Linn Energy LLC (NASDAQ:LINE)’s investors were disappointed at the start of the year when they found out that the company is trimming down the dividends, by 50 percent. That came as a big shock but you have to see the dual side of the coin. The oil prices have decreased significantly and it is hard to do business as it is. Many analysts think that it was the right thing to do because Linn Energy LLC (NASDAQ:LINE) is looking to protect its dividends. However, investors wouldn’t concur with that because they aren’t getting a return, which means that alarm bells could be ringing for Linn Energy LLC (NASDAQ:LINE).
The drop in the oil prices have left companies like Linn Energy LLC (NASDAQ:LINE) indisposed. The business has been affected severely and all energy companies are looking for alternatives so that the revenue continues to flow. Otherwise, the investors are likely to dump the stock for pennies. In such case scenario, Linn Energy LLC (NASDAQ:LINE) will have to start a share buyback program or give certain incentives to investors to keep them happy otherwise the stock price of Linn Energy LLC (NASDAQ:LINE) will go down in no time.
Linn Energy LLC (NASDAQ:LINE) is also contemplating another dividend cut because the guidance of the company shows that there is no real hope of any revenue coming in or at least nothing significant that will help the company get back to its feet. Linn Energy LLC (NASDAQ:LINE) is saving all it can because it realizes that as a last resort these dividends will keep the investors on the ice, for a certain time, if business fails to replenish. Investors are waiting for the company to orchestrate some sort of a turn around because it has been quite some time since the company posted anything positive on the revenue sheet.
Quarter after quarter the company has been posting losses and though Linn Energy LLC (NASDAQ:LINE) is only limping, it might fall down indefinitely if the business doesn’t flourish in the near future. The thing with energy companies is that they depend a lot on the economy and once the prices of oil go down, their business goes down accordingly. Same is the case with Linn Energy LLC (NASDAQ:LINE), which is desperately hoping for a turnaround of some kind.
The real issue here is the oil prices. As long as the oil prices remain low, the company will find it difficult to post revenue. It will find it even more difficult to keep the investors onboard for a long time. In such case scenario, the company must look for some sort of private projects to keep the revenue flowing. As far as investors are concerned, Linn Energy LLC (NASDAQ:LINE) should bring in programs to compensate the investor’s loss so momentarily they remain happy, or at least quiet if not happy.
Linn Energy LLC (NASDAQ:LINE) is in a desperate situation, one that can’t be helped except if the oil prices go up.
