UNITED STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





Form 10-K/A


Amendment No. 1





xANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2012





 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934





Commission file number:  001-35695











LinnCo, LLC


(Exact name of registrant as specified in its charter)





Delaware45-5166623(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification No.)600 Travis, Suite 5100Houston, Texas77002(Address of principal executive offices)(Zip Code)





Registrant’s telephone number, including area code


(281) 840-4000


Securities registered pursuant to Section 12(b) of the Act:


Title of each className of each exchange on which registeredShares Representing Limited Liability Company InterestsThe NASDAQ Global Select Market





Securities registered pursuant to Section 12(g) of the Act :


None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities


Act.     Yes  ̈ No x


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.     Yes  ̈ No x




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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes x No  ̈


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes x No  ̈


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer  ̈ Accelerated filer  ̈ Non-accelerated filer x Smaller reporting company  ̈


Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).


Yes  ̈ No x


As of the last business day of the registrant’s most recently completed second fiscal quarter, no public trading market existed for the registrant’s common shares.  As of January 31, 2013, the aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $1.4 billion based on $39.90 per share, the last reported sales price of the shares on the NASDAQ Global Select Market on such date.


As of January 31, 2013, there were 34,787,500 common shares outstanding.


Documents Incorporated By Reference:


Annual Report on Form 10-K/A of Linn Energy, LLC for the year ended December 31, 2012.







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EXPLANATORY NOTE


LinnCo, LLC (“LinnCo” or the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amended Filing”) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “Original Filing”) filed with the Securities and Exchange Commission (“SEC”) on February 28, 2013, to include the information required by Items 10 through 14 of Part III of the Company’s Form 10-K that was previously omitted and to include the Form 10-K/A of Linn Energy, LLC (“LINN Energy”), an affiliate of LinnCo, as Exhibit 99.2.  In connection with LinnCo’s acquisition of Berry Petroleum Company, the Company and LINN Energy filed a Registration Statement on Form S-4 and subsequent amendments to the S-4 (as amended, the “S-4”) to address the SEC’s comments to the S-4 and the Original Filing.  LINN Energy’s Annual Report on Form 10-K for the year ended December 31, 2012, was amended to conform the disclosures in the Annual Report on Form 10-K with the disclosures made in the S-4.


For the convenience of the reader, this Amended Filing sets forth the Original Filing in its entirety, as modified and superseded where necessary to reflect the revisions.  In the Amended Filing, the Company has also updated Item 1A. Risk Factors; and Items 10. through 14. of Part III to include information that was previously omitted.


In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amended Filing includes certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of this filing.


The Amended Filing continues to speak as of the date of the Original Filing and, except as set forth in the sections indicated above, the Company has not updated the Original Filing to reflect events occurring subsequently to the date of the Original Filing.  Accordingly, this Amended Filing should be read in conjunction with the Company’s filings made with the SEC subsequent to the filing of the Original Filing.







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TABLE OF CONTENTS








PagePart IItem 1.Business1Item 1A.Risk Factors3Item 1B.Unresolved Staff Comments16Item 2.Properties16Item 3.Legal Proceedings16Item 4.Mine Safety Disclosures16Part IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities17Item 6.Selected Financial Data19Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations20Item 7A.Quantitative and Qualitative Disclosures About Market Risk23Item 8.Financial Statements and Supplementary Data24Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure37Item 9A.Controls and Procedures37Item 9B.Other Information37Part IIIItem 10.Directors, Executive Officers and Corporate Governance38Item 11.Executive Compensation41Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters42Item 13.Certain Relationships and Related Transactions, and Director Independence43Item 14.Principal Accounting Fees and Services45Part IVItem 15.Exhibits and Financial Statement Schedules46Signatures47





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Table of Contents
 Part I


Item 1.  Business


This Annual Report on Form 10-K contains forward-looking statements based on expectations, estimates and projections as of the date of this filing.  These statements by their nature are subject to risks, uncertainties and assumptions and are influenced by various factors.  As a consequence, actual results may differ materially from those expressed in the forward-looking statements.


References


In this report, unless the context requires otherwise, references to “we,” “us,” “our,” the “Company,” or “LinnCo” are intended to refer to LinnCo, LLC.  A reference to a “Note” herein refers to the accompanying Notes to Financial Statements contained in Item 8. “Financial Statements and Supplementary Data.”  References to “shares” in this report refer to the Company’s common shares representing limited liability company interests.


Overview


LinnCo is a Delaware limited liability company formed on April 30, 2012, under the Delaware Limited Liability Company Act.  As of December 31, 2012, LinnCo’s sole purpose was to own units representing limited liability company interests (“units”) in Linn Energy, LLC (“LINN Energy”) and it expected to have no significant assets or operations other than those related to its interest in LINN Energy.  In connection with the pending acquisition of Berry Petroleum Company (see Note 8), LinnCo intends to amend its limited liability company agreement to permit the acquisition and subsequent contribution of assets to LINN Energy.  LINN Energy is an independent oil and natural gas company that trades on the NASDAQ Global Select Market under the symbol “LINE.”


