Source LINN Energy LLC.
LINN Energy LLC made several big announcements earlier this month. These moves were made to better position the company for the future given the current uncertainty in the energy industry. While the current market is challenging, the company sees new opportunities emerging from these challenges as it could make it a great time to buy oil and gas assets.
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Beginning the search for bargainsOn the company's conference call to discuss its recent announcements, LINN's CEO Mark Ellis noted that, "part of our strategic vision in a challenging commodity price environment is to position ourselves to be a buyer in a very opportune point in the commodities cycle." He later went on to say that the management team believes that, "these challenging times will also provide opportunities for the Company, as we continue to evaluate both asset and C-corp acquisitions."
Throughout that call management actually sounded really excited about the opportunities that should present themselves over the next few months. In order to take advantage of these opportunities the company is pursuing the creation of a unique acquisition financing structure, which would be similar to its new DrillCo venture with GSO Capital.
Source LINN Energy LLC.
Lining up fundingCFO Kolja Rockov spent some time on the call detailing the direction the company is heading by saying,
Later on he provided some more details on this concept by saying,
He then noted that this would be a long-term strategy that would allow the company to initially buy assets that are earlier in their lifecycle (such as a shale play), but those assets would be owned at the financial partner and not in the MLP. However, Rockov also noted several other benefits to such a structure by saying,
Basically the acquisition funding vehicle would provide the company with built in acquisition growth in the form of drop-down acquisition opportunities from a financial sponsor. It's a vehicle that the company sees being a key to opening new doors as well as smoothing out growth and reducing some of its risk.
Investor takeaway LINN Energy sees the current market turmoil as a time to go on the offensive and go shopping. It's trying to line everything up so it can take full advantage of the buying opportunities that are sure to present themselves over the next year. As Rockov put it, "obviously, what we're trying to put in place is not something to allow us to do small things."
The article LINN Energy LLC is Getting Ready to go on a Shopping Spree originally appeared on Fool.com.
Matt DiLallo owns shares of Linn Energy, LLC. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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