LiINN Energy Q2 Loss Widens; Plans To Recommend Suspension Of Distribution

(RTTNews) - LINN Energy LLC (LINE) reported second-quarter net loss of $379 million or $1.12 per unit, wider than net loss of $208 million or $0.64 per unit in the prior year.

The latest quarter's results include non-cash losses related to changes in fair value of unsettled commodity derivatives of about $455 million, or $1.33 per unit. The prior-year quarter's results include non-cash losses related to changes in fair value of unsettled commodity derivatives of about $393 million, or $1.20 per unit.

Total revenues for the quarter were $322 million, including losses on oil and natural gas derivatives of about $191 million.

Production for the quarter increased 8 percent to an average of about 1,219 MMcfe/d, compared to 1,131 MMcfe/d in the year-ago period.

LINN Energy said it has undertaken a comprehensive cost reduction initiative that has already generated significant savings. The company anticipates full-year cost reductions in lease operating expenses of approximately $100 million.

Based on successful cost management efforts and two quarters of favorable performance compared to guidance, LINN Energy has increased its previously announced combined cost reduction targets to over $225 million on an annualized basis.

LINN Energy also said it has increased full-year 2015 production guidance by about 4 percent.

Further, LINN Energy and LinnCo LLC (LNCO) said they plan to recommend suspension of LINN's distribution and LinnCo's dividend. LINN Energy also said it repurchased about $599 million of senior notes at a 35 percent discount.

"After careful consideration, management has decided to recommend to the Board of Directors that it suspend payment of LINN's distribution and LinnCo's dividend at the end of the third quarter 2015 and reserve approximately $450 million in cash from annualized distributions. The Board and management believe this suspension to be in the best long-term interest of all Company stakeholders," said Mark Ellis, Chairman, President and Chief Executive Officer.