LinnCo’s success is dependent upon the operation and management of LINN Energy and its resulting performance.  Therefore, LINN Energy’s Annual Report on Form 10-K for the year ended December 31, 2012, has been included in this filing as Exhibit 99.1 and incorporated herein by reference.  At December 31, 2012, the Company owned approximately 15% of LINN Energy’s outstanding units.  At December 31, 2012, LINN Energy owned 100% of the Company’s sole voting share and all of the Company’s common shares were held by the public.


The Company has elected to be treated as a corporation for United States (“U.S.”) federal income tax purposes.  Because it is treated as a corporation for U.S. federal income tax purposes, an owner of LinnCo shares will not report on its U.S. federal income tax return any of the Company’s items of income, gain, loss and deduction relating to an investment in it.


Within five (5) business days after receiving a cash distribution related to its interest in LINN Energy units, LinnCo is required to pay the cash received, net of reserves for its income tax liability (“tax reserve”), as dividends to its shareholders.  The amount of the tax reserve is calculated on a quarterly basis and is determined based on the tax liability estimate for the entire year.  The current quarter tax reserve can be increased or reduced, at the Company management’s discretion, to account for the over/(under) tax reserve recorded in prior quarters.  Because the tax reserve is an estimate, upon filing the annual tax returns, if the actual amount of tax due is greater or less than the total amount of tax reserved, the subsequent tax reserve, at Company management’s discretion, could be adjusted accordingly.  Any such adjustments are subject to approval by the Company’s Board of Directors (“Board”).


LINN Energy has agreed to provide to LinnCo, or to pay on LinnCo’s behalf, any legal, accounting, tax advisory, financial advisory and engineering fees, printing costs or other administrative and out-of-pocket expenses incurred by LinnCo, along with any other expenses incurred in connection with any public offering of shares in LinnCo or incurred as a result of being a publicly traded entity, including costs associated with annual, quarterly and other reports to holders of LinnCo shares, tax return and Form 1099 preparation and distribution, NASDAQ listing fees, printing costs, independent auditor fees and expenses, legal counsel fees and expenses, limited liability company governance and compliance expenses and registrar and transfer agent fees.  In addition, LINN Energy has agreed to indemnify LinnCo and its officers and directors for damages suffered or costs incurred (other than income taxes payable by LinnCo) in connection with carrying out LinnCo’s activities.


LinnCo Initial Public Offering (“IPO”)


On October 17, 2012, the Company closed the IPO of 34,787,500 shares to the public at a price of $36.50 per share ($34.858 per share, net of underwriting discount and structuring fee) for net proceeds of approximately $1.2 billion (after underwriting discount and structuring fee of approximately $57 million).  The net proceeds from the IPO were used to acquire 34,787,500 LINN Energy units which are equal to the number of LinnCo shares sold in the offering.


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 Item 1.  Business - Continued


Employees


LinnCo has no employees.  The Company has entered into an agreement with LINN Energy to provide the Company with the necessary services and support personnel.  For more information, see Note 1 and LINN Energy’s Annual Report on Form 10-K for the year ended December 31, 2012, included in this filing as Exhibit 99.1 and incorporated herein by reference.


Principal Executive Offices


The Company is a Delaware limited liability company with headquarters in Houston, Texas.  The principal executive offices are located at 600 Travis, Suite 5100, Houston, Texas 77002.  The main telephone number is (281) 840-4000.


Company Website


The Company’s internet website is www.linnco.com .  The Company makes available free of charge on or through its website Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission (“SEC”).  Information on the Company’s website should not be considered a part of, or incorporated by reference into, this Annual Report on Form 10-K.


The SEC maintains an internet website that contains these reports at www.sec.gov. Any materials that the Company files with the SEC may be read or copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.  Information concerning the operation of the Public Reference Room may be obtained by calling the SEC at (800) 732-0330.


Forward-Looking Statements


This Annual Report on Form 10-K contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond the Company’s control.  Because substantially all of LinnCo’s assets will consist of its interest in LINN Energy’s units, these risks and uncertainties primarily relate to LINN Energy’s business which include the following:


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|• | business strategy;

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|- | ---------------------
|• | acquisition strategy;

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|• | financial strategy;

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|• | ability to maintain or grow distributions;

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|• | drilling locations;

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|- | ----------------------------------
|• | oil, natural gas and NGL reserves;

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|- | -----------------------------------------
|• | realized oil, natural gas and NGL prices;

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|- | -------------------
|• | production volumes;

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|- | ------------------------------------------------------------------------------------
|• | lease operating expenses, general and administrative expenses and development costs;

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|- | -------------------------
|• | future operating results;

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|- | ---------------------------------------------------
|• | plans, objectives, expectations and intentions; and

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|- | ------
|• | taxes.

All of these types of statements, other than statements of historical fact included in this Annual Report on Form 10-K, are forward-looking statements.  These forward-looking statements may be found in Item 1. “Business;” Item 1A. “Risk Factors;” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other items within this Annual Report on Form 10-K.  In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology.


