Mid-Continent Traffic Jam. Platts North American Crude Marketing Conference 2/29/2013 Mark Cahill

Transcription

1 Mid-Continent Traffic Jam Platts North American Crude Marketing Conference 2/29/2013 Mark Cahill

2 Forward-Looking Statements and Risk Factors Statements made in these presentation slides and by representatives of LINN Energy, LLC and LinnCo, LLC (collectively the Company ) during the course of this presentation that are not historical facts are forward-looking statements. These statements are based on certain assumptions and expectations made by the Company which reflect management s experience, estimates and perception of historical trends, current conditions, anticipated future developments, potential for reserves and drilling, completion of current and future acquisitions, future distributions, future growth, benefits of acquisitions, future competitive position and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to financial performance and results, indebtedness under LINN Energy s credit facility and Senior Notes, access to capital markets, availability of sufficient cash flow to pay distributions and execute our business plan, prices and demand for natural gas, oil and natural gas liquids, LINN Energy s ability to replace reserves and efficiently develop LINN Energy s current reserves, LINN Energy s ability to make acquisitions on economically acceptable terms, regulation, availability of connections and equipment and other important factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. See Risk Factors in LINN Energy s 2011 Annual Report on Form 10- K and any other public filings. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information or future events. The market data in this presentation has been prepared as of January 25, 2013, except otherwise noted.

3 LINN Overview 9 th largest public MLP/LLC and 12 th largest domestic independent oil & natural gas company LINE IPO in 2006 with enterprise value of ~$713 million Equity market cap Total net debt Enterprise value $9.1 billion $5.6 billion $14.7 billion (1) Salt Creek Field ND Large, long-life diversified reserve base Jonah Field ~5.1 Tcfe total proved reserves WY MI 64% proved developed 45% oil and NGLs / 55% natural gas CA Hugoton Field KS IL ~17 year reserve-life index >15,000 gross productive oil and natural gas wells (2) Large inventory of low risk and liquids-rich development opportunities Jonah Field ~650 locations Granite Wash ~600 horizontal locations LINN Operations 2012 Acquisitions / Joint Venture NM TX OK Corporate Headquarters (Houston) East Texas LA Wolfberry ~400 locations Bakken ~800 horizontal locations (3) Cleveland ~165 horizontal locations Kansas Hugoton ~800 locations Salt Creek Field CO 2 flood Note: Market data as of January 25, 2013 (LINE and LNCO closing price of $38.65 and $39.59, respectively). All operational and reserve data as of December 31, 2011, pro forma for closed 2012 acquisitions and joint venture ( JV ). Estimates of proved reserves for closed 2012 acquisitions and JV were calculated as of the effective date of the acquisitions using forward strip oil and natural gas prices, which differ from estimates calculated in accordance with SEC rules and regulations. Estimates of proved reserves for closed 2012 acquisitions and JV based solely on data provided by seller. Source: Bloomberg. (1) Pro forma for LNCO IPO (assumes net proceeds used to repay debt outstanding). (2) Well count does not include ~2,500 royalty interest wells. (3) Average working interest of ~7%. 3

4 MLP and Independent E&P Rankings LINN is one of the largest MLP and independent E&P companies 9 th largest public MLP/LLC 12 th largest domestic independent oil & natural gas company Rank Master Limited Partnership Enterprise Value ($MM) Rank Independent E&P Enterprise Value ($MM) 1. Enterprise Products Partners $66, ConocoPhillips $94, Kinder Morgan Energy Partners $47, Occidental Petroleum Corp. $71, Energy Transfer Equity $40, Anadarko Petroleum Corp. $53, Williams Partners $25, Apache Corp. $45, Plains All American Pipeline $24, EOG Resources Inc. $39, Energy Transfer Partners $21, Chesapeake Energy Corp. $34, ONEOK Partners $16, Marathon Oil Corporation $29, Enbridge Energy Partners $14, Devon Energy Corporation $26, LINN Energy LLC (1) $14, Noble Energy Inc. $21, Magellan Midstream Partners $13, Continental Resources Inc. $17, El Paso Pipeline Partners $13, Pioneer Natural Resources Co. $17, Boardwalk Pipeline Partners $9, LINN Energy LLC (1) $14, Markwest Energy Partners $8, Range Resources Corp. $14, Buckeye Partners $8, Southwestern Energy Co. $13, Sunoco Logistics Partners $7, Concho Resources Inc. $13, Access Midstream Partners $7, Cabot Oil & Gas Corp. $12, Amerigas Partners $6, Murphy Oil Corp. $11, Regency Energy Partners $6, EQT Corp. $11, Western Gas Partners $5, Plains Exploration & Production $10, Cheniere Energy Partners $5, Denbury Resources Inc. $10, Nustar Energy LP $5, Sandridge Energy Inc. $9, Targa Resources Partners $5, Cobalt International Energy $9, Teekay LNG Partners $5, QEP Resources Inc. $8, Terra Nitrogen Company LP $4, Whiting Petroleum Corp. $7, Atlas Energy LP $4, Newfield Exploration Co. $6,965 Note: Market data as of January 25, 2013 (LINE and LNCO closing price of $38.65 and $39.59, respectively). Source: Bloomberg. (1) Pro forma for LNCO IPO. 4

