Linn Energy LLC (LINE): Three Things to Watch When It Reports

The numbers
As far as the actual numbers go, Linn Energy LLC (NASDAQ:LINE) provided its first-quarter and full-year guidance last quarter so we have some numbers to keep an eye on. First, the company expects oil and gas production to be between 810 MMcf per day and 845 MMcf per day for the quarter. The company expects that this production will generate $372 million in adjusted EBITDA for the quarter.

After interest and maintenance capital, LINN expects that its production will leave it with distributable cash flow of $165 million. That should translate into distributable cash flow per unit of $0.70 which would imply a coverage ratio of less than one times. While that’s a lot less than is preferred, LINN expects that the Berry deal will enable it to have a much safer 1.2 times coverage ratio, even after its planned distribution increase, so there are no red flags here. Keep an eye on these numbers because if LINN can’t meet them it could signal that there’s a problem.

The Foolish bottom line
I expect Linn Energy LLC (NASDAQ:LINE)’s first-quarter report to at least be in line, if not a slight beat, and I’m fairly confident that the company will alleviate any residual concerns that investors have following all the recent comments by short sellers. I’d also look for word about the future of its distribution with the possibility of an announcement of moving to monthly payouts. Finally, I wouldn’t put it past the company to announce a small asset acquisition; it does have a little extra capital after recently making a return.

The article 3 Things to Watch When LINN Energy Reports originally appeared on Fool.com and is written by Matt DiLallo.

Motley Fool contributor Matt DiLallo owns shares of LINN Energy, LLC and LinnCo, LLC. The Motley Fool recommends BreitBurn Energy Partners L.P. (NASDAQ:BBEP).

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