The forward-looking statements contained in this Annual Report on Form 10-K are largely based on LINN Energy and Company expectations, which reflect estimates and assumptions made by LINN Energy and Company management.  These estimates and assumptions reflect management’s best judgment based on currently known market conditions and other factors.  Although the Company believes such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties beyond its control.  In addition, management’s assumptions may prove to be inaccurate.  The Company cautions that the forward-looking statements contained in this Annual Report on Form 10-K are


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 Item 1.  Business - Continued


not guarantees of future performance, and it cannot assure any reader that such statements will be realized or the forward-looking statements or events will occur.  Actual results may differ materially from those anticipated or implied in forward-looking statements in this Annual Report on Form 10-K.  The forward-looking statements speak only as of the date made and, other than as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.  For additional discussion of such risks, uncertainties and assumptions, see LinnCo’s Prospectus filed with the SEC under Rule 424(b)(4) on October 12, 2012.


Item 1A.    Risk Factors


Our business has many risks.  Factors that could materially adversely affect our business, financial position, operating results or liquidity and the trading price of our shares are described below.  This information should be considered carefully, together with other information in this report and other reports and materials the Company and LINN Energy file with the SEC.  Because our only significant assets are the units issued by LINN Energy, our success is dependent solely upon the operation and management of LINN Energy and its resulting performance.  The risk factors that affect LINN Energy also affect LinnCo; see “Risk Factors” within LINN Energy’s Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2012, included in this filing as Exhibit 99.2 and incorporated herein by reference.


Our cash flow consists exclusively of distributions from LINN Energy.


Our only significant assets are LINN Energy units representing limited liability company interests in LINN Energy that we own.  Our cash flow will be therefore completely dependent upon the ability of LINN Energy to make distributions to its unitholders.  The amount of cash that LINN Energy can distribute to its unitholders, including us, each quarter principally depends upon the amount of cash it generates from its operations, which will fluctuate from quarter to quarter based on, among other things:


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|• | produced volumes of oil, natural gas and NGL;

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|• | prices at which oil, natural gas and NGL production is sold;

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|• | level of its operating costs;

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|• | payment of interest, which depends on the amount of its indebtedness and the interest payable thereon; and

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|• | level of its capital expenditures.

In addition, the actual amount of cash that LINN Energy will have available for distribution will depend on other factors, some of which are beyond its control, including:


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|• | availability of borrowings on acceptable terms under its credit facility to pay distributions;

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|• | the costs of acquisitions, if any;

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|• | fluctuations in its working capital needs;

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|• | timing and collectibility of receivables;

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|• | restrictions on distributions contained in its credit facility and the indentures governing its senior notes;

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|• | prevailing economic conditions;

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|• | access to credit or capital markets; and

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|• | the amount of cash reserves established by its board of directors for the proper conduct of its business.

Because of these factors, LINN Energy may not have sufficient available cash each quarter to pay a distribution at the current level or at all.  Furthermore, the amount of cash that LINN Energy has available for distribution depends primarily upon its cash flow, including cash flow from financial reserves and working capital borrowings, and is not solely a function of profitability, which will be affected by noncash items.  As a result, LINN Energy may be able to make cash distributions during periods when it records net losses and may not be able to make cash distributions during periods when it records net income.  Please see “Risk Factors” within LINN Energy’s Annual Report on Form 10-K for the year ended December 31, 2012, included in this filing as Exhibit 99.1 and incorporated herein by reference, for a discussion of risks relating to LINN Energy’s business, including factors that could cause LINN Energy to have insufficient cash to make distributions.


LINN Energy may not have sufficient net cash provided by operating activities to pay its distribution at the current distribution level, or at all, and as a result, future dividends to our shareholders may be reduced or eliminated.


LINN Energy’s net cash provided by operating activities is frequently less than cash distributions to its unitholders.  While LINN Energy’s Board of Directors makes discretionary adjustments to net cash provided by operating activities when declaring a distribution for the current period, if LINN Energy generates insufficient net cash provided by operating activities for a sustained period of time, LINN Energy’s Board of Directors may determine to reduce or eliminate its distribution to its


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 Item 1A.    Risk Factors - Continued


unitholders.  Any such reduction in distributions may cause us to reduce or eliminate our dividends, and the trading price of our shares may decline.  Factors that may cause LINN Energy to generate net cash provided by operating activities that is insufficient to pay its current distribution to its unitholders include, among other things, the following:


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|• | Production from existing assets: LINN Energy’s revenues are dependent on how much oil, natural gas and NGLs it produces.  If its existing assets under-perform for a prolonged period of time with respect to expected production volumes, its revenues may be lower than expected, and net cash provided by operating activities could be insufficient to pay LINN Energy’s current distribution to its unitholders.

