Link to Report: LINN Will Lose More than $1 Billion in 2015 | 4Q14 Results, Guidance, and 10-K Recap
Summary Bullets
- We expect LINN Energy’s oil and gas business to lose $(1.2)B and generate no CFFO in 2015. EBITDAX = interest expense. The hedge book will generate $1.0B of “cash flow,” which is what will fund $600MM of CapEx and $417MM of distributions in 2015.
- LINE and LNCO are worth $0. We value LINN between $4.7B - $6.5B. Its net debt is $10.3B.
- “DrillCo” and “AcquisitionCo” are unlikely to solve any of LINN’s problems.
- We believe true maintenance CapEx to be ~$1.0B - $1.1B per year. LINN will only spend $600MM in 2015.
- A capital efficiency and reserve replacement analysis is included in the note.
- A detailed review of the 10-K is included in the note.
Kevin Kaiser
Managing Director
