HOUSTON, Feb. 26, 2009 (GLOBE NEWSWIRE) -- Linn Energy, LLC (Nasdaq:LINE) announced today financial and operating results from continuing operations for the quarter and year ended December 31, 2008 and its outlook for 2009.
The following are significant achievements for 2008, as compared to 2007:
* Replaced 282% of production through the drill bit at a finding
and development cost of $1.44 per Mcfe (excluding price-related
revisions);
* Increased proved reserves by 17% to 1,660 Bcfe from 1,419 Bcfe
(including negative price-related revisions of 218 Bcfe);
* Increased average daily production by 144% to 212 MMcfe/d from 87
MMcfe/d;
* Increased adjusted EBITDA by 92% to $498 million from $259
million;
* Completed the sale of non-core assets for an aggregate contract
price of approximately $1 billion;
* A balance sheet with year end borrowing capacity of approximately
$440 million;
* Current production levels hedged approximately 100% for 2009,
2010 and 2011; and
* Current commodity hedge portfolio with a value of approximately
$1.1 billion as of February 20, 2009.
"In spite of a very challenging environment during 2008, Linn Energy achieved exceptional results," said Michael C. Linn, Chairman and Chief Executive Officer. "For the year, we added 228 Bcfe of proved reserves via the drill bit, replacing 282% of our production at a very attractive cost of $1.44 per Mcfe, excluding price-related revisions, which is a testament to the high quality of our assets and our operating team. Additionally, with the strategic moves in 2008 to divest approximately $1 billion of non-core assets, we strengthened our balance sheet and improved our financial flexibility. Given our comprehensive hedging program and our self-funded capital budget, we feel confident in our ability to continue to pay our distributions even amid low commodity prices and challenging credit market conditions."
2009 Guidance Highlights
* 100% hedged at weighted average prices of $102.21 per Bbl and $8.32
per MMBtu for oil and gas, respectively;
* Conservative capital budget of $150 million funded from internally
generated cash flow;
* Adjusted EBITDA of $540 million; and
* Estimated distribution coverage for the first quarter of 1.20x and
1.10x for 2009.
Fourth Quarter 2008 Results
Production for the fourth quarter 2008 averaged 201 MMcfe/d, compared to 176 MMcfe/d for the fourth quarter 2007. Production volumes for the fourth quarter 2008 were adversely affected by a wildfire in the Company's Brea Olinda Field in California that resulted in shut-in production for much of the quarter. Production at the Brea Olinda Field has now been restored. The Company's production was also affected by unusually high line pressures in several Granite Wash gathering systems, as well as lower than expected production from non-operated Mid-Continent properties, of which a portion was non-current. The Company initiated several projects in the Granite Wash area in the fourth quarter and, as a result, line pressures in the Granite Wash gathering systems have improved. Company-wide production volumes for January 2009 have recovered to an average of 215 MMcfe/d.
Hedged realized prices per Bbl for oil and NGL production were $81.15 and $32.95, respectively, for the fourth quarter 2008, compared to $69.00 and $63.48 per Bbl for the fourth quarter 2007. Hedged realized prices for gas were $7.36 per Mcf for the fourth quarter 2008, compared to $8.55 per Mcf for the fourth quarter 2007. Oil, gas and NGL revenues were $83 million and hedge revenues were $72 million, for combined revenues (a non-GAAP financial measure) of $155 million for the fourth quarter 2008, compared to $151 million for the fourth quarter 2007.
During the fourth quarter 2008, the Company generated adjusted EBITDA (a non-GAAP financial measure) of $78 million. The Company's adjusted EBITDA for the quarter was negatively impacted by lower production volumes and associated revenue, along with higher operating costs.
The Company utilizes commodity hedging to capture cash flow margin and reduce cash flow volatility. Due to the significant decrease in commodity prices during the fourth quarter, the Company reported a gain on derivatives from oil and gas hedges of approximately $957 million for the quarter, including $885 million of non-cash change in fair value of hedge positions. Non-cash gains or losses do not affect adjusted EBITDA, cash flow from operations or the Company's ability to pay its cash distributions.
2008 Results
Production for 2008 averaged 212 MMcfe/d, compared to 87 MMcfe/d for 2007. The Company drilled 306 wells with a 99% success rate that resulted in an approximate 9% organic production growth rate. Adjusted EBITDA was $498 million in 2008, which represents a 92% increase over 2007.
Hedged realized prices per Bbl for oil and NGL production were $80.92 and $57.86, respectively, for 2008, compared to $67.07 and $55.51 per Bbl for 2007. Hedged realized prices for gas were $8.42 per Mcf for 2008, compared to $8.36 per Mcf for 2007. Combined revenues (a non-GAAP financial measure) of oil, gas, NGL and hedge revenues were $684 million for 2008, compared to $293 million for 2007.
During the second quarter, the Company completed a bond offering of $256 million of 9 7/8% Senior Unsecured Notes due 2018. Net proceeds from the offering were used to repay borrowings under a term loan.
During the third quarter, the Company took advantage of the strength in crude oil prices to reposition its hedge portfolio by raising its swap prices to $90.00 per Bbl in 2009 and 2010, as well as to $84.22 per Bbl for 2011 through 2014. The Company also increased the weighted average put strike price to $120.00 from $72.13 per Bbl in 2009 and to $110.00 from $70.56 per Bbl in 2010.
