LinnCo / LinnEnergy suspends dividend in september

    LINNco/LinnEnergy has reported the following second quarter 2015 results:

    • Grew average daily production by 1.5 percent to approximately 1,219 MMcfe/d for the second quarter 2015, compared to 1,201 MMcfe/d for the first quarter 2015;
    • Increased full-year 2015 production guidance by approximately four percent and decreased lease operating expenses guidance by six percent;
    • Total revenues of approximately $322 million for the second quarter 2015, which includes losses on oil and natural gas derivatives of approximately $191 million;
    • Improved lease operating expenses by 18 percent to approximately $141 million for the second quarter 2015, compared to $173 million for the first quarter 2015;
    • Net loss of approximately $379 million, or $1.12 per unit, for the second quarter 2015, which includes non-cash losses related to changes in fair value of unsettled commodity derivatives of approximately $455 million, or $1.33 per unit;
    • Excess of net cash provided by operating activities after distributions to unitholders and discretionary adjustments considered by the Board of Directors (“Board”), including total development of oil and natural gas properties (see Schedule 1) of approximately $71 million for the second quarter 2015;
    • Estimated net positive mark-to-market hedge book value of approximately $1.6 billion as of June 30, 2015, and $1.8 billion as of July 28, 2015.
      The Company highlighted the following significant accomplishments:
    • Repurchased approximately $599 million of outstanding senior notes in July and $783 million year-to-date, resulting in annualized interest cost savings of approximately $54 million;
    • Announced the sale of the remaining Permian Basin Wolfcamp acreage for approximately $281 million
    • Anticipate full-year cost reductions in lease operating expenses of approximately $100 million;
    • Anticipate general and administrative expense reductions of approximately $30 million on an annualized basis;
    • Estimate combined cost reductions in lease operating expenses, general and administrative expenses, interest expense and capital costs of more than $225 million on an annualized basis;
    • Completed the semi-annual borrowing base redetermination in May 2015 with a liquidity position of approximately $1.5 billion as of June 30, 2015;

    Current guidance for the full-year 2015 anticipates funding total oil and natural gas capital expenditures, along with distributions paid through September 2015, from internally generated cash flow with an excess of net cash after total oil and natural gas development costs of approximately $200 million;
    Finalized the strategic alliance with GSO Capital Partners LP, the credit platform of The Blackstone Group L.P., to fund up to $500 million of oil and natural gas development with 5-year availability; and
    Finalized the strategic alliance with private capital investor Quantum Energy Partners to commit up to $1 billion of equity capital to fund acquisitions and development of oil and natural gas assets.
    “As a result of the high quality of our asset base and our employees’ focus on optimization efforts, we continued to outperform during the second quarter. We have made exceptional progress in reducing costs across the Company, allowing us to cover the distribution and total oil and natural gas capital while generating an excess of $71 million,” said Mr. Ellis. “We also announced today that we have repurchased an additional $599 million of our senior notes, bringing our year-to-date total to approximately $783 million. The continued commodity price uncertainty has created a unique opportunity to repurchase our bonds at a significant discount, and we believe this not only represents the best current use of capital but will also help solidify the Company’s long-term financial position.”

    In July 2015, LINN repurchased approximately $599 million of senior notes in privately negotiated transactions for approximately $392 million, representing a discount to par of approximately 35 percent (yield to maturity of 18 percent and return on investment of greater than 50 percent). Year-to-date, the Company has repurchased a total of approximately $783 million of senior notes. LINN estimates the aggregate senior note repurchases to result in annualized interest cost savings of approximately $54 million.

    “This significant repurchase of our outstanding senior notes demonstrates our proactive commitment to investing our cash resources in the most attractive risk-adjusted return opportunity. We expect this series of transactions, along with potential future repurchases, to add meaningful unitholder value for the long term,” said Kolja Rockov, Executive Vice President and Chief Financial Officer.

    In July 2015, LINN repurchased approximately $599 million of senior notes in privately negotiated transactions for approximately $392 million, representing a discount to par of approximately 35 percent (yield to maturity of 18 percent and return on investment of greater than 50 percent). Year-to-date, the Company has repurchased a total of approximately $783 million of senior notes. LINN estimates the aggregate senior note repurchases to result in annualized interest cost savings of approximately $54 million.

    “This significant repurchase of our outstanding senior notes demonstrates our proactive commitment to investing our cash resources in the most attractive risk-adjusted return opportunity. We expect this series of transactions, along with potential future repurchases, to add meaningful unitholder value for the long term,” said Kolja Rockov, Executive Vice President and Chief Financial Officer.