Linn Energy Skips Interest Payment

Struggling oil-and-gas producer Linn Energy LLC said there was substantial doubt about its ability to continue operations on a sustainable basis after it decided to skip an interest payment on some senior notes.

Hit by a slump in crude oil prices, the company has lost more than 90 percent of its market value in the past 12 months.

The company, which exercised its 30-day grace period for paying a total interest of about $60 million that was due on Tuesday, said it was evaluating strategic options to shore up its balance sheet.

"The uncertainty associated with Linn's ability to meet its obligations as they become due raises substantial doubt about the company's ability to continue as a going concern," Linn Energy said in a statement on Tuesday.

The company, which had previously suspended distributions in October, said in February it exhausted its credit facility by drawing down the remaining $919 million, which took its total borrowings to $3.6 billion.

About 40 energy producers have filed for bankruptcy since oil prices began to tumble in late 2014, and up to a third of all oil-and-gas companies may fail unless prices recover, according to a study by Deloitte.

Linn has retained Lazard (LAZ) as its financial adviser and Kirkland & Ellis as legal adviser.

Linn shares were down 18.4 percent at 80 cents in premarket trading.

Reporting by Tom Hals