Update: Linn Energy's Distribution Cut Hurts, But Its New 11% Yield Is Nothing To Whine About

Just when investors bounced back from their New Year's hangover, Linn Energy (Nasdaq: LINE) made probably the biggest announcement in years: The E&P company is going to cut its capital budget and its distributions to shareholders in 2015 as falling crude oil prices claim their next, but probably not last, victim in the sector. Retreating crude oil prices are also largely to blame for the decline in Linn Energy's valuation, which fell more than 63% in the last year.According to Linn Energy's latest press release:HOUSTON, Jan. 2, 2015 (GLOBE NEWSWIRE) -- LINN Energy, LLC ("LINN" or the "Company") and LinnCo, LLC (LNCO) ("LinnCo") announced today that LINN's Board of Directors has approved a 2015 budget which includes a 53% reduction in oil and natural gas capital expenditures to $730 million, from approximately $1.55 billion in 2014, and a reduction of the LINN distribution and LinnCo dividend to $1.25 per unit or share, from the previous level of $2.90 per unit or share, on an annualized basis. LINN expects to fund its total 2015 oil and natural gas capital program, along with the distribution, from internally generated cash flow.The market certainly seemed quite glad and relieved that Linn Energy finally enacted the distribution cut: Shares closed more than 12% higher on Friday, but they shot up by 19% throughout the trading day.Now let's be clear here: The decrease in income is definitely going to hurt me about as much as... Read more