An Investor’s Guide to Oil & Gas MLPs (Part I)

Photo credit: LINN Energy

Part I Will Look Closer at the Top 4

• Represent ~75% segment’s value

• Most aggressive acquirers• Geographically diverse• Secure and growing

distributions

LINN Energy LLC and LinnCo LLC

• $7.8 billion market cap

• 8.8% yield• Coverage ratio last

quarter: 1.0x• Distribution paid

monthly

Ticker: LINE/LNCO(All data LINE)

Photo credit: LINN Energy

Part I Will Look Closer at the Top 4

Source: LINN Energy Investor Presentation

The Information that Matters

• Total Proved Reserves: 1.1 Billion BOE• Liquids production: 54%• Reserve life-index: ~17 years• General Partner: None• Areas to watch: Recently completed Berry

Petroleum acquisition, natural gas prices and the Permian Basin development

BreitBurn Energy Partners L.P.

• $2.4 Billion market cap

• 9.6% yield• Coverage ratio last

quarter: 1.3x• Distribution paid

monthly

Ticker: BBEP

Photo credit: Flickr/Robert Ashworth

Part I Will Look Closer at the Top 4

Source: BreitBurn Energy Investor Presentation

The Information that Matters

• Total Proved Reserves: 190.8 million BOE• Liquids production: 62%• Reserve life-index: ~15 years• General Partner: None• Areas to watch: Oil prices and debt levels

Vanguard Natural Resources, LLC

• $2.4 billion market cap

• 8.3% yield• Coverage ratio last

quarter: 1.09x• Distribution paid

monthly

Ticker: VNR

Photo credit: Flickr/USFWS Mountain Prairie

Part I Will Look Closer at the Top 4

Source: Vanguard Investor Presentation

The Information that Matters

• Total Proved Reserves: 316 million BOE• Liquids production: 33%• Reserve life index: ~13 years• General Partner: None• Areas to watch: Natural gas prices and strategy

shift organically grow production

EV Energy Partners, L.P.

• $1.9 billion market cap

• 8.6% yield• Coverage ratio last

quarter: 0.7x• Distribution paid

quarterly

Ticker: EVEP

Photo credit: Flickr/Daniel X. O’Neil

Part I Will Look Closer at the Top 4

Source: EV Energy Investor Presentation

The Information that Matters

• Total Proved Reserves: 160.5 million BOE/d• Liquids production: 31%• Reserve life index: ~14 years• General Partner: EnerVest• Areas to watch: Utica Shale and natural gas

prices, distribution coverage ratio and midstream growth

Now Let’s See How Each Compares

• Scale• Reserves• Production• Hedging

Enterprise Value

Total Proved Reserves

Sources: Company investor presentations, SEC filings and author’s calculations

Where is the Cash Flowing From?

Sources: Company investor presentations, SEC filings and author’s calculations

How Secure is the Cash Flow?

Sources: Company investor presentations, SEC filings and author’s calculations

How Secure is the Cash Flow?

Sources: Company investor presentations, SEC filings and author’s calculations

Key Takeaways

LINN Energy – Top-dog, balanced production and very secure cash flowsBreitBurn – Oil heavy with less secure cash flowVanguard – Natural gas focused with secure gas cash flowEV Energy – Natural gas heavy with less secure cash flow

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