Also in 2008, the Company announced the sale of non-core assets for an aggregate contract price of approximately $1 billion in three separate transactions. During the third quarter 2008, the Company completed the sale of its interests in oil and gas properties located in the Appalachian Basin for a contract price of $600 million and its interests in oil and gas properties located in the Verden area of Oklahoma for a contract price of $185 million. During the fourth quarter 2008, the Company completed the sale of its deep rights in certain central Oklahoma acreage, including the Woodford Shale interval, for a contract price of $202 million. The Company used net proceeds from the sales to reduce indebtedness.
Reserve Update
The Company's proved reserves at December 31, 2008 were 1.7 Tcfe, of which 68% were classified as proved developed. Proved reserves at December 31, 2008 were 51% gas, 31% oil and 18% NGL. The Company estimates the PV-10 (a non-GAAP financial measure) of its approximately 1.7 Tcfe of proved reserves to be over $3.5 billion, based on its oil and gas hedge prices for 2009-2014 and strip prices as of December 31, 2008 for unhedged volumes.
During 2008, the Company demonstrated its ability to grow organically by adding 228 Bcfe of proved reserves from the drill bit. The Company had negative reserve revisions of 228 Bcfe, of which substantially all were associated with the low commodity price environment at year end. Finding and development costs from the drill bit were $1.44 per Mcfe and the reserve replacement ratio was 282% (excluding price-related revisions). Including acquisitions, the Company achieved a reserve replacement ratio of approximately 756% at a reserve replacement cost of $1.53 per Mcfe (excluding price-related revisions). The Company's reserve estimates were based upon prices of $39.22 per Bbl and $5.71 per MMBtu as of December 31, 2008.
Proved Reserves Table - Continuing Operations (Bcfe)
-----------------------------------------------------------
Proved reserves at December 31, 2007 1,419
-----------------------------------------------------------
Revision of previous estimates due to price (218)
-----------------------------------------------------------
Revision of previous estimates due to other (10)
-----------------------------------------------------------
Purchase of minerals in place 368
-----------------------------------------------------------
Sales of minerals in place (49)
-----------------------------------------------------------
Extension, discoveries and other 228
-----------------------------------------------------------
Production (78)
-----------------------------------------------------------
Proved reserves at December 31, 2008 1,660
-----------------------------------------------------------
2008 Costs Expended Table - Continuing Operations ($ millions)
(a Non-GAAP Financial Measure)
-----------------------------------------------------------
Oil and gas capital $315
-----------------------------------------------------------
Acquisition capital $585
-----------------------------------------------------------
Total costs expended $900
-----------------------------------------------------------
2009 Capital Budget
The 2009 capital budget of $150 million was high graded to focus on low cost production and reserve projects, including workovers and recompletions, complemented by drilling opportunities in the Texas Panhandle that offer the highest returns for the Company. In light of low commodity prices, the Company's capital budget amount represents a decrease of approximately 50% in spending and a two-thirds reduction from the number of wells drilled in 2008. The Company estimates its 2009 maintenance capital to be $97 million, or 65% of the total capital budget.
Unit Repurchase Program
On October 9, 2008, the Board of Directors authorized the repurchase of up to $100 million of the Company's outstanding units. During the fourth quarter 2008, the Company repurchased 1,076,900 units at an average cost of $12.09 per unit (total cost of approximately $13 million), or a yield of 21%. The Company may purchase units from time to time on the open market or in negotiated purchases. The timing and amounts of any such repurchases will be at the discretion of management, subject to market conditions and other factors, and will be in accordance with applicable securities laws and other legal requirements. The repurchase plan does not obligate the Company to acquire any specific number of units and may be discontinued at any time.
Cash Distributions
In January 2009, the Company's Board of Directors declared a quarterly cash distribution of $0.63 per unit, or $2.52 per unit on an annualized basis, with respect to the fourth quarter 2008. The distribution was paid on February 13, 2009 to unitholders of record as of the close of business on February 6, 2009.
Annual Report on Form 10-K
The Company plans to file its Annual Report on Form 10-K for the year ended December 31, 2008 with the Securities and Exchange Commission on February 26, 2009.
Conference Call
As previously announced, management will host a teleconference call on February 26, 2009 at 10:00 a.m. Central Time/11:00 a.m. Eastern Time to discuss Linn Energy's fourth quarter 2008 results and its outlook for 2009. Prepared remarks by Michael C. Linn, Chairman and Chief Executive Officer, Mark E. Ellis, President and Chief Operating Officer, and Kolja Rockov, Executive Vice President and Chief Financial Officer, will be followed by a question and answer period.
Investors and analysts are invited to participate in the call by phone at (866) 804-6924 (Passcode: 24258412) or via the internet at www.linnenergy.com. A replay of the call will be available on the Company's website or by phone at (888) 286-8010 (Passcode: 18162832) for a seven-day period following the call.
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP financial measure that is reconciled to its most comparable GAAP financial measure under the heading "Explanation and Reconciliation of Adjusted EBITDA" in this press release (see Schedule 1).
Combined revenues is a non-GAAP financial measure that is reconciled to its most comparable GAAP financial measure under the heading "Explanation and Reconciliation of Combined Revenues" in this press release (see Schedule 3).
PV-10 is a non-GAAP financial measure that is reconciled to its most comparable GAAP financial measure under the heading "Explanation and Reconciliation of PV-10" in this press release (see Schedule 12).
