Linn Energy LLC (LINE), Berry Petroleum Company (BRY): Is The Linn-Berry Merger in Trouble?

At the same time, Linn Energy maintained its commitment to the deal, saying in a corporate statement that the SEC does not view negatively any entity, individual, or security regarding the companies involved. Furthermore, all parties involved remain fully committed to seeing the deal done.

Moreover, investors are paying close attention to Linn’s dividend, which is one of the highest in the oil and gas partnership space. Since the SEC inquiry pertains to Linn’s hedging strategies and financial reporting measures, the dividend may be at risk.

Fortunately, on the same day of the announcement, Linn and LinnCo LLC (NASDAQ:LNCO) both declared their expected monthly distributions. Each company will pay $0.2416 per share, or $2.90 annualized, on July 16 to shareholders as of the close of business on July 10.

Whether Linn and LinnCo are value traps or screaming bargains depends heavily on the result of the SEC inquiry. Should the SEC find no wrongdoing, investors should view the June 2 shellacking as a major buying opportunity.

Linn and LinnCo now yield 10% and 9%, respectively, and their yields are even greater if you account for the 6% distribution increase planned for later this year.

I initiated a position in LinnCo during the past couple of months, to avoid the headaches of a K-1. While a 13% haircut is never good, I’m a Foolish enough investor to understand a long-term opportunity when I see it. I can’t definitively say that the deal will go through, and it’s obvious that Linn needs this inquiry to end without fanfare.

At the present time, Linn seems much closer to a screaming buy than a house of cards. I’ll be waiting for the dust to settle a bit, but over the coming weeks, should LinnCo continue to trade lower, I’ll be adding to my position.

The article Is The Linn-Berry Merger in Trouble? originally appeared on Fool.com.

Robert Ciura owns shares of Linn Co, LLC . The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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