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This is What LINN Energy Needs to Buy Next
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This is What LINN Energy Needs to Buy Next

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LINN Energy and LinnCo need to lower the production decline rate so that the company doesn’t have to spend so much money to maintain production. Focusing on becoming a leader in owning enhanced oil …

LINN Energy and LinnCo need to lower the production decline rate so that the company doesn’t have to spend so much money to maintain production. Focusing on becoming a leader in owning enhanced oil recovery projects, like Kinder Morgan Partners, will accomplish both objectives.

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  • now the oil price has droped by 50% since the slides were posted, i wonder if it changes the objectives
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  • Keep an eye on your peers and imitate what's worth imitating.
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  • Myself Goutam Bagchi Executive Consultant of Questkon Consultancy Services & Business Services . I come from a respectable Family. I am an educated person and having B.Com/LLB Degree and 27 years Sales & Marketing Exeperience in FMCG/Pharmaceuticals/OTC/Cosmetics Products Sales & Franchisee & Channel Development in Various Company In India . Being the Executive Consultant of Questkon Consultancy Services & Business Services I have develop various Blog,& Community & also Various Channel. I am also member of Various Organization. Apart from that i am interested to write an Articles & Journal . I am also interested to join in home based online journalism to promote my webpage and handsome income .
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  • https://www.flickr.com/photos/amagill/3367543296/in/photolist-chEwR9-bH1iX8-42PQoC-a2YSa6-62QVKf-dTUAhR-QxcaH-7jm7SP-8F5t1j-dUSc9a-a5SwX-68vjKV-68zxeQ-9C9vCS-dSZe91-9ZA9J6-9kJxyv-9uKMHb-68zxij-bDwJ11-dK2oa7-bu6sBd-8usD9K-657VsP-5XW3k4-61LYTT-dSK3tm-8ismaU-8ism9f-bbeUhH-4Kdou8-cnchKE-dmyfCP-doZD-8ismdA-62LFqP-chEbX5-cEJ54Q-7yUSSQ-8ip6ZZ-cNdyo-knHgd-9htwiK-9VwVc2-8HWvej-62LEPx-bu6pKh-7HedAv-kyBTGB-f54gtt
  • http://energy.gov/fe/science-innovation/oil-gas/enhanced-oil-recovery
  • http://ir.breitburn.com/releasedetail.cfm?ReleaseID=773244
  • http://investor.memorialpp.com/releasedetail.cfm?ReleaseID=845092
  • http://phx.corporate-ir.net/phoenix.zhtml?c=251151&p=irol-newsArticle&ID=1928142&highlight=
  • http://www.kindermorgan.com/investor/presentations/0603_RBC_(DS).pdf
  • http://www.kindermorgan.com/investor/presentations/0603_RBC_(DS).pdf
  • http://www.kindermorgan.com/investor/presentations/0603_RBC_(DS).pdf
  • http://www.kindermorgan.com/investor/presentations/0603_RBC_(DS).pdf
  • http://www.kindermorgan.com/investor/presentations/0603_RBC_(DS).pdf
  • http://files.shareholder.com/downloads/LINE/2506788784x0x557462/2219810C-E358-4431-9ED1-47294A219176/Salt_Creek_Joint_Venture.pdf
  • Transcript