The methods used by the Company to calculate finding and development cost and reserve replacement ratio may differ from methods used by other companies to compute similar measures. As a result, the Company's measures may not be comparable to similar measures provided by other companies (see Schedule 11).
ABOUT LINN ENERGY
Linn Energy is an independent oil and gas company focused on the development and acquisition of long life properties which complement its asset profile in producing basins within the United States. More information about Linn Energy is available on the internet at www.linnenergy.com.
This press release includes "forward-looking statements." All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include but are not limited to forward-looking statements about acquisitions and the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, hedging activities, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to the Company's financial performance and results, availability of sufficient cash flow to pay distributions and execute its business plan, prices and demand for oil, gas and natural gas liquids, the ability to replace reserves and efficiently develop current reserves and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the Securities and Exchange Commission. See "Risk Factors" in the Company's Annual Report filed on Form 10-K and other public filings and press releases.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
The financial summary follows; all amounts within are unaudited.
Schedule 1
Linn Energy, LLC
Explanation and Reconciliation of Adjusted EBITDA
Adjusted EBITDA
This press release includes the non-generally accepted accounting principle ("non-GAAP") financial measure of adjusted EBITDA. The accompanying schedules provide reconciliations of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with United States generally accepted accounting principles ("GAAP"). This non-GAAP financial measure should not be considered as an alternative to GAAP measures, such as net income, operating income or any other GAAP measure of liquidity or financial performance.
The Company defines adjusted EBITDA as income (loss) from continuing operations plus the following adjustments:
* Net operating cash flow from acquisitions and divestitures,
effective date through closing date;
* Interest expense;
* Depreciation, depletion and amortization;
* Impairment of goodwill and long-lived assets;
* Write-off of deferred financing fees and other;
* (Gain) loss on sale of assets, net;
* Unrealized (gain) loss on commodity derivatives;
* Unrealized (gain) loss on interest rate derivatives;
* Realized loss on canceled derivatives;
* Unit-based compensation and warrant expenses;
* Exploration costs; and
* Income tax (benefit) expense.
Adjusted EBITDA is a significant non-GAAP performance metric used by Company management to indicate (prior to the establishment of any reserves by its Board of Directors) the cash distributions the Company expects to pay unitholders. Specifically, this financial measure indicates to investors whether or not the Company is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates. Adjusted EBITDA is also a quantitative metric used throughout the investment community with respect to publicly-traded partnerships and limited liability companies.
The following presents a reconciliation of consolidated income (loss)
from continuing operations to adjusted EBITDA:
Three Months Ended Year Ended
------------------------------- --------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
(in thousands)
Income (loss)
from
continuing
operations $ 888,054 $ 921,943 $(198,878) $ 825,657 $(356,194)
Plus:
Net operating
cash flow
from acquisi-
tions and
divestitures,
effective
date through
closing
date (1) (872) (4,356) 15,767 3,436 67,417
Interest
expense, cash 16,782 17,514 18,627 81,704 35,974
Interest
expense,
noncash 6,536 5,060 918 12,813 3,000
Depreciation,
depletion and
amortization 46,834 52,004 39,740 194,093 69,081
Impairment of
goodwill and
long-lived
assets 50,505 -- -- 50,505 --
Write-off of
deferred
financing
fees and
other -- 3,351 676 6,728 3,460
(Gain) loss
on sale of
assets, net (98,763) -- 1,700 (98,763) 1,767
Unrealized
(gain) loss
on commodity
derivatives (884,865) (887,249) 214,651 (734,732) 388,733
Reclassifi-
cation of
derivative
settlements
(2) -- -- (101) -- (5,946)
Unrealized
loss on
interest rate
derivatives 44,634 3,877 25,865 50,638 29,548
Realized loss
on canceled
derivatives
(3) -- 13,161 -- 81,358 --
Unit-based
compensation
and warrant
expenses 3,301 3,913 2,956 14,699 13,518
Exploration
costs 4,654 268 3,445 7,603 4,053
Income tax
(benefit)
expense (4) 1,665 1,002 (219) 2,712 4,788
--------- --------- --------- --------- ---------
Adjusted
EBITDA from
continuing
operations $ 78,465 $ 130,488 $ 125,147 $ 498,451 $ 259,199
========= ========= ========= ========= =========
Adjusted
EBITDA from
discontinued
operations $ 749 $ (1,243) $ 10,937 $ 14,087 $ 42,681
========= ========= ========= ========= =========
(1) Includes net operating cash flow from acquisitions and
divestitures through the date of this report.
(2) During the second quarter 2008, the Company revised its
classification of realized and unrealized gains (losses) on gas
derivative contracts in order to match realized gains (losses)
with the related production. All prior periods amounts have been
reclassified to conform to current period presentation. This
reclassification had no effect on the Company's reported net
income.
(3) During the three months ended September 30, 2008 and the year
ended December 31, 2008, the Company canceled (before the
contract settlement date) derivative contracts on estimated
future gas production primarily associated with properties in
the Verden area and Appalachian Basin, resulting in realized
losses of $13.2 million and $81.4 million, respectively.
(4) Tax expense for the quarter and year ended December 31, 2008
primarily represents Texas margin tax expense. Tax expense for
the quarter and year ended December 31, 2007 relates primarily
to 2006 expense recovery. The Company's taxable subsidiaries
generated net operating losses for the year ended December 31,
2006, which were subsequently recovered through an intercompany
service charge, resulting in tax expense for the year ended
December 31, 2007.