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|• | NGL commodity prices: LINN Energy has been and continues to be limited in its ability to effectively hedge its NGL production.  As a result, LINN Energy is subject to the current depressed price environment for NGLs, and in particular, ethane prices.  If current price levels for NGLs continue into the future, its revenues and results of operations will be affected, and net cash provided by operating activities could be insufficient to pay LINN Energy’s current distribution to its unitholders.

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|• | Access to and cost of capital:Accretive acquisitions are an integral component of LINN Energy’s business strategy.  When revenues are expected to be lower as a result of under-performance of assets, weakening commodity prices on unhedged volumes or declining contract prices on hedged volumes, LINN Energy seeks to make accretive acquisitions of oil and natural gas properties to cover potential shortfalls in net cash provided by operating activities in order to maintain its distribution level.  As a result of the pending SEC inquiry, LINN Energy may be limited in its ability to access the capital markets at an acceptable cost or at all; thus its ability to make accretive acquisitions may be limited.

As a result of these and other factors, the amount of cash LINN Energy may distribute to its unitholders in the future may be significantly less than the current distribution level or the distribution may be suspended or eliminated.  Further, if LINN Energy reduces its distributions to its unitholders, our Board of Directors will be required by our limited liability company agreement to reduce the cash dividend to our shareholders to be equal to 100% of such distribution, net of reserves for income taxes payable by us as determined by our Board of Directors.


If LINN Energy is unable to fully offset declines in production and proved developed producing reserves from discretionary reductions for a portion of its oil and natural gas development costs, its net cash provided by operating activities could be reduced, which could adversely affect its ability to pay a distribution at the current level or at all.


In determining the amount of cash that LINN Energy distributes to unitholders, LINN Energy’s Board of Directors establishes at the end of each year the estimated amounts (which it refers to as discretionary reductions for a portion of oil and natural gas development costs) that it believes will be necessary during the following year to fully offset declines in production and proved developed producing reserves through drilling and development activities.  In determining this portion of oil and natural gas development costs (which includes estimated drilling and development costs associated with projects to convert a portion of non-producing reserves to producing status but does not include the historical cost of acquired properties as those amounts have already been spent in prior periods and were financed primarily with external sources of funding), LINN Energy management evaluates historical results of LINN Energy’s drilling and development activities based on periodically revised and updated information from past years to assess the costs, adequacy and effectiveness of such activities and future assumptions regarding cost trends, production and decline rates and reserve recoveries.  However, LINN Energy’s management does not conduct an analysis to evaluate historical amounts of capital actually spent on such drilling and development activities.  LINN Energy’s ability to pursue projects with the intent to fully offset declines in production and proved developed producing reserves through drilling and development activities is limited to its inventory of development opportunities on its existing acreage position.  LINN Energy management’s estimate of this discretionary portion of its oil and natural gas development costs does not include the historical acquisition cost of projects pursued during the year or the acquisition of new oil and natural gas reserves.  Moreover, LINN Energy’s assumptions regarding costs, production and decline rates and reserve recoveries may prove incorrect.  If LINN Energy is unable to fully offset declines in production and proved developed producing reserves from this discretionary portion of its oil and natural gas development costs, its net cash provided by operating activities could be reduced, which could adversely affect its ability to pay a distribution at the current level or at all.  Furthermore, LINN Energy’s existing reserves, inventory of drilling locations and production levels will decline over time as a result of development and production activities.  Consequently, if LINN Energy were to limit its total capital expenditures to this discretionary portion of its oil and natural gas development costs and not complete acquisitions of new reserves, total reserves would decrease over time, resulting in an inability to sustain production at current levels, which


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could adversely affect its ability to pay a distribution at the current level or at all, and consequently our ability to pay a dividend at the current level or at all.


We will incur corporate income tax liabilities on income allocated to us by LINN Energy with respect to LINN Energy units we own, which may be substantial.


We are classified as a corporation for U.S. federal income tax purposes and, in most states in which LINN Energy does business, for state income tax purposes.  Under current law, we will be subject to U.S. federal income tax at rates of up to 35% (and a 20% alternative minimum tax in certain cases), and to state income tax at rates that vary from state to state, on the net income allocated to us by LINN Energy with respect to the LINN Energy units we own.  The amount of cash available for distribution to you will be reduced by the amount of any such income taxes payable by us for which we establish reserves.


The amount of income taxes payable by us depends on a number of factors including LINN Energy’s earnings from its operations, the amount of those earnings allocated to us and the amount of the distributions paid to us by LINN Energy.  Our income tax liabilities could be substantial if any of the following occurs:


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|• | LINN Energy significantly decreases its drilling activity;

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|• | an issuance of significant additional units by LINN Energy without a corresponding increase in the aggregate tax deductions generated by LINN Energy;

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|• | proposed legislation is enacted that eliminates the current deduction of intangible drilling costs and other tax incentives to the oil and natural gas industry; or

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|• | there is a significant increase in oil and natural gas prices.

If the assumptions we used to estimate income taxes are incorrect, our income tax liabilities could be substantially higher than we project.


