LINE

[dan_s]

Here is what Stifel had to say:

"LINN Energy LLC (LINE, Buy, $4.76) reported 2Q15 earnings which largely exceeded our estimates. However, the strong
quarter was overshadowed by the decision to suspend the distribution following the September 2015 payment. Given the
implied excess coverage in 2H15, we are admittedly surprised by the decision to suspend the distribution. However, we
believe it is the best move in this current market with its senior debt trading at significant discounts and the need to
progress towards deleveraging its balance sheet. We anticipate a rollover in the investor base given the historical focus on
the income stream however we continue to see value as the partnership continues to right the ship. We are reiterating our
Buy rating and lowering our target price to $7.00 reflecting 7.5x EV/NTM EBITDA estimate."

I will take a hard look at LINE this weekend.

[Chena47]

Hi Dan. As you revue Line energy, would you also comment on why they had such a large loss of 191 million dollars on their derivatives for this past quarter. Thanks

[dan_s]

When commodity prices are higher at the end of a quarter than at the beginning of the quarter, SEC and GAAP accounting rules require a "mark-to-market" adjustment of the derivatives. Don't feel too bad, this is extremely confusing stuff for most investors and most CPAs that don't work in the upstream area.

Think of it like this. Hedges are like Put Options. If you own Puts options on a stock and the price of the stock goes up, the value of your Puts goes down.

If oil prices stay where they are today until 9/30. LINE will record a HUGE gain on those same hedges in the 3rd quarter.

When I update the LINE forecast model, I will break out the realized gain from the unrealized loss and it may make more sense to you.

This is why all of you need to ignore "reported earnings" and focus on cash flow from operations.

[cmm3rd]

Just out this afternoon:

Linn Energy LLC (LINE) said late Tuesday its board approved a proposal to suspend Linn's distribution and dividend at its affiliate LinnCo(LNCO) as of Sept. 30. "Linn's board of directors will evaluate the company's ability to reinstate the distribution and dividend on an ongoing basis," said the company in a statement. Shares of Linn were unchanged in after- hours trade while LinnCo(LNCO) shares fell 1.3%.

[dan_s]

I know this is painful for LINE and LNCO shareholders, but survival is much more important than the dividend. They are buying back their debt at a big discount. With improving oil prices they should make it.

BTW I did drop LINE from our High Yield Income Portfolio months ago. I will look at their Q3 results, but it will be a struggle for them for a few more quarters.