This is What LINN Energy Needs to Buy Next

Photo credit: LINN Energy 

LINN Energy (NASDAQ: LINE  ) and LinnCo (NASDAQ: LNCO  ) have been under a lot of pressure from investors and analysts to stabilize the company's production so that it will be easier to grow the payout in the future. To do so LINN Energy and LinnCo need to get the company's production decline rate to a more manageable level. The company's recent asset trade involving its acreage in the Permian Basin is a step in the right direction. However, the best way for LINN Energy to get its decline rate under control is to join Kinder Morgan Energy Partners (NYSE: KMP  ) and become a leader in using carbon dioxide in enhanced oil recovery.

Currently, LINN Energy and a partner are working on an enhanced oil recovery project in the Rockies. The Salt Creek Field in Wyoming is just the type of assets that LINN Energy and LinnCo need to buy next as ultra-low declining assets like these are a perfect fit for an MLP like LINN Energy.

I created the following slideshow presentation to help investors gain a better general understanding of carbon dioxide enhanced oil recovery and why it will help LINN Energy and LinnCo. The presentation details Kinder Morgan Energy Partners' premier position in enhanced oil recovery as well as highlights some recent transactions in the sector. 

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 06, 2014, at 1:24 PM, OKIEOIL wrote:

    A few of LNCO/LINE stockholders are a bit hesitant to advocate for CO2. It is due to ignorance but the person with the money, has stroke sometimes where s/he should not. OXY has gotten rich on it.

  • Report this Comment On June 06, 2014, at 1:34 PM, zorro6204 wrote:

    If I was a betting man, I'd say Wolfcamp act II will be low-decline oil properties. The gas acquisition made a lot of sense for them, long term, but it didn't do enough to goose current cash flow. In order to make accretive acquisitions they must boost the unit price, I'm sure they understand that and are working in that direction, but we'll see.

  • Report this Comment On June 06, 2014, at 2:52 PM, TMFmd19 wrote:

    @zorro6204 - Yeah, I'd be making that very same bet. Low-decline oil is where LINN needs to go next and nearly all of its peers are buying EOR projects because it really provides solid base production.


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Matt DiLallo

Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:

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9/2/2015 10:37 AM
LINE $3.40 Down -0.03 -0.87%
Linn Energy, LLC CAPS Rating: ***
LNCO $2.86 Down -0.07 -2.39%
Linn Co, LLC CAPS Rating: ***
KMP $0.00 Down +0.00 +0.00%
Kinder Morgan Ener… CAPS Rating: *****