Schedule 2
Linn Energy, LLC
Explanation and Reconciliation of Adjusted Net Income
Adjusted Net Income from Continuing Operations
Adjusted net income from continuing operations is a non-GAAP performance measure used by Company management to evaluate its operational performance from oil and gas properties, prior to derivative gains and losses, impairment of goodwill and long-lived assets and (gain) loss on sale of assets, net. The following presents a reconciliation of consolidated income (loss) from continuing operations to adjusted net income from continuing operations:
Three Months Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
(in thousands, except per unit amounts)
Income (loss) from
continuing
operations $ 888,054 $ 921,943 $(198,878) $ 825,657 $(356,194)
Plus:
Unrealized (gain)
loss on commodity
derivatives (884,865) (887,249) 214,651 (734,732) 388,733
Reclassification
of derivative
settlements -- -- (101) -- (5,946)
Unrealized loss
on interest rate
derivatives 44,634 3,877 25,865 50,638 29,548
Realized loss on
canceled
derivatives -- 13,161 -- 81,358 --
Impairment of
goodwill and
long-lived assets 50,505 -- -- 50,505 --
(Gain) loss on
sale of assets,
net (98,763) -- 1,700 (98,763) 1,767
--------- --------- --------- --------- ---------
Adjusted net income
from continuing
operations $ (435)$ 51,732 $ 43,237 $ 174,663 $ 57,908
========= ========= ========= ========= =========
Income (loss) from
continuing
operations per
unit - basic $ 7.77 $ 8.06 $ (1.97) $ 7.23 $ (5.17)
Plus, per unit:
Unrealized (gain)
loss on commodity
derivatives (7.74) (7.76) 2.12 (6.42) 5.64
Reclassification
of derivative
settlements -- -- -- -- (0.09)
Unrealized loss
on interest rate
derivatives 0.39 0.03 0.26 0.44 0.43
Realized loss on
canceled
derivatives -- 0.12 -- 0.71 --
Impairment of
goodwill and
long-lived assets 0.44 -- -- 0.44 --
(Gain) loss on
sale of assets,
net (0.86) -- 0.02 (0.87) 0.03
--------- --------- --------- --------- ---------
Adjusted net income
from continuing
operations per
unit - basic $ -- $ 0.45 $ 0.43 $ 1.53 $ 0.84
========= ========= ========= ========= =========
Schedule 3
Linn Energy, LLC
Explanation and Reconciliation of Combined Revenues
Combined Revenues
Combined revenues is a non-GAAP performance measure used by Company management to evaluate its performance. Management believes that the presentation of combined revenues provides useful information to investors because it is used by investors and securities analysts in evaluating oil and gas companies. This non-GAAP financial measure should not be considered as an alternative to GAAP measures, such as total revenues. The following presents a reconciliation of revenues and other from continuing operations to combined revenues from continuing operations:
Three Months Ended Year Ended
--------------------- ---------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
---------- --------- ---------- ---------
(in thousands)
Revenues and other
from continuing
operations $1,043,981 $ (58,787) $1,435,031 $ (75,283)
Less:
Unrealized (gain)
loss on oil and gas
derivatives (884,865) 214,550 (734,732) 382,787
Gas marketing revenues (1,790) (3,933) (12,846) (11,589)
Other revenues (2,077) (682) (3,759) (2,738)
---------- --------- ---------- ---------
Combined revenues from
continuing operations $ 155,249 $ 151,148 $ 683,694 $ 293,177
========== ========= ========== =========
Gain (loss) on oil and
gas derivatives $ 956,562 $(201,949) $ 662,782 $(345,537)
Less:
Unrealized (gain)
loss on oil and gas
derivatives (884,865) 214,550 (734,732) 382,787
---------- --------- ---------- ---------
Hedge revenues (losses) $ 71,697 $ 12,601 $ (71,950) $ 37,250
========== ========= ========== =========
Schedule 4
Linn Energy, LLC
Consolidated Statements of Operations
Three Months Ended Year Ended
------------------------------ --------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
--------- --------- -------- ---------- ---------
(in thousands, except per unit amounts)
Revenues and
other:
Oil, gas and
natural gas
liquid sales $ 83,552 $ 240,634 $ 138,547 $ 755,644 $ 255,927
Gain (loss) on
oil and gas
derivatives 956,562 845,818 (201,949) 662,782 (345,537)
Gas marketing
revenues 1,790 4,647 3,933 12,846 11,589
Other revenues 2,077 561 682 3,759 2,738
--------- --------- -------- ---------- ---------
1,043,981 1,091,660 (58,787) 1,435,031 (75,283)
--------- --------- -------- ---------- ---------
Expenses:
Lease operating
expenses 37,248 33,503 14,608 115,402 41,946
Transportation
expenses 4,923 5,683 3,383 17,597 5,575
Gas marketing
expenses 1,489 4,061 2,674 11,070 9,100
General and
administrative
expenses 21,603 18,692 17,954 77,391 51,374
Exploration
costs 4,654 268 3,445 7,603 4,053
Bad debt
expenses -- 1,436 -- 1,436 --
Depreciation,
depletion and
amortization 46,834 52,004 39,740 194,093 69,081
Impairment of
