Linn Energy files for Bankruptcy

Summary

Linn Energy has filed for Chapter 11 bankruptcy protection in order to restructure its massive debt load.

The partnership has entered into a restructuring support agreement which calls for the wipeout of Linn Energy's common units.

LinnCo has been included as a debtor in the bankruptcy filing, and its shares would also be wiped out under the plan.

After months of speculation surrounding its deteriorating financial situation, Linn Energy (NASDAQ:LINE) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas on Wednesday. Along with this move, LinnCo (NASDAQ:LNCO) was included as a debtor in the bankruptcy filing, and as of the time of the bankruptcy filing, the company held a roughly 67% equity interest in Linn Energy. This sharp increase in ownership is largely due to an exchange offer, which LinnCo announced in March, that allowed unitholders of Linn Energy to exchange their units, on a one-for-one basis, for shares of LinnCo in a move to try to prevent the occurrence of cancellation of debt income (or CODI) in a restructuring scenario. This bankruptcy paints a bleak outlook for the partnership's units and for its debtholders, as the common unitholders will likely be completely wiped out and various creditors will hold the new equity of the firm, although the ultimate value of Linn Energy following a potential exit from bankruptcy, which is anticipated in late 2016, is highly uncertain.

http://seekingalpha.com/article/3974358-linn-energys-bankruptcy

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Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on May 12, 2016 at 1:41

The courts in Houston has made changes to expedite bankruptcy proceedings for energy companies.  I expect that may help other companies to pull the trigger on sooner rather than later bankruptcy filings.

Permalink Reply by lee on May 12, 2016 at 3:35

Skip - we leased to Wildhorse in Lincoln Parish, don't hear much of them anymore do you think they are next.  We also have a lease in the Cadeville Unit how will this effect us I think Linn is considered the operator.

Permalink Reply by Skip Peel - Mineral Consultant on May 12, 2016 at 4:13

MRD has acquired most of Wildhorse Resources leases in Lincoln Parish.  Some leases are now owned by Wildhorse Resource Management.  MRD is a publicly traded company.  Wildhorse Resources Management is a private company.  Wildhorse Resources no longer exists.  To make an educated guess on which company holds your lease currently I would need to know the section-township-range location.  Linn holds lease rights that MRD might like to pick up for the right price depending on location.  Hopefully Linn will shed their Lincoln Parish acreage, regardless of location, and it will be acquired by a company or companies with the intent and the financial strength to develop.

MRD is sound financially.  I haven't read anything on Wildhorse Resources Management but suspect they are not at risk for bankruptcy.

Permalink Reply by Bean Counter on May 12, 2016 at 4:36

After the MRD deal, WHRM continued to drill in Lincoln Parrish. (Taylor, Spillers, Pruett, etc) They only recently stopped drilling. One of the co founders of the original Wildhorse was recently named CEO of MRD (Jay Graham) so there is still a connection between the 2 companies. 

Permalink Reply by Skip Peel - Mineral Consultant on May 12, 2016 at 5:35

All three entities are (were) connected through their relationship with the equity company, NGP.

MRD Holdco, which is controlled by three of the private equity funds managed by Natural Gas Partners (NGP), owns ~36% of MRD’s common stock. NGP is a family of private equity investment funds with roughly $16.5 billion of cumulative equity commitments to make investments in the natural resources sector.

Permalink Reply by Paul Butler on May 12, 2016 at 8:52

Linn is listed as Operator for 319 wells in Louisiana.

Attached hereto are two, hyperlinked, Excel spreadsheets showing the Linn wells.

One is organized by Parish name.

One is organized, sequentially, by section, township and range.

My clients in Manhattan are screaming bloody murder.

They thought they had an investment.

Enjoy

Attachments:
Permalink Reply by Skip Peel - Mineral Consultant on May 12, 2016 at 8:57

If they thought they had an investment based upon these wells I wish them luck with their other "investments". 

Permalink Reply by Paul Butler on May 12, 2016 at 9:16

I can't say something like that.

They would try to knock me out.

I've been telling them for two years to dump the stock.

I know what you mean.  I organized those wells by status code. 

Only 88 had the status code 10 (active producing).

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