This is What LINN Energy Needs to Buy Next

Photo credit: LINN Energy

LINN Energy has a big problem…

…its oil and gas production is in a steady state of natural decline.

To combat this problem LINN Energy needs to spend millions just to

maintain its production.

This is commonly knows as “maintenance capital.”

However, in LINN Energy’s case it’s the “discretionary reductions for a portion of oil and gas development

costs.”

That mouthful cost the company $193.4 million

last quarter.

Photo credit: Andrew Magill

It’s money that could have been heading back to your

pocket if LINN Energy’s decline rate was lower.

To combat that problem LINN Energy really needs

to acquire properties with lower decline rates.

That’s why the company needs to focus on buying carbon dioxide enhanced

oil recovery projects.

What is Enhanced Oil Recovery?

Enhanced oil recovery, or EOR, uses carbon dioxide to push out the oil that

won’t easily come out of a reservoir.

What is Enhanced Oil Recovery?

Source: Energy.gov

It’s an asset that’s a perfect fit for an MLP…

…which is why LINN Energy’s peers have spent

billions to buy these properties.

LINN Energy's MLP peers love EOR:

• Last June BreitBurn Energy Partners acquired an EOR project in Oklahoma for $860 million.• 35 million BOE of total reserves acquired. • Reserve life index of approximately 13 years.• Company expects 10 years of little to no decline in

production.

LINN Energy's MLP peers love EOR:

• In May Memorial Production Partners acquired an EOR project in Wyoming for $935 million.• 89 million BOE of total reserves acquired. • Reserve life index of approximately 39 years.• Average annual decline rate of about 5%.

LINN Energy's MLP peers love EOR:

• Also in May Atlas Resource Partners spent $420 million to acquire an EOR project in Colorado.• 47 million BOE of total reserves acquired. • Reserve to production ratio of 44 years.• Average decline rate of 3-4% over the past 15

years.

LINN Energy's MLP peers love EOR:

• Meanwhile, Kinder Morgan Energy Partners is a leader in producing oil from carbon dioxide in Texas.• Largest transporter of carbon dioxide in the U.S. • Plans to spend $2.1 billion on enhanced oil

recovery projects over the next five years to increase production.

• Billions of barrels of oil still in place that can be extracted through EOR.

LINN Energy's MLP peers love EOR:

• Meanwhile, Kinder Morgan Energy Partners is a leader in producing oil from carbon dioxide in Texas.• Largest transporter of carbon dioxide in the U.S. • Plans to spend $2.1 billion on enhanced oil

recovery projects over next five years to increase production.

• Billions of barrels of oil still in place that can be extracted through EOR.

LINN Energy's MLP peers love EOR:

• In addition to expanding its oil production, Kinder Morgan Energy Partners is expanding its carbon dioxide transportation capacity.• Announced a

billion dollar expansion project in April. • Followed that up with

another $671 million expansion project in May. • These projects will enable Permian Basin

producers to add more EOR projects in the region.

• Meanwhile, Kinder Morgan Energy Partners is a leader in producing oil from carbon dioxide in Texas.• Largest transporter of carbon dioxide in the U.S. • Among the leading producers of oil from carbon

dioxide in Texas. • Plans to spend $2.1 billion on enhanced oil

recovery projects over next five years to increase production.

Goodman Point Photo credit: Kinder Morgan

LINN Energy's MLP peers love EOR:

• Carbon Dioxide EOR are perfect for MLPs:• Focus is on oil, which has higher margins than

natural gas.• Ultra-low decline rates make it easier to keep

production stable.• Requires less maintenance capital which improves

the distribution coverage ratio.• Enhances America’s energy security as this is oil

that couldn’t be extracted through primary production techniques.

Good news…LINN Energy is already gaining experience in EOR

Company acquired a 23% joint venture interest in the Salt Creek field from Anadarko Petroleum in

2012.

LINN Energy is already gaining experience in EOR

Company acquired a 23% joint venture interest in the Salt Creek field from Anadarko Petroleum in

2012.

Recently acquired East Goldsmith Field has CO2 EOR potential too!

Investor TakeawayLINN Energy needs to turn its attention to

acquiring EOR projects. These oil-rich projects will improve margins and lower the decline rate.

How to earn easy income from the energy boom.