goodwill and
long-lived
assets 50,505 -- -- 50,505 --
Taxes, other
than income
taxes 13,592 17,242 11,256 61,435 22,350
(Gain) loss on
sale of assets,
net (98,763) -- 1,700 (98,763) 1,767
--------- --------- -------- ---------- ---------
82,085 132,889 94,760 437,769 205,246
--------- --------- -------- ---------- ---------
Other income and
(expenses):
Interest
expense, net of
amounts
capitalized (23,318) (22,574) (19,545) (94,517) (38,974)
Gain (loss) on
interest rate
swaps (49,191) (9,694) (25,127) (66,674) (28,081)
Other, net 332 (3,558) (878) (7,702) (3,822)
--------- --------- -------- ---------- ---------
(72,177) (35,826) (45,550) (168,893) (70,877)
--------- --------- -------- ---------- ---------
Income (loss)
from continuing
operations
before income
taxes 889,719 922,945 (199,097) 828,369 (351,406)
Income tax
benefit
(expense) (1,665) (1,002) 219 (2,712) (4,788)
--------- --------- -------- ---------- ---------
Income (loss)
from continuing
operations 888,054 921,943 (198,878) 825,657 (356,194)
Discontinued
operations:
Gain (loss) on
sale of
assets, net of
taxes (2,075) 162,442 -- 159,045 936
Income (loss)
from
discontinued
operations,
net of taxes 2,527 (1,774) (4,276) 14,914 (9,091)
--------- --------- -------- ---------- ---------
452 160,668 (4,276) 173,959 (8,155)
Net income (loss) $ 888,506 $1,082,611 $(203,154) $ 999,616 $(364,349)
========= ========= ======== ========== =========
Income (loss) per
unit -
continuing
operations:
Units - basic $ 7.77 $ 8.06 $ (1.97) $ 7.23 $ (5.17)
========= ========= ======== ========== =========
Units - diluted $ 7.76 $ 8.05 $ (1.97) $ 7.23 $ (5.17)
========= ========= ======== ========== =========
Income (loss) per
unit -
discontinued
operations:
Units - basic $ 0.01 $ 1.41 $ (0.04) $ 1.53 $ (0.12)
========= ========= ======== ========== =========
Units - diluted $ -- $ 1.41 $ (0.04) $ 1.52 $ (0.12)
========= ========= ======== ========== =========
Net income (loss)
per unit:
Units - basic $ 7.78 $ 9.47 $ (2.01) $ 8.76 $ (5.29)
========= ========= ======== ========== =========
Units - diluted $ 7.76 $ 9.46 $ (2.01) $ 8.75 $ (5.29)
========= ========= ======== ========== =========
Weighted average
units
outstanding:
Units - basic 114,229 114,321 101,096 114,140 68,916
========= ========= ======== ========== =========
Units - diluted 114,475 114,476 101,096 114,256 68,916
========= ========= ======== ========== =========
Class D - basic -- -- -- -- --
========= ========= ======== ========== =========
Class D -
diluted -- -- -- -- --
========= ========= ======== ========== =========
Distributions
declared per
unit $ 0.63 $ 0.63 $ 0.57 $ 2.52 $ 2.18
========= ========= ======== ========== =========
Schedule 5
Linn Energy, LLC
Operating Statistics - Continuing Operations
Three Months Ended Year Ended
--------------------------- ----------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
-------- --------- -------- -------- --------
Average daily production
- continuing operations:
Gas (MMcf/d) 114 127 121 124 51
Oil (MBbls/d) 8 9 5 9 3
NGL (MBbls/d) 7 7 4 6 3
Total (MMcfe/d) 201 227 176 212 87
Average daily production
- discontinued
operations:
Total (MMcfe/d) 1 1 24 12 24
Weighted average prices
(hedged):(1)
Gas (Mcf) $ 7.36 $ 8.05 $ 8.55 $ 8.42 $ 8.36
Oil (Bbl) $ 81.15 $ 85.30 $ 69.00 $ 80.92 $ 67.07
NGL (Bbl) $ 32.95 $ 65.56 $ 63.48 $ 57.86 $ 55.51
Weighted average prices
(unhedged):(2)
Gas (Mcf) $ 2.84 $ 8.63 $ 6.92 $ 7.39 $ 6.39
Oil (Bbl) $ 47.01 $ 109.96 $ 81.27 $ 92.78 $ 66.44
NGL (Bbl) $ 32.95 $ 65.56 $ 63.48 $ 57.86 $ 55.51
Representative NYMEX oil
and gas prices:
Gas (MMBtu) $ 6.95 $ 10.25 $ 6.97 $ 9.04 $ 6.86
Oil (Bbl) $ 58.74 $ 117.98 $ 90.68 $ 99.65 $ 72.34
Costs per Mcfe of
production:
Lease operating
expenses $ 2.01 $ 1.60 $ 0.90 $ 1.49 $ 1.31
Transportation expenses $ 0.27 $ 0.27 $ 0.21 $ 0.23 $ 0.17
General and
administrative
expenses(3) $ 1.17 $ 0.89 $ 1.11 $ 1.00 $ 1.61
Depreciation, depletion
and amortization $ 2.53 $ 2.49 $ 2.45 $ 2.50 $ 2.16
Taxes, other than
income taxes $ 0.74 $ 0.82 $ 0.70 $ 0.79 $ 0.70
(1) Includes the effect of realized gains (losses) of $71.7 million,
$(28.3) million and $12.6 million on derivatives for the three
months ended December 31, 2008, September 30, 2008 and December
31, 2007, respectively. Includes the effect of realized gains of
$9.4 million and $37.3 million on derivatives for the years
December 31, 2008 and 2007, respectively. The realized gains
(losses) noted above exclude losses on canceled derivative
contracts. During the three months ended September 30, 2008 and
the year ended December 31, 2008, the Company canceled (before
the contract settlement date) derivative contracts on estimated
future gas production primarily associated with properties in the
Verden area and Appalachian Basin resulting in realized losses of
$13.2 million and $81.4 million, respectively.