    • 1. This is What LINN Energy Needs to Buy Next Photo credit: LINN Energy
    • 2. LINN Energy has a big problem… …its oil and gas production is in a steady state of natural decline.
    • 3. To combat this problem LINN Energy needs to spend millions just to maintain its production.
    • 4. This is commonly knows as “maintenance capital.”
    • 5. However, in LINN Energy’s case it’s the “discretionary reductions for a portion of oil and gas development costs.”
    • 6. That mouthful cost the company $193.4 million last quarter.
    • 7. Photo credit: Andrew Magill
    • 8. It’s money that could have been heading back to your pocket if LINN Energy’s decline rate was lower.
    • 9. To combat that problem LINN Energy really needs to acquire properties with lower decline rates.
    • 10. That’s why the company needs to focus on buying carbon dioxide enhanced oil recovery projects.
    • 11. What is Enhanced Oil Recovery? Enhanced oil recovery, or EOR, uses carbon dioxide to push out the oil that won’t easily come out of a reservoir.
    • 12. What is Enhanced Oil Recovery? Source: Energy.gov
    • 13. It’s an asset that’s a perfect fit for an MLP…
    • 14. …which is why LINN Energy’s peers have spent billions to buy these properties.
    • 15. LINN Energy's MLP peers love EOR: • Last June BreitBurn Energy Partners acquired an EOR project in Oklahoma for $860 million. • 35 million BOE of total reserves acquired. • Reserve life index of approximately 13 years. • Company expects 10 years of little to no decline in production.
    • 16. LINN Energy's MLP peers love EOR: • In May Memorial Production Partners acquired an EOR project in Wyoming for $935 million. • 89 million BOE of total reserves acquired. • Reserve life index of approximately 39 years. • Average annual decline rate of about 5%.
    • 17. LINN Energy's MLP peers love EOR: • Also in May Atlas Resource Partners spent $420 million to acquire an EOR project in Colorado. • 47 million BOE of total reserves acquired. • Reserve to production ratio of 44 years. • Average decline rate of 3-4% over the past 15 years.
    • 18. LINN Energy's MLP peers love EOR: • Meanwhile, Kinder Morgan Energy Partners is a leader in producing oil from carbon dioxide in Texas. • Largest transporter of carbon dioxide in the U.S. • Plans to spend $2.1 billion on enhanced oil recovery projects over the next five years to increase production. • Billions of barrels of oil still in place that can be extracted through EOR.
    • 19. LINN Energy's MLP peers love EOR: • Meanwhile, Kinder Morgan Energy Partners is a leader in producing oil from carbon dioxide in Texas. • Largest transporter of carbon dioxide in the U.S. • Plans to spend $2.1 billion on enhanced oil recovery projects over next five years to increase production. • Billions of barrels of oil still in place that can be extracted through EOR.
    • 20. LINN Energy's MLP peers love EOR: • In addition to expanding its oil production, Kinder Morgan Energy Partners is expanding its carbon dioxide transportation capacity. • Announced a billion dollar expansion project in April. • Followed that up with another $671 million expansion project in May. • These projects will enable Permian Basin producers to add more EOR projects in the region.
    • 21. • Meanwhile, Kinder Morgan Energy Partners is a leader in producing oil from carbon dioxide in Texas. • Largest transporter of carbon dioxide in the U.S. • Among the leading producers of oil from carbon dioxide in Texas. • Plans to spend $2.1 billion on enhanced oil recovery projects over next five years to increase production. Goodman Point Photo credit: Kinder Morgan
    • 22. LINN Energy's MLP peers love EOR: • Carbon Dioxide EOR are perfect for MLPs: • Focus is on oil, which has higher margins than natural gas. • Ultra-low decline rates make it easier to keep production stable. • Requires less maintenance capital which improves the distribution coverage ratio. • Enhances America’s energy security as this is oil that couldn’t be extracted through primary production techniques.
    • 23. Good news…LINN Energy is already gaining experience in EOR Company acquired a 23% joint venture interest in the Salt Creek field from Anadarko Petroleum in 2012.
    • 24. LINN Energy is already gaining experience in EOR Company acquired a 23% joint venture interest in the Salt Creek field from Anadarko Petroleum in 2012.
    • 25. Recently acquired East Goldsmith Field has CO2 EOR potential too!
    • 26. Investor Takeaway LINN Energy needs to turn its attention to acquiring EOR projects. These oil-rich projects will improve margins and lower the decline rate.
    • 27. How to earn easy income from the energy boom.