approximately $423 million, or $1.28 per unit, and an impairment charge of approximately $603 million, or $1.83 per unit, related to the divestiture of certain high valued unproved properties in the Midland Basin. This compares to a net loss of approximately $30 million, or $0.13 per unit, for the third quarter 2013, which includes non-cash losses in fair value of unsettled commodity derivatives, including the reduction of put option premium value over time, of approximately $99 million, or $0.42 per unit.The Company fully covered its distribution and generated excess of net cash provided by operating activities after distributions to unitholders and discretionary adjustments of approximately $88 million for the third quarter 2014 compared to an excess of net cash of approximately $2 million for the third quarter 2013 (see Schedule 1, footnote 6). Guidance Update LINN expects production for the fourth quarter 2014 to average between 1,350 to 1,405 MMcfe/d, which equates to full-year 2014 production guidance of 1,203 to 1,227 MMcfe/d. The Company expects to incur a shortfall of net cash provided by operating activities after distributions to unitholders and discretionary adjustments of approximately $94 million for the fourth quarter 2014. Fourth quarter 2014 results are anticipated to include approximately $45 million of negative divestiture-related cash flows from the pending sale of Granite Wash and Cleveland plays and sale of certain Wolfberry properties. Similarly, the Company had excess of net cash provided by operating activities after distributions to unitholders and discretionary adjustments of approximately $88 million for the third quarter 2013, which included approximately $80 million of positive acquisition-related cash flows from the closed trade with Exxon Mobil and closed acquisitions with Devon and Pioneer.
Updated operational and financial guidance is provided in the supplemental information posted at www.linnenergy.com. Please refer to Schedule 1, footnote 3 for more information regarding acquisition and divestiture related cash flows.Hedging Update The Company is hedged approximately 90 percent to 100 percent on expected natural gas production in 2015 and 2016. LINN is hedged approximately 60 percent to 70 percent in 2015 and approximately 50 percent to 60 percent for 2016 on expected oil production through a combination of swaps, 3-way collars and puts. In addition, the Company has hedged natural gas differentials in certain regions but has not hedged any of its exposure to oil differentials. The Company does not directly hedge NGL volumes. As a result of the significant volume of completed and announced transactions this year, these estimates are preliminary and may change once the Company has completed its 2015 budget process. The Company intends to update these estimates when it issues guidance for 2015. Cash Distributions and Dividends During the third quarter 2014, LINN paid three monthly cash distributions of $0.2416 per unit ($2.90 per unit on an annualized basis) on July 16, August 14 and September 11, 2014. LinnCo paid three monthly cash dividends of $0.2416 per common share ($2.90 per share on an annualized basis) on July 17, August 15 and September 12, 2014. Conference Call and Webcast As previously announced, management will host a conference call on Tuesday, November 4, 2014, at 10 a.m. Central (11 a.m. Eastern) to discuss the Company's third quarter 2014 results and its outlook for the remainder of 2014. Prepared remarks by Mark E. Ellis, Chairman, President and Chief Executive Officer, and Kolja Rockov, Executive Vice President and Chief Financial Officer, will be followed by a question and answer session. Investors and analysts are invited to participate in the call by dialing (855) 319-4076, or (631) 887-3945 for international calls using Conference ID: 99086684. Interested parties may also listen over the Internet at www.linnenergy.com. A replay of the call will be available on the Company's website or by phone until 4:00 p.m. Central (5 p.m. Eastern), November 18, 2014. The number for the replay is (855) 859-2056, or (404) 537-3406 for international calls using Conference ID: 99086684.
ABOUT LINN ENERGYLINN Energy's mission is to acquire, develop and maximize cash flow from a growing portfolio of long-life oil and natural gas assets. LINN Energy is a top-15 U.S. independent oil and natural gas development company, with approximately 7.8 Tcfe of proved reserves (pro forma for announced 2014 trades, acquisitions and divestitures) in producing U.S. basins as of December 31, 2013. More information about LINN Energy is available at www.linnenergy.com. ABOUT LINNCO LinnCo was created to enhance LINN Energy's ability to raise additional equity capital to execute on its acquisition and growth strategy. LinnCo is a Delaware limited liability company that has elected to be taxed as a corporation for United States federal income tax purposes, and accordingly its shareholders will receive a Form 1099 in respect of any dividends paid by LinnCo. More information about LinnCo is available at www.linnco.com. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS This press release includes "forward-looking statements." All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include, but are not limited to forward-looking statements related to acquisitions, trades or divestitures or their expected tax treatment, timing and payment of distributions, taxes and the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, hedging activities, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of current conditions, historical trends, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to the Company's financial performance and results, availability of sufficient cash flow to pay distributions and execute its business plan, prices and demand for oil, natural gas and natural gas liquids, the ability to replace reserves and efficiently develop current reserves and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the Securities and Exchange Commission. Please read "Risk Factors" in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|Net cash provided by operating activities||$ 520,175||$ 379,155||$ 1,435,810||$ 940,511|
|Distributions to unitholders||(240,652)||(170,569)||(721,235)||(511,686)|
|Excess of net cash provided by operating activities after distributions to unitholders||279,523||208,586||714,575||428,825|
|Discretionary adjustments considered by the Board of Directors:|
|Discretionary reductions for a portion of oil and natural gas development costs (1)||(213,252)||(115,659)||(606,120)||(337,869)|
|Cash recoveries of bankruptcy claim (2)||—||—||(2,913)||(5,073)|
|Cash received (paid) for acquisitions or divestitures – revenues less operating expenses (3)||79,555||(233)||79,555||(7,023)|
|Provision for legal matters (4)||—||1,000||1,598||1,000|
|Changes in operating assets and liabilities and other, net (5)||(57,443)||(91,401)||(69,249)||(116,031)|
|Excess (shortfall) of net cash provided by operating activities after distributions to unitholders and discretionary adjustments considered by the Board of Directors (6)||$ 88,383||$ 2,293||$ 117,446||$ (36,171)|
CONTACT: LINN Energy, LLC and LinnCo, LLC Investors and Media: Clay Jeansonne, Vice President, Investor and Public Relations 281-840-4193 Zach Dailey, Director, Investor Relations 713-904-6547 Sarah Nordin, Public Relations & Media 713-904-6605