Events inconsistent with our assumptions could cause our income tax liabilities to be substantially higher than estimated and could therefore cause our quarterly dividends to be substantially lower than the quarterly distributions on LINN Energy units.  For example, distributions that we receive with respect to our LINN Energy units that exceed the net income allocated to us by LINN Energy with respect to those units decrease our tax basis in those units.  When our tax basis in our LINN Energy units is reduced to zero and any loss or other carryovers are fully utilized, the distributions we receive from LINN Energy in excess of net income allocated to us by LINN Energy will effectively be fully taxable to us, without any deductions.


Changes to current U.S. federal tax laws may affect our ability to take certain tax deductions.


Substantive changes to the existing U.S. federal income tax laws have been proposed that, if adopted, would affect, among other things, our ability to take certain deductions related to LINN Energy’s operations, including deductions for intangible drilling costs and percentage depletion and deductions for costs associated with U.S. production activities.  We are unable to predict whether any changes, or other proposals to such laws, ultimately will be enacted. Any such changes could negatively impact the value of an investment in our shares.


Our shareholders are only able to indirectly vote on matters on which LINN Energy unitholders are entitled to vote, and our shareholders are not entitled to vote to elect our directors.


Our shareholders will only be able to indirectly vote on matters on which LINN Energy unitholders are entitled to vote, and our shareholders are not entitled to vote to elect our directors.  Therefore, you will only be able to indirectly influence the management and board of directors of LINN Energy, and you will not be able to directly influence or change our management or board of directors.  If our shareholders are dissatisfied with the performance of our directors, they have no ability to remove the directors and have no right on an annual or ongoing basis to elect our board of directors.  Rather, our board of directors is appointed by the holder of our voting share, which is LINN Energy.  Our limited liability company agreement also contains provisions limiting the ability of holders of our shares to call meetings or to obtain information about our operations, as well as other provisions limiting the ability of holders of our shares to influence the manner or direction of management.


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LINN Energy may issue additional units without your approval or other classes of units, and we may issue additional shares, which would dilute our direct and your indirect ownership interest in LINN Energy and your ownership interest in us.


LINN Energy’s limited liability company agreement does not limit the number of additional limited liability company interests, including interests that rank senior to the LINN Energy units, that it may issue at any time without the approval of its unitholders.  The issuance by LINN Energy of additional units or other equity securities of equal or senior rank will have the following effects:


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|• | our proportionate ownership interest in LINN Energy will decrease;

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|• | the amount of cash available for distribution on each LINN Energy unit may decrease, resulting in a decrease in

the amount of cash available to pay dividends to you;


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|• | the relative voting strength of each previously outstanding unit, including the LINN Energy units we hold and

vote in accordance with the vote of our shareholders, will be diminished; and


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|• | the market price of the LINN Energy units may decline, resulting in a decline in the market price of our shares.




In addition, our limited liability company agreement does not limit the number of additional shares that we may issue at any time without your approval.  The issuance by us of additional shares will have the following effects:


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|• | your proportionate ownership interest in us will decrease;

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|• | the relative voting strength of each previously outstanding share you own will be diminished; and

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|• | the market price of our shares may decline.




Your shares are subject to limited call rights that could result in your having to involuntarily sell your shares at a time or price that may be undesirable.  Shareholders who are not “Eligible Holders” will not be entitled to receive distributions on or allocations of income or loss on their shares and their shares will be subject to redemption.


If LINN Energy or any of its affiliates owns 80% or more of our outstanding shares, LINN Energy has the right, which it may assign to any of its affiliates, to purchase all of our remaining outstanding shares, at a purchase price not less than the greater of the then-current market price of our shares and the highest price paid for our shares by LINN Energy or one of its affiliates during the prior 90 days.  If LINN Energy exercises any of its rights to purchase our shares, you may be required to sell your shares at a time or price that may be undesirable, and you could receive less than you paid for your shares.  Any sale of our shares, to LINN Energy or otherwise, for cash will be a taxable transaction to the owner of the shares sold.  Accordingly, a gain or loss will be recognized on the sale equal to the difference between the cash received and the owner’s tax basis in the shares sold.


In addition, if at any time a person owns more than 90% of the outstanding LINN Energy units, such person may elect to purchase all, but not less than all, of the remaining outstanding LINN Energy units at a price equal to the higher of the current market price (as defined in LINN Energy’s limited liability company agreement) and the highest price paid by such person or any of its affiliates for any LINN Energy units purchased during the 90-day period preceding the date notice was mailed to the LINN Energy unitholders informing them of such election.  In this case, we will be required to tender all of our outstanding LINN Energy units and distribute the cash we receive, net of income taxes payable by us, to our shareholders.  Following such distribution, we will dissolve and wind up our affairs.  Thus, upon the election of a holder of 90% of the outstanding LINN Energy units, you may receive a distribution that is effectively less than the price at which you would prefer to sell your shares.


