LINN Energy (LINEQ) acquisition target Berry Petroleum (NYSE: BRY) reported third-quarter earnings on Wednesday. As an investor in LINN Energy or LinnCo (NASDAQ: LNCO) these are important results to keep an eye on each quarter until the deal finally closes. So, let's dive in and take a closer look.

Drilling down into the numbers
Berry Petroleum reported earnings of $0.50 per share, but backing out items such as derivatives and transaction costs pushed adjusted earnings up to $0.93 per share. That's $0.20 higher per share than Berry Petroleum earned last quarter on an adjusted basis.

The key number here for LINN Energy or LinnCo investors is that Berry Petroleum produced $173 million in discretionary cash flow on oil and gas revenues of $306 million. Because of the company's oil rich assets, Berry was able to produce an operating margin of $51.45 per barrel of oil equivalent. It's that solid cash flow profile that LINN wants to help solidify and grow its distribution.

A deeper look at production
Berry Petroleum produced 41,413 barrels of oil equivalent per day, or BOE/d, during the three-month period. That's up 14% from the third quarter of last year and 5% more than it produced in the second quarter of this year. What's encouraging is that Berry isn't growing just to grow, but instead is focused on boosting oil production. That's evidenced by the fact that oil production has jumped 20% over the past year, while at the same time gas production was allowed to naturally decline by 22%. As of the third quarter, 80% of Berry Petroleum's production was oil, which is exactly why LINN Energy and LinnCo want to buy the company.

Production growth was strongest in California as the New Steam Floods and Diatomite assets were both up double-digits over last quarter. These are two of Berry's biggest growth drivers with production up by more than 50% over the past year. Overall, Berry's operations in California offer both cash flow and high-margin production growth and the company continues to deliver solid results from those assets.

Berry also delivered solid production growth in the Uinta Basin. Production there was up 10% from the last quarter and is up 36% over last year. One of the key contributors to increased production is that Berry was able to do a better job marketing its oil to buyers outside of Utah.

Finally, Berry delivered solid results in the Permian Basin. While production was just up 4% over last quarter, it's up 22% year over year. The Permian Basin is an area that LINN Energy likes a lot and it recently bolstered its position. Bottom line, Berry delivered solid production growth that will be a very nice addition to LINN Energy.

What does the future hold?
Berry didn't have much to say about the merger with LINN Energy and LinnCo other than the fifth amended Form S-4 was filed with the SEC on Oct. 22. Once the SEC gives its blessing the merger would finally be put to a shareholder vote. It's still anyone's guess when or if that will happen.

The other item worth mentioning is that Berry boosted its production forecast for the year. The company now expects to produce 40,500-40,800 BOE/d which is above the high end of its guidance. That's solid outperformance that shouldn't be missed by investors, especially given LINN's struggles with meeting its production guidance this year.

Investor takeaway
Berry Petroleum produced very solid third-quarter results. The company's production continues to get oilier while also exceeding expectations. That's why this is still a very good deal for investors in both LINN Energy and LinnCo.