5 Agenda 1. Producer Oil Marketing 2. The History of Oil in the Texas Panhandle 3. Quantity and Quality of Production 4. New Markets 5. What to do? 5

6 Marketing Determines the Direction of the Commodity

7 Producer Marketing Flow Assurance Netback

8 Significant Hedge Position (Equivalent Basis) LINN s cash flow is notably more protected from oil and natural gas price uncertainty than its C-Corp. and Upstream MLP peers Prolonged periods of weak commodity prices could put further pressure on E&P C-Corps. Expected Production Hedged 100% 80% 60% 40% 20% 0% 100% 100% 100% 100% 100% 88% 36% 66% 64% 63% 47% 37% 35% 30% 31% 71% 65% 49% 20% 70% 69% 29% 4% 16% 79% 25% 54% 9% 1% 1% % Swaps % Puts C-Corp. Peers Upstream MLP (1) (2) % Hedged Peers % Hedged Note: LINN s hedge percentages based on internal estimates. Excludes NGL production and natural gas puts used to hedge NGL revenues associated with BP Hugoton acquisition. Source: Production estimates based on Bloomberg consensus, and hedge information based on publicly available sources. (1) Represents simple average and peer group includes: CLR, FST, XEC, KWK, NFX, PXD, PXP, RRC, SWN and WLL. (2) Represents simple average and peer group includes: BBEP, EVEP, LGCY, LRE, MEMP, MCEP, PSE, QRE and VNR. 8

9 Every Road Was Once Adequate

10 Everyone Likes A Good Neighborhood 10

11 Granite Wash Operated Horizontal Drilling Activity (Greater Stiles Ranch) DYCO Hemphill County Wheeler County STILES RANCH Texas Oklahoma Roger Mills County MAYFIELD Over 600 horizontal locations Drilled 80 horizontal wells in 2012 Successfully completed 26 Hogshooter oil wells in 2012 Average IP rates of ~1500 Bbls/d of oil FRYE RANCH Current Hogshooter Development 8 rig drilling program currently focused primarily on Hogshooter Plan to drill an additional 11 Hogshooter wells by year-end 7TH STEP MENDOTA BUFFALO WALLOW 2 STEP TWIN CHANNELS Hemphill County Roger Mills County OK Beckham County Wheeler County TX LINN Acreage PXP Acquisition Acreage DYCO FRYE RANCH STILES RANCH MAYFIELD Beckham County Feet 0 8,260 LINN Acreage ~23,000 Gross ~12,000 Net PXP Acquisition Acreage ~21,000 Net Drilled Gas Wells Drilled Hogshooter Wells Mayfield Drilling 11

12 LINN s Unique Position In The Granite Wash Produce from eight separate zones Granite Wash / Atoka Wash Stratigraphy Each zone bears a unique production profile Oil LATERAL BOREHOLES VIR- GILIAN 9,400 Tonkawa Lansing Kansas City (Hogshooter) Cleveland Liquids-rich gas Dry gas Enables LINN to adapt its drilling program Focus on highest returns Recently shifted entire drilling program to focus on oil Oil Natural Gas & Condensate Rich Natural Gas & Condensate Lean LINN horizontal tested zone D E S M O I N E S I A N G R A N I T E W A S H A T W O A K S A H Carr Britt A B C D E F A thru C" Lwr C thru E" 15,000 12

13 It s Always Somebody Else s Problem 13

14 Congestion Bypass 14

15 Choose Your Direction 15

16 LI NN Energy s mission is to acquire, develop and maximize cash flow from a growing portfolio of long-life oil and natural gas assets.