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Could High Debt Kill Linn Energy LLC's Sky-High Yield?

Source: Linn Energy investor presentation

In addition Linn Energy is still a highly indebted MLP with $12.3 billion in total debt which created $588 million in interest payments last year -- consuming 34% of Linn's operating cash flow in 2014.

Without an oil recovery in the second half of the year, It's still possible that Linn's payout will need further cutting in order to bring the MLP's balance sheet in line with the current realities of the oil industry.

Takeaway: Linn Energy's payout is safer than Breitburn's was but is still risky

In my opinion the oil crash is showing Linn Energy's management to be more proactive and capable than that of Breitburn. However, it's not without its own faults. Linn's excessive debt load -- acquired when oil prices were in the triple digits -- potentially hangs like a sword of Damocles over the payout, threatening to fall and slash the distribution again should oil prices not recover during the second half of the year.

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The article Could High Debt Kill Linn Energy LLC's Sky-High Yield? originally appeared on Fool.com.

Adam Galas has no position in any stocks mentioned. The Motley Fool recommends BreitBurn Energy Partners. 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 .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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