By Sarfaraz A. Khan. Research Asst. Mohsin Khan
Several companies and MLPs operating in the energy space, such as Seadrill (NYSE:SDRL), Civeo (NYSE:CVEO) and Breitburn Energy (NASDAQ:BBEP), have been clamping down on their capital budgets as well as dividends and distributions in the wake of plunging oil prices. Linn Energy (NASDAQ:LINE), the biggest oil and gas producer that is structured like a MLP, has also slashed its dividends and capital expenditure plans. The news, however, is hardly surprising as Mr. Market has been warning about the impact of low oil prices on Linn's distributions for the last few months.
Linn Energy has grown its distribution from $2.52 a piece in 2009 to $2.90 a piece in 2014. The company has now reduced this by 56% to $1.25 a piece for 2015. Coupled with this is the 53% decrease in the oil and natural gas capital budget to $730 million, from approximately $1.55 billion announced for 2014.