What to Expect From Linn Energy Earnings

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Independent oil and gas producer Linn Energy LLC (NASDAQ: LINE) is scheduled to report third-quarter results before markets open Thursday. Linn Energy and its sister company, LinnCo LLC (NASDAQ: LNCO), cut distributions and dividends from $2.90 per unit or share to $1.25 in January of this year, and suspended them altogether in early October.

The estimates from Thomson/First Call are not likely to brighten the picture. Linn Energy, an upstream master limited partnership (MLP), is expected to post earnings per common unit of $0.13 on revenues of $765.1 million, and LinnCo is forecast to post earnings per share (EPS) of $0.21 on $749.8 million in revenues. In the June quarter, Linn Energy posted earnings of $0.22 per unit and paid its quarterly cash distribution of $0.3125 in three monthly installments of $0.1042 per common unit.

In late October, Linn Energy announced that its maximum borrowing availability under its credit facility had been lowered to $3.6 billion and that borrowing under a credit facility for Berry Petroleum had been cut to $900 million, which includes $250 million of restricted cash posted as collateral with Berry’s lenders.

In May, Goldman Sachs cut its rating on Linn Energy’s common units to Sell, and more recent ratings changes are pointed in the same direction:

  • FBR downgraded the common units to Underperform and lowered its price target from $6 to $2.
  • Stifel Nicolaus cut it from Buy to Hold.
  • Barclays reiterated an Equal Weight rating but cut its price target from $9 to $1.50
  • Citigroup reiterated a Hold rating but cut the price target from $5 to $4.

In the noon hour Wednesday, Linn Energy common units traded up about 3.8%, at $2.86 in a 52-week range of $2.01 to $24.50. The consensus price target on the units is $3.15.

LinnCo’s shares traded at $2.65, flat with Tuesday’s closing price, in a 52-week range of $1.88 to $22.55. The price target on the stock is $5.58.

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