(2) Does not include the effect of realized gains (losses) on
derivatives.
(3) General and administrative expenses for the three months ended
December 31, 2008, September 30, 2008 and December 31, 2007
includes approximately $3.3 million, $3.9 million and
$3.0 million, respectively, of non-cash unit-based compensation
and unit warrant expenses. Excluding these amounts, general and
administrative expenses for the three months ended December 31,
2008, September 30, 2008 and December 31, 2007 were $0.99 per
Mcfe, $0.71 per Mcfe and $0.93 per Mcfe, respectively. General
and administrative expenses for the years ended December 31, 2008
and 2007 includes approximately $14.6 million and $13.5 million,
respectively, of non-cash unit-based compensation and unit
warrant expenses. Excluding these amounts, general and
administrative expenses for the years ended December 31, 2008 and
2007 were $0.81 per Mcfe and $1.19 per Mcfe, respectively. This
is a non-GAAP measure used by management to analyze the Company's
performance.
Schedule 6
Linn Energy, LLC
Selected Balance Sheet Data
December 31,
----------------------
2008 2007
---------- ----------
(in thousands)
Assets
Total current assets $ 563,931 $ 183,159
Oil and gas properties, net 3,552,378 3,386,061
Other property and equipment, net 98,288 137,439
Other noncurrent assets, net 507,423 101,044
---------- ----------
Total assets $4,722,020 $3,807,703
========== ==========
Liabilities and Unitholders' Capital
Total current liabilities $ 237,830 $ 242,727
Credit facility 1,403,393 1,443,000
Senior notes, net 250,175 --
Other noncurrent liabilities 69,936 95,335
---------- ----------
Total liabilities 1,961,334 1,781,062
Unitholders' capital 2,760,686 2,026,641
---------- ----------
Total liabilities and unitholders' capital $4,722,020 $3,807,703
========== ==========
Schedule 7
Linn Energy, LLC
Selected Cash Flow Data
Year Ended December 31,
------------------------
2008 2007
----------- -----------
(in thousands)
Net cash provided by (used in) operating
activities(1)(2) $ 179,515 $ (44,814)
Net cash used in investing activities (35,550) (2,892,420)
Net cash provided by (used in) financing
activities (116,738) 2,932,080
----------- -----------
Net increase (decrease) in cash and cash
equivalents 27,227 (5,154)
Cash and cash equivalents:
Beginning 1,441 6,595
----------- -----------
Ending $ 28,668 $ 1,441
=========== ===========
(1) The years ended December 31, 2008 and 2007 include premiums paid
for derivatives of approximately $129.5 million and $279.3
million, respectively. Premiums paid during the year ended
December 31, 2008 include $67.6 million for contracts to replace
those with Lehman Commodity Services.
(2) During the year ended December 31, 2008, the Company cancelled
(before the contract settlement date) derivative contracts on
estimated future gas production resulting in realized losses of
$81.4 million. The future gas production under the canceled
contracts primarily related to properties in the Appalachian
Basin and Verden areas.
Schedule 8
Linn Energy, LLC
Guidance Table
Q1 2009E FY 2009E
------------------- -------------------
Net Production and Other
Revenues:
Gas (MMcf/d) 123 - 127 123 - 129
Oil (Bbls/d) 8,920 - 9,170 8,500 - 8,910
NGL (Bbls/d) 5,700 - 5,860 5,920 - 6,200
Total (MMcfe/d) 211 - 217 210 - 220
Other revenues, net
(in thousands)(1) $ 725 - $ 925 $ 2,900 - $ 3,700
Costs (in thousands):
LOE $ 32,000 - $ 36,000 $132,000 - $142,000
Transportation 3,000 - 5,000 14,000 - 17,000
Production and ad valorem
taxes 7,500 - 9,500 30,500 - 34,500
-------- -------- -------- --------
Total operating expenses $ 42,500 - $ 50,500 $176,500 - $193,500
======== ======== ======== ========
General and administrative
expenses - non-GAAP (2) $ 17,000 - $ 19,000 $ 68,000 - $ 72,000
Depreciation, depletion
and amortization $ 52,500 - $ 58,500 $215,000 - $235,000
Costs per Mcfe (Mid-Point):
LOE $ 1.77 $ 1.75
Transportation 0.21 0.20
Production and ad valorem
taxes 0.44 0.41
--------- ---------
Total operating expenses $ 2.42 $ 2.36
========= =========
General and administrative
expenses - non-GAAP(2) $ 0.93 $ 0.89
Depreciation, depletion and
amortization $ 2.88 $ 2.87
Targets (Mid-Point) (in
thousands):
Adjusted EBITDA(3) $ 136,000 $ 540,000
Interest expense(4)(5)(6) (25,000) (124,000)
Maintenance capital
expenditures (24,250) (97,000)
--------- ---------
Distributable cash flow $ 86,750 $ 319,000
========= =========
Distributable cash flow per
unit(7) $ 0.75 $ 2.77
Distribution per unit(7)(8) $ 0.63 $ 2.52
Distribution coverage
ratio(7)(8) 1.20x 1.10x
Weighted Average NYMEX
Differentials:
Gas (MMBtu) $ (1.10) - $ (0.80) $ (1.00) - $ (0.65)
Oil (Bbl) $ (6.50) - $ (4.00) $ (6.50) - $ (4.00)
NGL realization on crude
oil price (%) 50% 50%
Unhedged Commodity Price Jan Feb March Remainder
Assumptions: -------- -------- -------- ---------
Gas (MMBtu) $ 6.16 $ 4.49 $ 4.00 $ 4.00
Oil (Bbl) $ 41.92 $ 40.00 $ 40.00 $ 40.00
Notes to Guidance Table:
(1) Includes other revenues and margin on natural gas marketing
activities.
