Linn Energy LLC (LINE, Financial) filed Quarterly Report for the period ended 2010-06-30.
Linn Energy Llc has a market cap of $4.42 billion; its shares were traded at around $29.9 with a P/E ratio of 18.7 and P/S ratio of 16.2. The dividend yield of Linn Energy Llc stocks is 8.4%.LINE is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
At June 30, 2010, the Company had long-term debt outstanding under its Credit Facility of approximately $600.0 million, which incurred interest at floating rates (see Note 6). A 1% increase in LIBOR would result in an estimated $6.0 million increase in annual interest expense. The Company has entered into interest rate swap agreements based on LIBOR to minimize the effect of fluctuations in interest rates (see Note 7).
At June 30, 2010, the average public bond yield spread utilized to estimate the impact of the Company s credit risk on derivative liabilities was approximately 4.38%. A 1% increase in the average public bond yield spread would result in an estimated $0.7 million increase in net income for the six months ended June 30, 2010. At June 30, 2010, the credit default swap spreads utilized to estimate the impact of counterparties credit risk on derivative assets ranged between 0% and 2.21%. A 1% increase in each of the counterparties credit default swap spreads would result in an estimated $4.1 million decrease in net income for the six months ended June 30, 2010.
In May 2010, the Company entered into a settlement agreement with the South Coast Air Quality Management District under which the Company agreed to pay penalties and fees for improper natural gas flaring under its current permit. The Company has not been cited for violation of emission standards associated with this activity and it is taking appropriate steps to remedy the situation. The Company estimates that total penalties associated with this matter will be approximately $100,000 and has paid approximately $69,000 as of June 30, 2010. The Company does not expect this matter to have a material adverse impact on its financial condition or results of operations.
The recently enacted Health Care and Education Reconciliation Act of 2010 includes a provision that, in taxable years beginning after December 31, 2012, subjects certain individuals, estates and trusts to an Unearned Income Medicare Contribution tax of 3.8% on certain income. In the case of an individual having a modified adjusted gross income in excess of $200,000 (or $250,000 for married taxpayers filing joint returns), the provision imposes a tax equal to 3.8% of the lesser of such excess and the individual s “net investment income,” which will include net income and gains from the ownership or disposition of our units.
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Linn Energy Llc has a market cap of $4.42 billion; its shares were traded at around $29.9 with a P/E ratio of 18.7 and P/S ratio of 16.2. The dividend yield of Linn Energy Llc stocks is 8.4%.LINE is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
The Company enters into derivative contracts with respect to a portion of its projected production through various transactions that provide an economic hedge of the risk related to the future prices received. The Company does not enter into derivative contracts for trading purposes (see Note 7). At June 30, 2010, the fair value of contracts that settle during the next 12 months was an asset of approximately $277.1 million and a liability of $2.4 million for a net asset of approximately $274.7 million. A 10% increase in the index oil and natural gas prices above the June 30, 2010, prices for the next 12 months would result in a net asset of approximately $198.5 million which represents a decrease in the fair value of approximately $76.2 million; conversely, a 10% decrease in the index oil and natural gas prices would result in a net asset of approximately $350.3 million which represents an increase in the fair value of approximately $75.6 million.At June 30, 2010, the Company had long-term debt outstanding under its Credit Facility of approximately $600.0 million, which incurred interest at floating rates (see Note 6). A 1% increase in LIBOR would result in an estimated $6.0 million increase in annual interest expense. The Company has entered into interest rate swap agreements based on LIBOR to minimize the effect of fluctuations in interest rates (see Note 7).
At June 30, 2010, the average public bond yield spread utilized to estimate the impact of the Company s credit risk on derivative liabilities was approximately 4.38%. A 1% increase in the average public bond yield spread would result in an estimated $0.7 million increase in net income for the six months ended June 30, 2010. At June 30, 2010, the credit default swap spreads utilized to estimate the impact of counterparties credit risk on derivative assets ranged between 0% and 2.21%. A 1% increase in each of the counterparties credit default swap spreads would result in an estimated $4.1 million decrease in net income for the six months ended June 30, 2010.
In May 2010, the Company entered into a settlement agreement with the South Coast Air Quality Management District under which the Company agreed to pay penalties and fees for improper natural gas flaring under its current permit. The Company has not been cited for violation of emission standards associated with this activity and it is taking appropriate steps to remedy the situation. The Company estimates that total penalties associated with this matter will be approximately $100,000 and has paid approximately $69,000 as of June 30, 2010. The Company does not expect this matter to have a material adverse impact on its financial condition or results of operations.
The recently enacted Health Care and Education Reconciliation Act of 2010 includes a provision that, in taxable years beginning after December 31, 2012, subjects certain individuals, estates and trusts to an Unearned Income Medicare Contribution tax of 3.8% on certain income. In the case of an individual having a modified adjusted gross income in excess of $200,000 (or $250,000 for married taxpayers filing joint returns), the provision imposes a tax equal to 3.8% of the lesser of such excess and the individual s “net investment income,” which will include net income and gains from the ownership or disposition of our units.
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