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WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc

Linn Energy, Llc · Dec 6, 2012 · 31 slides

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Slides

  1. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 1
    Wells Fargo Securities 2012 Pipeline, MLP & Energy Symposium December 2012
  2. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 2
    LINN Overview 8th largest public MLP/LLC and 11th largest domestic independent oil & natural gas company IPO in 2006 with enterprise value of 713 million Equity market cap 9.8 billion Total net debt 5.6 billion Salt Creek Field…
  3. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 3
    MLP and Independent E&P Rankings LINN is one of the largest MLP and independent E&P companies 8th largest public MLP/LLC 11th largest domestic independent oil & natural gas company Rank Master Limited Partnership Enterprise Value (MM)…
  4. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 4
    Growth Through Accretive Acquisitions 10 billion in acquisitions completed since the Companys inception Includes 54 separate transactions(1) Value of Acquisitions Per Year (1) 9,680 10,000 9,000 2,800 8,000 6,880 7,000 ('s in…
  5. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 5
    Recent Acquisition Activity Closed 3.4 billion in acquisition and joint-venture agreements since December 2011(1) Hedged 100% of expected natural gas and oil production until 2017 and 2016, respectively Date(1) Seller Price (MM)(2)…
  6. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 6
    Jonah Field Acquisition From BP On July 31, 2012, LINN closed a 1.025 billion Sheridan Park acquisition in Wyomings Jonah Field from BP. Big Horn Campbell Crook Strategic Rationale Wyoming Washakie Weston Teton Significant…
  7. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 7
    Granite Wash Operated Horizontal Drilling Activity (Greater Stiles Ranch) Over 600 horizontal locations 7TH STEP MENDOTA TWIN CHANNELS Roger Mills County Expect to drill or participate in 81 Hemphill County horizontal wells in…
  8. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 8
    LINNs Unique Position In The Granite Wash Produce from eight Granite Wash / Atoka Wash Stratigraphy separate zones Each zone bears a LATERAL BOREHOLES VIR- 9,400 Tonkawa GILIAN unique production Lansing profile Kansas City…
  9. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 9
    LINN Provides Both Organic & Acquisition Growth LINN is unique in that it provides investors with the potential for significant organic and acquisition growth 1,000 2012E Exit Rate of 900 800 MMcfe/d(1) Potential 800 Organic…
  10. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 10
    LinnCo Structure and Financial Highlights
  11. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 11
    LinnCo Structure LINE LNCO Current distribution of 2.90 / unit(1) Estimated dividend of 2.84 / share(2) Schedule K-1 (partnership) Form 1099 (C-Corp.) Existing LINE LinnCo Unitholders Shareholders 2.84 Common Dividend Shares…
  12. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 12
    LinnCo Structure Advantages Shareholders receive Form 1099 rather than a Reduces Tax Schedule K-1 Reporting No state income tax filing requirements Burdens Generally, no UBTI(1) implications Tax-shield at LINN Energy, LLC o…
  13. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 13
    LinnCo IPO Recap LinnCos 1.3 billion IPO represents a landmark transaction for the energy sector Largest E&P IPO 3rd largest energy IPO 2nd largest 2012 IPO Strong institutional demand of 2.0 billion 83% institutional…
  14. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 14
    LNCO Performance Since IPO LNCO has experienced dramatic yield compression since IPO (46 bps) LNCO discount versus LINE continues to narrow 9% discount at IPO 2% discount currently Continue to believe that LNCO will appeal greatly…
  15. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 15
    Attractive Valuation LINN represents an attractive value relative to other yield segments Current Yields 8.0% 7.3% 7.3% 7.0% 6.0% 6.0% 5.0% 4.3% Yield 4.0% 3.4% 3.0% 2.2% 2.0% 1.6% 1.0% 1.0% 0.0% S&P E&P 10-Yr.…
  16. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 16
    LINN Has Created an Acquisition Machine 2010 2011 2012 YTD(1) Screened 189 opportunities Screened 122 opportunities Screened 216 opportunities Bid 41 for 10.1 billion Bid 31 for 7.5 billion Bid 19 for 10.1 billion Closed 13 for 1.4…
  17. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 17
    Significant Hedge Position LINN is hedged 100% on expected natural gas production through 2017; and 100% on expected oil production through 2016 Puts provide price upside opportunity Natural Gas Positions Oil Positions 550…
  18. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 18
    Significant Hedge Position (Equivalent Basis) LINNs cash flow is notably more protected from oil and natural gas price uncertainty than its C-Corp. and Upstream MLP peers Prolonged periods of weak commodity prices could put further…
  19. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 19
    Distribution History Consistently paid the distribution for 27 quarters 81% increase in quarterly distribution since IPO Distribution History 16.57 15.84 0.73 16.00 15.12 0.73 14.39 0.73 13.70 0.69 14.00 13.01 0.69 12.32 0.69…
  20. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 20
    LINN Historical Return LINN Total Return and Stock Price Appreciation (LINE IPO Present of 260%) 260% 250% 200% 157% 150% 100% 99% 50% 27% 13% 0% (50%) 2006 2007 2008 2009 2010 2011 2012 Line Total Return (TR)…
  21. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 21
    Size Advantage in E&P MLP/LLC Market LINN has a significant size advantage in the E&P market presents significantly more E&P MLP/LLC market acquisition opportunities than rest of MLP Greater access to capital markets market Ability…
  22. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 22
    Why Invest in LINN High quality asset base Stable o Multi-year inventory of high-return development opportunities Distributions o Long-life reserves (21 years) o Diversified asset base (6 core areas / 15,000 gross producing wells)…
  23. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 23
    LINN Energys mission is to acquire, develop and maximize cash flow from a growing portfolio of long-life oil and natural gas assets.
  24. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 24
    LINN Overview Salt Creek Field ND Jonah Field WY MI Hugoton Field CA IL KS TX Panhandle Oklahoma Shallow TX Panhandle OK Granite Wash East Texas NM TX LINN Operations Corporate Headquarters LA 2012 Acquisitions /…
  25. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 25
    Financial Appendix
  26. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 26
    Proved Reserves The following table sets forth certain information with respect to LINNs proved reserves at December 31, 2011 and pro forma proved reserves calculated on the basis required by SEC rules: Proved Proved Reserves At…
  27. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 27
    Historical Financial Statements Reconciliation of Non-GAAP Measures The Company defines adjusted EBITDA as net income (loss) plus the following adjustments: Net operating cash flow from acquisitions and divestitures, effective date…
  28. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 28
    Historical Financial Statements Adjusted EBITDA The following presents a reconciliation of net loss to adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 (in thousands) Net…
  29. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 29
    Historical Financial Statements Adjusted Net Income The following presents a reconciliation of net loss to adjusted net income: Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 (in thousands,…
  30. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 30
    Reserve Replacement / F&D Calculations Reconciliation of Non-GAAP Measures Year Ended December 31, 2011 2010 Costs incurred (in thousands): Costs incurred in oil and natural gas property acquisition, exploration and development…
  31. WELLS FARGO SECURITIES 2012 PIPELINE MLP & ENERGY SYMPOSIUM – Linn Energy, Llc – slide 31
    The U.S. Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only resources that qualify as reserves as defined by SEC rules. We use terms describing hydrocarbon quantities in…

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