A limited liability company sure has its benefits if management knows exactly how to create them. It appears Linn Energy's (Nasdaq: LINE) management has perfected that art, helping the company grow stronger and stronger.

Being in the natural gas business has proved worthwhile for the Houston-based company, and there seems to be no reason for this trend to stop. In case you've missed the story, natural gas should be the next biggest trend in commodity plays, and it has the potential to last for decades.

So what's different about Linn?
Unlike most of its fellow brethren in the E&P business, Linn functions a bit differently in that it enjoys the typical benefits of a master limited partnership and in the process can shortchange Uncle Sam on taxes. And yet, it does not have to worry about accountability to a general partner -- a perfect platform for a firm in the business of exploring natural resources.

Operational soundness
With growing revenues for the past eight quarters, Linn has consistently managed to grow in terms of operations. Average daily production rose to 312 million cubic feet equivalent, or Mmcfe, of gas in the first quarter this year -- a healthy year-over-year increase of 46%.

A venture into the Bakken play only underlines the company's ambitions to expand its resource plays. On March 31, Linn acquired assets in the Williston Basin from Concho Resources (NYSE: CXO) worth $194 million. April saw further consolidations in North Dakota worth $163 million.

Foolish investors should take notice of how operations are diversifying. In fact, it comes in tandem with divestiture of non-core assets, which actually pulled the operating income into the red in the last quarter. However, don't be deterred. The balance sheet looks healthy with $195 million in cash reserves -- an impressive jump from $16 million in the year-ago period. That is tremendous.

The ace up its sleeve
However, the greatest advantage lies in that being a limited liability company, Linn's tax structure allows for higher payouts to investors. With a trailing annual dividend yield of 7.1%, this is nothing short of phenomenal. After all, it's official now: Historically, dividend stocks have yielded greater returns over time than low- or no-yield stocks.

Current value of net future cash flows, discounted per annum using standardized measures, stands at $4.2 billion at the end of 2010 -- a whopping 145% jump from the corresponding value a year before. A good $1.6 million of the increase can be attributed to purchase of minerals in place, extensions, discoveries, and improved recovery. In all, the future of core operations looks bright.

How cheap is Linn?
How cheap does the stock look when compared to these future cash flows? Total enterprise value to discounted future cash flows -- or TEV/DFCF, a metric showing how expensive the company is with regards to future cash returns -- would be a good indicator.

The value stands at 2.09. For fellow limited partnership Encore Energy Partners (NYSE: ENP), it stands at 1.62. However, I believe the market has a reason behind that, given the huge reserves Linn enjoys in comparison. The value does not look too expensive when compared with other E&P players in the industry. Range Resources (NYSE: RRC) at 3.20 and Chesapeake (NYSE: CHK) at 2.39 prove that. The stock does appear undervalued in that sense.

Foolish bottom line
Overall, the future of this company looks promising. Despite minor hiccups, like a debt-to-equity level of 87% (which is manageable), management seems to know how to go ahead with operations. In the long run, Foolish investors should benefit from this dividend stock.

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