(2) Excludes unit-based compensation, which represents a non-cash
charge based on equity-related compensation.
(3) Includes effects of the Company's hedge positions, cash flow
adjustments from acquisition and divestiture activities and other
expenses.
(4) Includes cash payments for interest expense as well as accrued
interest on the Company's outstanding senior notes.
(5) Includes the effects of the Company's interest rate hedges.
(6) For Q2-Q4 2009E, assumes higher interest expense related to
refinancing the Company's credit facility.
(7) Assumes 115.1 million units outstanding.
(8) Based on current quarterly distribution of $0.63 per unit, or
$2.52 per unit on an annualized basis.
Schedule 9
Linn Energy, LLC
Guidance Table - Commodity Hedge Summary
Q1 2009E FY 2009E
------------ ------------
Gas Positions:
Fixed Price Swaps:
Hedged Volume (MMMBtu) 9,896 39,586
Average Price ($/MMBtu) $ 8.53 $ 8.53
Puts:
Hedged Volume (MMMBtu) 1,740 6,960
Average Price ($/MMBtu) $ 7.50 $ 7.50
PEPL Puts:(1)
Hedged Volume (MMMBtu) 1,334 5,334
Average Price ($/MMBtu) $ 7.85 $ 7.85
Total:
Hedged Volume (MMMBtu) 12,970 51,880
Average Price ($/MMBtu) $ 8.32 $ 8.32
Oil Positions:(2)
Fixed Price Swaps:
Hedged Volume (MBbls) 609 2,437
Average Price ($/Bbl) $ 90.00 $ 90.00
Puts:(2)
Hedged Volume (MBbls) 461 1,843
Average Price ($/Bbl) $ 120.00 $ 120.00
Collars:
Hedged Volume (MBbls) 62 250
Average Floor Price ($/Bbl) $ 90.00 $ 90.00
Average Ceiling Price ($/Bbl) $ 114.25 $ 114.25
Total:
Hedged Volume (MBbls) 1,132 4,530
Average Price ($/Bbl) $ 102.21 $ 102.21
Gas Basis Differential Positions:(3)
PEPL Basis Swaps:
Hedged Volume (MMMBtu) 11,729 46,916
Average Price ($/MMBtu) $ (0.97) $ (0.97)
Notes to Hedge Summary:
Includes positions covering production for all months within periods
specified.
(1) Settle on the PEPL spot price of gas to hedge basis differential
associated with gas production in the Mid-Continent Deep and
Mid-Continent Shallow regions.
(2) The Company uses oil puts to hedge oil production and NGL
revenues.
(3) Represents a swap of the basis between NYMEX and PEPL spot price
of gas for the volumes hedged.
Schedule 10
Linn Energy, LLC
Commodity Hedge Portfolio
The following table shows the Company's annual commodity derivative
positions, at December 31, 2008, for each of the years ending
December 31, 2009 through December 31, 2014.
Year Year Year Year Year Year
2009 2010 2011 2012 2013 2014
------- ------- ------- ------- ------- -------
Gas Positions:
Fixed Price Swaps:
Hedged Volume
(MMMBtu) 39,586 39,566 31,901 29,662 -- --
Average Price
($/MMBtu) $ 8.53 $ 8.20 $ 8.27 $ 8.46 $ -- $ --
Puts:
Hedged Volume
(MMMBtu) 6,960 6,960 6,960 -- -- --
Average Price
($/MMBtu) $ 7.50 $ 7.50 $ 7.50 $ -- $ -- $ --
PEPL Puts:(1)
Hedged Volume
(MMMBtu) 5,334 10,634 13,259 5,934 -- --
Average Price
($/MMBtu) $ 7.85 $ 7.85 $ 7.85 $ 7.85 $ -- $ --
Total:
Hedged Volume
(MMMBtu) 51,880 57,160 52,120 35,596 -- --
Average Price
($/MMBtu) $ 8.32 $ 8.05 $ 8.06 $ 8.36 $ -- $ --
Oil Positions:(2)
Fixed Price Swaps:
Hedged Volume
(MBbls) 2,437 2,150 2,073 2,025 2,275 2,200
Average Price
($/Bbl) $ 90.00 $ 90.00 $ 84.22 $ 84.22 $ 84.22 $ 84.22
Puts:(2)
Hedged Volume
(MBbls) 1,843 2,250 2,352 500 -- --
Average Price
($/Bbl) $120.00 $110.00 $ 69.11 $ 77.73 $ -- $ --
Collars:
Hedged Volume
(MBbls) 250 250 276 348 -- --
Average Floor
Price ($/Bbl) $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ -- $ --
Average Ceiling
Price ($/Bbl) $114.25 $112.00 $112.25 $112.35 $ -- $ --
Total:
Hedged Volume
(MBbls) 4,530 4,650 4,701 2,873 2,275 2,200
Average Price
($/Bbl) $102.21 $ 99.68 $ 77.00 $ 83.79 $ 84.22 $ 84.22
Gas Basis
Differential
Positions:(3)
PEPL Basis Swaps:
Hedged Volume
(MMMBtu) 46,916 43,166 35,541 34,066 31,700 --
Average Price
($/MMBtu) $ (0.97) $ (0.97) $ (0.96) $ (0.95) $ (1.01) $ --
Notes to Hedge Portfolio:
Includes positions covering production for all months within periods
specified.