In order to comply with U.S. laws with respect to the ownership of interests in oil and natural gas leases on federal lands, we have adopted certain requirements regarding those investors who may own our shares.  As used herein, an Eligible Holder means a person or entity qualified to hold an interest in oil and natural gas leases on federal lands.  As of the date hereof, Eligible Holder means: (1) a citizen of the U.S.; (2) a corporation organized under the laws of the U.S. or of any state thereof; or (3) an association of U.S. citizens, such as a partnership or limited liability company, organized under the laws of the U.S. or of any state thereof, but only if such association does not have any direct or indirect foreign ownership, other than foreign ownership of stock in a parent corporation organized under the laws of the U.S. or of any state thereof.  For the avoidance of doubt, onshore mineral leases or any direct or indirect interest therein may be acquired and held by aliens only through stock ownership, holding or control in a corporation organized under the laws of the U.S. or of any state thereof and only for so long as the alien is not from a country that the U.S. federal government regards as denying similar privileges to citizens or corporations of the U.S.  Shareholders who are not persons or entities who meet the requirements to be an Eligible Holder


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will not be entitled to receive distributions in kind on their shares in a liquidation and they run the risk of having their shares redeemed by us at the then-current market price.


The terms of our shares may be changed in ways you may not like, because our board of directors has the power to change the terms of our shares in ways our board determines are not materially adverse to you.


As an owner of our shares, you may not like the changes made to the terms of our shares, if any, and you may disagree with our board of directors’ decision that the changes are not materially adverse to you as a shareholder.  Your recourse if you disagree is limited because our limited liability company agreement gives broad latitude and discretion to our board of directors and limits the fiduciary duties that our officers and directors otherwise would owe to you.


Our limited liability company agreement limits the fiduciary duties owed by our officers and directors to our shareholders, and LINN Energy’s limited liability company agreement limits the fiduciary duties owed by LINN Energy’s officers and directors to its unitholders, including us.


Our limited liability company agreement has modified, waived and limited the fiduciary duties of our directors and officers that would otherwise apply at law or in equity and replaced such duties with a contractual duty requiring our directors and officers to act in good faith.  For purposes of our limited liability company agreement, a person shall be deemed to have acted in good faith if the person subjectively believes that the action or omission of action is in, or not opposed to, the best interests of LinnCo.  In addition, any action or omission shall be deemed to be in, or not opposed to, the best interests of LinnCo and our shareholders if the person making the determination subjectively believes that such action or omission of action is in, or not opposed to, the best interest of LINN Energy and all its unitholders, taken together, and such person may take into account the totality of the relationship between LINN Energy and us.  In addition, when acting in any capacity other than as one of our directors or officers, including when acting in their individual capacities or as officers or directors of LINN Energy or any affiliate of LINN Energy, our directors and officers will not be required to act in good faith and will have no obligation to take into account our interests or the interests of our shareholders.


The above modifications of fiduciary duties are expressly permitted by Delaware law.  Thus, we and our shareholders will only have recourse and be able to seek remedies against our board of directors if they breach their obligations pursuant to our limited liability company agreement.  Furthermore, even if there has been a breach of the obligations set forth in our limited liability company agreement, that agreement provides that our directors and officers will not be liable to us or our shareholders, except for acts or omissions not in good faith.


These provisions restrict the remedies available to our shareholders for actions that without those limitations might constitute breaches of duty, including fiduciary duties.  In addition, LINN Energy’s limited liability company agreement also limits the fiduciary duties owed by LINN Energy’s officers and directors to its unitholders, including us.


Our limited liability company agreement prohibits a shareholder who acquires 15% or more of our shares or voting power with respect to 15% or more of the outstanding LINN Energy units without the approval of our or LINN Energy’s board of directors from engaging in a business combination with us or with LINN Energy for three years.  This provision could discourage a change of control of us or of LINN Energy that our shareholders may favor, which could negatively affect the price of our shares.


Our limited liability company agreement effectively adopts Section 203 of the Delaware General Corporation Laws, or the DGCL.  Section 203 of the DGCL as it applies to us prevents an interested shareholder, defined as a person who owns 15% or more of our outstanding shares or voting power with respect to 15% or more of the outstanding LINN Energy units, from engaging in business combinations with us or with LINN Energy for three years following the time such person becomes an interested shareholder.  Section 203 broadly defines “business combination” to encompass a wide variety of transactions with or caused by an interested shareholder, including mergers, asset sales and other transactions in which the interested shareholder receives a benefit on other than a pro rata basis with other shareholders.  This provision of our limited liability company agreement could have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that might result in a premium over the market price for our shares or LINN Energy’s units.


Our shares may trade at a substantial discount to the trading price of LINN Energy units.


We cannot predict whether our shares will trade at a discount or premium to the trading price of LINN Energy units.  If we incur substantial corporate income tax liabilities on income allocated to us by LINN Energy with respect to LINN Energy units we own, the quarterly dividends of cash you receive per share will be substantially less than the quarterly per unit


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distribution of cash that we receive from LINN Energy.  In addition, in the event of a merger, tender offer, going private transaction or sale of all or substantially all of our assets (“Terminal Transaction”) the net proceeds you receive from us per share may, as a result of our corporate income tax liabilities on the transaction and other factors, be substantially lower than the net proceeds per unit received by a direct LINN Energy unitholder.  As a result of these considerations, our shares may trade at a substantial discount to the trading price of LINN Energy units.


