Linn Energy (LINE)

[dan_s]

By Ben Levisohn at Barrons

...of its asset sales that is following its recent sale. RBC Capital Markets' John Ragozzino and team take a look at what that means for Linn Energy ( LINE):

"Asset Rationalization Strategy Nearing Completion. After a busy A&D program thus far in 2014, Linn Energy has successfully exited the majority of its high decline, unconventional assets (including its entire GW & Cleveland positions, its Wolfberry assets and a majority of its Permian properties) which have dragged on portfolio efficiency for some time. The final step in this transformational asset rationalization strategy will be the sale of the remaining Midland Basin assets, which we believe will ultimately fetch up to another $750MM in proceeds in the near future. The efficient redeployment of proceeds in a reverse [like kind exchange], including the acquisition of $2.3B in mature assets from Devon Energy ( DVN), will ultimately reduce Linn Energy's overall portfolio decline rate to a far more manageable 15% on a proforma basis. Additionally, capex reductions are estimated between $300MM-$400MM for 2015, further enhancing Linn Energy's DCF generation potential."

VERY IMPORTANT: Linn Energy has over 80% of their July-Dec crude oil production hedged at $92.48/bbl and over 50% of their 2015 crude oil hedged at $94.48/bbl. Most of their natural gas for the 18 months ending 12-31-2015 is hedged at over $5.12/mcf.