What’s the Outlook for Linn Energy LLC (LINE) in 2013

Take the company’s Jonah Field acquisition from BP, not only did it acquire around 750 gross producing wells, but there are around another 650 future drilling locations which will add to production over time. The same can be said for the Hugoton acquisition from BP which not only came with around 2,400 operated wells but nearly 800 future drilling locations and 500 recompletion opportunities.

The upside from organic growth makes LINN different from most of its upstream MLP peers. The company delivered approximately 30% organic production growth in 2011 and is expected to deliver another 20% in organic growth in 2012. This provides investors with additional upside of at least double-digit organic production growth in 2013. As the price of natural gas recovers, it opens up even more organic drilling opportunities.

Cashing in
All of the acquisitions and organic growth opportunities are designed to drive one key metric: distributable cash flow. With every acquisition, the company targets a $0.03 accretion to distributable cash flow per unit for every $100 million spent. That accretion target can also be reached through the drill bit.

Of course, not all of that accretion per unit gets returned to investors. Natural decline, commodity prices, hedging and capital expenditures all take a cut. However, after four straight quarters of a static distribution, investors are likely getting a raise at some point in 2013.

Foolish bottom line
There’s a lot to like at LINN Energy and by extension LinnCo. The next key data point on the company will arrive on Feb. 21st when the company reports its fourth-quarter and full-year results. The company should also give investors some more insights as to what to expect in the year ahead.

I expect big things from the company in the year ahead which is one reason why I named the company my top energy stock from 2013. Stay tuned to Fool.com for continuing covering of this innovative energy company in the year ahead.

The article What’s the Outlook for LINN Energy in 2013 originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo owns shares of Linn Energy, LLC and Linn Co, LLC. The Motley Fool has no position in any of the stocks mentioned.

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