Linn Energy LLC, Houston, (Nasdaq: LINE) has reported its financial and operating results for the three months ended March 31, 2011, and its outlook for the remainder of 2011.

"Linn Energy is off to a strong start in 2011," says Mark E. Ellis, president and chief executive. "To date, we have executed acquisition agreements totaling $637 million. These acquisitions enabled us to enter a new operating region in the Williston Basin and solidified our Permian presence even further. On the financial front, we strengthened our position through a $649 million public equity offering that helped fund recent acquisitions. We also retired 81 percent of our highest cost debt, which will significantly reduce interest expense. With our successful acquisition activity and impressive organic growth profile, we increased 2011 guidance. We believe our distribution coverage ratio for the remainder of the year will average approximately 1.40x, which should provide us with the ability to increase our distribution this year."

Granite Wash Activity Update

The company maintained a four-rig drilling program in the Granite Wash in the first quarter 2011. Linn expects to continue this four-rig program throughout the year and drill approximately 35 operated wells. The company now has 13 operated horizontal wells producing and 11 additional operated wells either drilling, completing or awaiting completion. Linn is currently on pace to complete two to three new horizontal wells each month throughout 2011. The company also owns working interests in nine non-operated horizontal producing wells, with nine additional non-operated wells in progress.

With continued industry success in the Granite Wash and higher oil and NGL prices, Linn expects the level of non-operated activity to remain high. The company has a current net production capacity from the horizontal Granite Wash program of approximately 50 MMcfe/d. Initial production rates from the company's 13 operated wells average 23 MMcfe/d, which exceeds Linn's forecast of 15 MMcfe/d initial production rates. The Granite Wash horizontal drilling program is currently on track to achieve expected growth targets for the year.

Permian Basin Activity Update

During the first quarter, Linn expanded its acreage position in the Permian Basin through additional acquisitions and drilled 20 operated wells to total depth. The company currently operates approximately 1,175 producing wells and produces approximately 12,000 Boe/d in the Permian Basin (pro forma for recent acquisitions). In the Wolfberry play, Linn has five rigs operating and expects to drill 130 wells during 2011. Initial production rates from the Wolfberry trend average more than 130 Boe/d, with a high rate to date exceeding 700 Boe/d. The Permian Basin drilling program is also on track to achieve expected growth targets for the year.

First Quarter 2011 Results

Linn increased production to an average of 312 MMcfe/d in the first quarter 2011, compared to 213 MMcfe/d for the first quarter 2010. Production was positively impacted by excellent operating results, which more than offset the impact of inclement weather during the quarter.

During the first quarter 2011, the company's hedged realized average price was $86.24 per Bbl. This equates to a $3.20 per Bbl decrease of the company's hedge positions compared to its unhedged realized average price of $89.44 per Bbl. The hedged realized average price for natural gas was $8.99 per Mcf for the first quarter 2011. This equates to a $4.28 per Mcf benefit from the company's hedge positions over its unhedged realized average price of $4.71 per Mcf. Realized average price for NGL production was $45.81 per Bbl for the first quarter 2011.

For the first quarter 2011, the company reported a net loss of $447 million, or $2.75 per unit, which includes noncash losses of $425 million, or $2.62 per unit, from the change in fair value of hedges covering future production, a loss of $85 million, or $0.52 per unit, on extinguishment of debt, and a gain of $1 million, or $0.01 per unit, on the sale of assets. Excluding these items, adjusted net income (a non-GAAP financial measure) for the first quarter 2011 was $62 million, or $0.38 per unit, compared to mid-point guidance of $0.33 per unit.