LINN Energy (NASDAQ:LINE) and LinnCo (NASDAQ:LNCO) announced first-quarter results before the opening bell this morning. The combined oil and natural gas company reported production that exceeded guidance. However, there was a small shortfall in net cash in excess of its distributions to investors.

Daily production volume increased by 39% year over year to 1,104 MMcfe/d. The bulk of this increase was due to the LinnCo-led acquisition of Berry Petroleum, which closed at the end of last year. Furthermore, better than expected results from the company's capital spending plan, along with efficient management of its base assets, enabled LINN to exceed the high end of its guidance range.

Despite exceeding the production guidance, LINN Energy fell about $3 million short in covering its distribution for the quarter. Higher transportation expenses and wider than anticipated oil differentials affected the company's cash flow. That being said, the shortfall is quite minor for a company that paid $240 million in distributions this past quarter.

LINN Energy's strong first-quarter production results led the company to reaffirm full-year production guidance. However, the company does expect full-year expenses to be slightly higher than its previous guidance, while it also now sees natural gas liquids prices being lower and oil differentials being wider than previous guidance. LINN now expects a $17 million shortfall in covering its distribution this year; it previously expected an excess of $12 million.

This shortfall could quickly be reversed once the company completes the review of strategic options for its acreage position in the Midland Basin. CEO Mark Ellis said in a statement that LINN Energy is "pleased by the level of interest expressed in our Midland Basin properties and believe our position represents a tremendous amount of potential value for our unitholders. ... All of these options are expected to increase cash available for distribution and have the potential to lower the Company's capital intensity and overall decline rate."

Matt DiLallo owns shares of Linn Co, LLC and Linn Energy, LLC. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.