LINN Energy Q4 Loss Widens; Stock Plunges

(RTTNews) - LINN Energy, LLC (LINE) reported that its net loss for the fourth quarter 2015 was $2.5 billion and $7.05 per unit, compared to net loss of $155 million and $0.47 per unit in the fourth quarter 2014.

In the pre-market trade, LINE is currently trading at $0.81, down $0.17 or 17.31%. The latest-quarter results included non-cash impairment charges of approximately $3.0 billion, or $8.63 per unit, non-cash losses related to changes in fair value of unsettled commodity derivatives of approximately $83 million, or $0.24 per unit, and non-cash gains on extinguishment of debt of approximately $506 million, or $1.44 per unit.

The prior year result included non-cash impairment charges of approximately $1.7 billion, or $5.16 per unit, and non-cash gains related to changes in fair value of unsettled commodity derivatives of approximately $1.2 billion, or $3.70 per unit.

The non-cash impairment charges for the fourth quarter 2015 were primarily due to lower commodity prices and the Company's estimates of proved reserves. In the fourth quarter 2014, the non-cash impairment charges were due to a steep decline in commodity prices.

Production decreased 16 percent to 1,134 MMcfe/d for the fourth quarter 2015, compared to 1,358 MMcfe/d for the fourth quarter 2014. This decrease was primarily attributable to divestiture activities during the fourth quarter 2014 and reduced capital expenditures.

Total revenues and other were approximately $647 million for the fourth quarter 2015, compared to $2.2 billion for the fourth quarter 2014, which includes losses related to non-cash changes in fair value of unsettled commodity derivatives of approximately $86 million and gains of approximately $1.2 billion, respectively.

LINN's Board of Directors and management are in the process of evaluating strategic alternatives to help strengthen its balance sheet and maximize the value of the Company. As part of this process, LINN has elected to exercise its 30-day grace period with respect to interest payments due March 15, 2016 of approximately $30 million on its 7.75% senior notes due February 2021, approximately $12 million on its 6.50% senior notes due September 2021 and approximately $18 million on the Berry Petroleum Company, LLC ("Berry") senior notes due September 2022.

If LINN fails to make the interest payments within the 30-day grace period and is otherwise unable to obtain a waiver or other suitable relief from the holders under the indentures governing the senior notes prior to the expiration of the 30-day grace period, the default under the indentures will mature into an event of default, allowing the noteholders to accelerate the outstanding indebtedness under the senior notes.

LINN has approved a 2016 capital budget of approximately $340 million. The 2016 budget includes $250 million of oil and natural gas capital expenditures, which represents a 44 percent reduction from approximately $450 million spent to develop oil and natural gas properties in 2015. LINN also plans to spend approximately $75 million of plant and pipeline capital. The Company expects to fund its 2016 oil and natural gas capital program primarily from internally generated cash flow.

The Company's full-year 2016 production is expected to be approximately 14 percent lower than full-year 2015 production, which includes approximately 50 MMcfe/d of marginal well shut-ins.