(1) Settle on the PEPL spot price of gas to hedge basis differential
associated with gas production in the Mid-Continent Deep and
Mid-Continent Shallow regions.
(2) The Company uses oil puts to hedge oil production and NGL
revenues.
(3) Represents a swap of the basis between NYMEX and PEPL spot price
of gas for the volumes hedged.
Schedule 11
Linn Energy, LLC
Reserve Replacement/Finding and Development Calculations
Reserve Replacement/Finding and Development Calculations
The methods used by the Company to calculate finding and development
cost and reserve replacement ratio may differ from methods used by
other companies to compute similar measures. As a result, the
Company's measures may not be comparable to similar measures provided
by other companies. The Company believes that providing such measures
is useful in evaluating the cost to add proved reserves; however,
these measures are provided in addition to, and not as an alternative
for, and should be read in conjunction with, the information
contained in the Company's financial statements prepared in
accordance with GAAP. The following presents the calculations of
reserve replacement and finding and development costs:
Year Ended
December 31, 2008
-----------------
Costs incurred (in thousands):
Property acquisition costs:
Proved $ 595,795
Unproved 4,111
Development costs 332,557
-----------------
Costs incurred 932,463
-----------------
Less:
Asset retirement obligation costs (680)
Discontinued operations (32,207)
-----------------
Costs expended - continuing operations 899,576 A
-----------------
Less:
Property acquisition costs - continuing
operations (584,630)
-----------------
Oil and gas capital $ 314,946 B
=================
Reserve data - continuing operations (MMcfe):
Purchase of minerals in place 368,136
Extensions, discoveries and other additions 228,083
Less:
Revision of previous estimates - other than
price (9,571)
-----------------
Annual additions, excluding price-related
revisions 586,648 C
-----------------
Less:
Purchase of minerals in place (368,136)
-----------------
Annual additions, excluding price-related
revisions and acquisitions 218,512 D
=================
Annual production 77,548 E
=================
Calculations:
Reserve replacement costs $ 1.53 A/C
Reserve replacement ratio 756% C/E
Finding and development cost from the drill bit $ 1.44 B/D
Drill bit reserve replacement ratio 282% D/E
Schedule 12
Linn Energy, LLC
Explanation and Reconciliation of PV-10
PV-10
PV-10 represents the present value, discounted at 10% per year, of
estimated future net revenues. The Company's calculation of PV-10
differs from the standardized measure of discounted future net cash
flows determined in accordance with the rules and regulations of the
Securities and Exchange Commission in that it is presented including
the impacts of commodity derivatives and current strip prices, rather
than year end market prices and without giving effect to derivatives.
In addition to using current strip prices and taking into account the
impact of commodity derivatives, the Company's calculation of PV-10
differs from the standardized measure of discounted future net cash
flows because it is not tax affected due to the fact that the Company
is a limited liability company. The Company calculates PV-10 value in
this manner because such a large percentage of the Company's forecasted
oil and gas production is hedged for multiple-year periods, and
management therefore believes that its PV-10 calculation more
accurately reflects the value of its estimated future net revenues.
The information used to calculate PV-10 is not derived directly from
data determined in accordance with SFAS 69, "Disclosures about Oil
and Gas Producing Activities." The Company's calculation of PV-10
should not be considered as an alternative to the standardized
measure of discounted future net cash flows determined in accordance
with the rules and regulations of the Securities and Exchange
Commission. The following presents a reconciliation of standardized
measure of discounted future net cash flows to the Company's
calculation of PV-10:
December 31, 2008
-----------------
(in millions)
Standardized measure of discounted future net cash
flows $ 1,424
Plus:
Difference due to oil and gas hedge prices and
strip prices for unhedged volumes 2,159
-----------------
PV-10 $ 3,583
=================
CONTACT: Linn Energy, LLC
Clay P. Jeansonne, Vice President - Investor Relations
281-840-4193
|
| Symbol: |
LINE |
| Last Trade: |
24.49
(11/20/2009 ET)
|
| Change: |
-0.01
(-0.040%)
|
| Day's Range: |
24.13 -
24.57 |
| Open: |
24.50 |
| Previous Close: |
24.50 |
| TSO: |
129,917,000 |
| Market Cap: |
3.18B |
| Day's Volume: |
741,679 |
|
Blogger
Blog Search
Digg
del.icio.us
Facebook
Newsvine
Reddit
StumbleUpon
Technorati
Yahoo MyWeb