We are a “controlled company” within the meaning of the NASDAQ rules and rely on exemptions from various corporate governance requirements.


Our shares are listed on the NASDAQ Global Select Market.  A company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company is a “controlled company” within the meaning of the NASDAQ rules.  A “controlled company” may elect not to comply with various corporate governance requirements of NASDAQ, including the requirement that a majority of its board of directors consist of independent directors, the requirement that its nominating and governance committee consist of all independent directors and the requirement that its compensation committee consist of all independent directors.


We are a “controlled company” because LINN Energy holds our sole voting share and has the sole power to elect our board of directors.  Because we rely on certain of the “controlled company” exemptions and do not have a compensation committee or a nominating and corporate governance committee, you do not have the same corporate governance advantages afforded to stockholders of companies that are subject to all of the corporate governance requirements of NASDAQ.


Tax Risks to Shareholders


Upon a Terminal Transaction, we may be entitled to a smaller distribution per LINN Energy unit we own than other LINN Energy unitholders, and we may incur substantial corporate income tax liabilities in the transaction or upon the distribution of the proceeds from the transaction to you, in which case the net proceeds you receive from us per share may be substantially lower than the net proceeds per unit received by a direct LINN Energy unitholder.


Upon a liquidation of LINN Energy, LINN Energy unitholders will receive distributions in accordance with the positive balances in their respective capital accounts in their units.  As a result of the underwriting discount and offering expenses incurred in connection with the IPO, we acquired LINN Energy units at a price lower than the market price of LINN Energy units at the time of the IPO.  Therefore, our capital account in the LINN Energy units that we own is lower than the capital accounts of other LINN Energy unitholders.  Therefore, we would be entitled upon a dissolution of LINN Energy to a smaller distribution per LINN Energy unit we own than other LINN Energy unitholders, unless adjustments are made to our capital accounts in the LINN Energy units that we own.


Each time LINN Energy issues or redeems units, it is required to adjust the capital accounts in all outstanding LINN Energy units upward to the extent of the “unrealized gains” in LINN Energy’s assets or downward to the extent of the “unrealized losses” in LINN Energy’s assets immediately prior to such issuance or redemption.  In general, the difference between the fair market value of each such asset and its adjusted tax basis equals the unrealized gain (if the fair market value exceeds the adjusted tax basis) or the unrealized loss (if the adjusted tax basis exceeds the fair market value).  Unrealized gains and unrealized losses generally are allocated among the LINN Energy unitholders in the same manner as other items of LINN Energy income, gain, deduction or loss.


The board of directors of LINN Energy, however, is authorized to make disproportionate allocations of income and deductions, including allocations of unrealized gains and unrealized losses, to the extent necessary to cause the capital accounts of all LINN Energy units to be the same.  We anticipate that there will be sufficient unrealized gains or unrealized losses in connection with future issuances or redemptions of LINN Energy units in order for LINN Energy to allocate to us sufficient unrealized gains, or to allocate sufficient unrealized losses to other holders of LINN Energy units, to cause the capital accounts in the LINN Energy units that we own to be the same as the capital accounts of all other LINN Energy units and result in our being entitled upon the dissolution of LINN Energy to the same distribution per LINN Energy unit we own as other LINN Energy unitholders.  However, there can be no assurance that such adjustments will occur or that any adjustments that do occur will be sufficient to eliminate the difference between our capital account in the LINN Energy units that we own and the capital accounts of other LINN Energy unitholders in their LINN Energy units.


We are classified as a corporation for U.S. federal income tax purposes and, in most states in which LINN Energy does business, for state income tax purposes.  Upon a Terminal Transaction, we will be required to liquidate and distribute the net after-tax proceeds of the transaction to you.  We may incur substantial corporate income tax liabilities upon such a transaction or upon our distribution to you of the proceeds of the transaction.  The tax liability we incur will depend in part upon the


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amount by which the value of the LINN Energy units we own exceeds our tax basis in the units.  We expect our tax basis in our LINN Energy units to decrease over time as we receive distributions that exceed the net income allocated to us by LINN Energy with respect to those units.  As a result, we may incur substantial income tax liabilities upon such a transaction even if LINN Energy units decrease in value after we purchase them.  The amount of cash or other property available for distribution to you upon our liquidation will be reduced by the amount of any such income taxes paid by us.


As a result of these factors, upon a Terminal Transaction, the net proceeds you receive from us per share may be substantially lower than the net proceeds per unit received by a direct LINN Energy unitholder.


Your tax gain on the disposition of our shares could be more than expected, or your tax loss on the disposition of our shares could be less than expected.


If you sell your shares, or you receive a liquidating distribution from us, you will recognize a gain or loss for U.S. federal income tax purposes equal to the difference between the amount realized and your tax basis in those shares.  Because distributions in excess of your allocable share of our earnings and profits decrease your tax basis in your shares, the amount, if any, of such prior excess distributions with respect to the shares you sell or dispose of will, in effect, become taxable gain to you if you sell such shares at a price greater than your tax basis in those shares, even if the price you receive is less than your original cost.


