Linn Energy (NASDAQ:LINE) will release its quarterly report on Thursday, and investors have been pleased about the progress the stock has made in recovering from its worst levels of late 2013. But even as Linn Energy LLC investors and shareholders of the related LinnCo (NASDAQ:LNCO) start to see the effects of the now-completed acquisition of Berry Petroleum, the newly combined entity will still have to compete against peers Vanguard Natural Resources (NASDAQ:VNR) and BreitBurn Energy Partners (NASDAQ:BBEP) and their own acquisition efforts.

Despite its unusual corporate structure for an upstream business, Linn Energy has the same goal as any other oil and gas company: getting the most it can from the assets at its disposal. With its takeover of Berry in the record books, Linn has the ability to become even more efficient in what has been a long string of asset acquisitions in the past. At the same time, many investors choose Linn because it pays much higher dividends than most traditional oil and gas producers. Let's take an early look at what's been happening with Linn Energy over the past quarter and what we're likely to see in its report.

Line
Source: Linn Energy.

Stats on Linn Energy

Analyst EPS Estimate

$0.26

Change From Year-Ago EPS

(37%)

Revenue Estimate

$625.36 million

Change From Year-Ago Revenue

9.5%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Which way will Linn Energy earnings move this quarter?
In recent months, analysts have had mixed views on Linn Energy earnings, raising fourth-quarter estimates by a penny per share but cutting full-year 2014 projections by the same penny. The unit price has jumped 15% since mid-November.

The big news of the quarter came in December, when Linn Energy announced that it had completed its merger with Berry Petroleum. Many had feared that the long-awaited deal would never get done, while others pointed to raised bids along the way as representing too high a price to pay for Berry. But the acquisition helped Linn in its efforts to increase its exposure to oil and liquids, making its overall mix more oil-rich than gas-rich and thereby transforming the way that the company reports its business.

As a result of the merger, Linn will grow in key areas including California, the Permian Basin, and the Uinta Basin. Moreover, with the equity financing of the deal, Linn didn't have to stretch its balance sheet by incurring additional debt to facilitate the merger. With long reserve lives for the assets it acquired, Linn Energy will see a dramatic production increase that should last for years to come.

But Linn isn't the only company that's been incorporating recent acquisitions. BreitBurn bought valuable assets in Oklahoma from Whiting Petroleum last year, stretching its balance sheet but giving it exposure to a potentially lucrative area that hasn't gotten as much attention as some other high-profile plays. For its part, Vanguard said in late December that it would buy $581 million in natural-gas assets in Wyoming, taking advantage of rock-bottom gas prices to pick up what it hopes will be lucrative long-term holdings when natural gas recovers.

Still, Linn has strong growth potential. Horizontal drilling in the Permian Basin could be a big driver of increased production in the well-established play in the years ahead, with some early success creating a lot of potential if those results prove representative of its broader assets. Moreover, other underdeveloped assets could pay off in better-than-expected ways, creating even more profit potential.

In the Linn Energy earnings report, watch to see how the company positions itself to move forward now that it has had a few months with Berry's assets under its roof. Investors will watch closely to make sure that Linn is capturing every bit of profit potential from both its new assets and its legacy holdings from before the merger.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends BreitBurn Energy Partners L.P. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.