Linn Energy, LinnCo shares sink after dividend, drilling-and-exploration budget cuts announced

IndustriesAssociated Press

Shares of Linn Energy tumbled before the opening bell and after the company cut its expected capital expenditures in half for the year and trimmed its annual payout to shareholders, becoming the latest producer to slash spending in the face of a severe decline in energy prices.

Benchmark U.S. crude fell again Friday to just above $52 per barrel, just months after trading as high as $115.

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The Houston company announced a 53 percent reduction in oil and natural gas capital expenditures to $730 million, from about $1.55 billion last year. The company also cut the dividend and distribution it pays affiliate LinnCo to $1.25 per unit or share from $2.90. That represents what Linn and LinnCo pay shareholders as well as the payout Linn makes to LinnCo.

LinnCo LLC shares also sank in early trading.

Linn Energy LLC said that it anticipates significantly lower crude oil prices in the new year.

Major oil companies are cutting spending almost across the board as prices for natural gas and crude slide. The price decline is hitting smaller companies especially hard.

Earlier this week, American Eagle Energy Corp. suspended its 2015 drilling budget and said that it won't resume drilling until crude oil prices rebound. Shares of Civeo Corp. sank after the company, which finds housing and provides other services to drillers, suspended its dividend and surprised Wall Street with an especially dismal outlook for the year.

Shares of Linn Energy LLC fell nearly 7 percent, or 68 cents, to $9.45 Friday shortly before markets opened, while LinnCo fell 7.6 percent, or 79 cents, to $9.58.

Friday's stock decline follows a tough year for both Linn Energy and LinnCo. Their stocks sank 67 percent and 66 percent, respectively, in 2014.