March 20, 2012 / 10:38 PM / 6 years ago

Linn Energy sees spending up to $2 billion yearly on deals

(Reuters) - Oil and gas firm Linn Energy LLC LINE.O, which has seen its output rise 20-fold since its market debut in 2006, will spend up to $2 billion on acquisitions every year as it looks to keep up its scorching growth.

Linn, which has already wrapped up deals worth $1.4 billion so far this year, has been on an acquisition spree, spending nearly $3 billion to snap up a number of properties across the United States in the last two years.

“You could probably expect us to do $1 billion to $2 billion transactions each year for the foreseeable future,” Chief Executive Mark Ellis told Reuters in a telephone interview on Tuesday.

“The only thing that can slow down our momentum would be our access to capital ... We have had great success there.”

The company had $1.1 million in cash and cash equivalents at the end of 2011, while its long-term debt was $3.99 billion, according to Thomson Reuters data.

Linn, which has a market value of $7.64 billion, recently snared a $1.2 billion deal to buy natural gas assets in Kansas from BP Plc (BP.L) and followed that up with a $175 million acquisition in East Texas.

Ellis, who has more than 30 years of experience in the oil and natural gas industry, said the company is on track to complete $1.5 billion to $2 billion in deals this year, suggesting more acquisitions could be on the cards in 2012.

He added that acquisitions would help the company boost its payouts to its unitholders.

The Houston-based company’s distributions have more than doubled over the past six years and it currently pays out $2.76 a unit.

“We would really like to be in a position to grow (distributions) at about a 5 percent rate each year going forward,” Ellis said.

As a limited liability company, Linn’s corporate structure allows it to reduce its tax burden by passing on cash flow to unitholders, while giving it greater access to capital.

Linn units, which have gained nearly 3 percent over the past month, closed down 23 cents at $38.08 on Tuesday on the Nasdaq.

Reporting by Swetha Gopinath in Bangalore; Editing by Viraj Nair

Our Standards:The Thomson Reuters Trust Principles.
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