LINN Energy’s primary business objective is to provide stability and growth of distributions for the long-term benefit of our unitholders. The company’s business strategy is comprised of the following key elements.
Grow Through Acquisitions of Long-Life,
High-Quality U.S. Assets
LINN Energy’s acquisition program focuses on U.S. oil and natural gas basins that provide significant opportunities for future growth and consolidation. We target assets that are financially accretive and provide long-life, high-quality production with relatively predictable decline curves and low-risk development opportunities. We evaluate acquisitions based on decline profile, reserve life, operational efficiency, field cash flow and development costs.
Organically Grow Reserves and Production
LINN Energy maintains a large inventory of drilling and optimization projects to achieve organic growth through its capital program. We implement drilling programs and optimization projects intended to not only replace production, but also grow production and reserves. We focus on low-risk, repeatable drilling opportunities to maintain and/or grow cash flow. Many of the wells are completed in multiple producing zones with commingled production and long economic lives. The number, types and locations of wells varies, depending on our capital budget, well costs, anticipated production and estimated recoverable reserves.
Reduce Cash Flow Volatility through Hedging
LINN Energy has attractive commodity hedge positions in place to provide long-term cash-flow predictability to pay distributions and manage its business. We hedge a significant portion of our forecasted production to reduce exposure to fluctuations in the prices of oil and natural gas. By removing a significant portion of the price volatility associated with future production, we expect to mitigate the possible effects of potential declining commodity prices on cash flow from operations. These transactions are in the form of swap contracts, collars and put options.
To view LINN’s current hedge position in detail, view the company’s most recent presentation.