If you are a U.S. holder of our shares, the IRS Forms 1099-DIV that you receive from your broker may over-report your dividend income with respect to our shares for U.S. federal income tax purposes, and failure to over-report your dividend income in a manner consistent with the IRS Forms 1099-DIV that you receive from your broker may cause the IRS to assert audit adjustments to your U.S. federal income tax return.  If you are a non-U.S. holder of our shares, your broker or other withholding agent may overwithhold taxes from dividends paid to you, in which case you would have to file a U.S. tax return if you wanted to claim a refund of the overwithheld tax.


Dividends we pay with respect to our shares will constitute “dividends” for U.S. federal income tax purposes only to the extent of our current and accumulated earnings and profits.  Dividends we pay in excess of our earnings and profits will not be treated as “dividends” for U.S. federal income tax purposes; instead, they will be treated first as a tax-free return of capital to the extent of your tax basis in your shares and then as capital gain realized on the sale or exchange of such shares.  We may be unable to timely determine the portion of our distributions that is a “dividend” for U.S. federal income tax purposes.


If you are a U.S. holder of our shares, we may be unable to persuade brokers to prepare the IRS Forms 1099-DIV that they send to you in a manner that is consistent with our determination of the amount that constitutes a “dividend” to you for U.S. federal income tax purposes or you may receive a corrected IRS Form 1099-DIV (and you may therefore need to file an amended federal, state or local income tax return).  We will attempt to timely notify you of available information to assist you with your income tax reporting (such as posting the correct information on our web site).  However, the information that we provide to you may be inconsistent with the amounts reported to you by your broker on IRS Form 1099-DIV, and the IRS may disagree with any such information and may make audit adjustments to your tax return.


If you are a non-U.S. holder of our shares, “dividends” for U.S. federal income tax purposes will be subject to withholding of U.S. federal income tax at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) unless the dividends are effectively connected with your conduct of U.S. trade or business.  Because we may be unable to timely determine the portion of our distributions that is a “dividend” for U.S. federal income tax purposes or we may be unable to persuade your broker or withholding agent to withhold taxes from distributions in a manner consistent with our determination of the amount that constitutes a “dividend” for such purposes, your broker or other withholding agent may overwithhold taxes from distributions paid to you.  In such a case, you would have to file a U.S. tax return to claim a refund of the overwithheld tax.


If LINN Energy were subject to a material amount of entity-level income taxes or similar taxes, whether as a result of being treated as a corporation for U.S. federal income tax purposes or otherwise, the value of LINN Energy units would be substantially reduced and, as a result, the value of our shares would be substantially reduced.


The anticipated benefit of an investment in LINN Energy units depends largely on the assumption that LINN Energy will not be subject to a material amount of entity-level income taxes or similar taxes, and the anticipated benefit of an investment in our shares depends largely upon the value of LINN Energy units.


LINN Energy may be subject to material entity-level U.S. federal income tax and state income taxes if it is treated as a corporation, rather than as a partnership, for U.S. federal income tax purposes.  Because LINN Energy’s units are publicly


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traded, Section 7704 of the Internal Revenue Code requires that LINN Energy derive at least 90% of its gross income each year from the marketing of oil and natural gas, or from certain other specified activities, in order to be treated as a partnership for U.S. federal income tax purposes.  We believe that LINN Energy has satisfied this requirement and will continue to do so in the future, so we believe LINN Energy is and will be treated as a partnership for U.S. federal income tax purposes.  However, we have not obtained a ruling from the U.S. Internal Revenue Service regarding LINN Energy’s treatment as a partnership for U.S. federal income tax purposes.  Moreover, current law or the business of LINN Energy may change so as to cause LINN Energy to be treated as a corporation for U.S. federal income tax purposes or otherwise subject LINN Energy to material entity-level U.S. federal income taxes, state income taxes or similar taxes.  For example, one recent legislative proposal would eliminate the qualifying income exception upon which LINN Energy relies for its treatment as a partnership for U.S. federal income tax purposes.  Any modification to current law or interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible to meet the requirements for partnership status, affect or cause LINN Energy to change its business activities, change the character or treatment of portions of LINN Energy’s income and adversely affect our investment in LINN Energy units.


If LINN Energy were treated as a corporation for U.S. federal income tax purposes, it would be subject to U.S. federal income tax at rates of up to 35% (and a 20% alternative minimum tax in certain cases), and to state income tax at rates that vary from state to state, on its taxable income.  Distributions from LINN Energy would generally be taxed again as corporate distributions, and no income, gain, loss, deduction or credit would flow through to LINN Energy unitholders.  Any income taxes or similar taxes imposed on LINN Energy as an entity, whether as a result of LINN Energy’s treatment as a corporation for U.S. federal income tax purposes or otherwise, would reduce LINN Energy’s cash available for distribution to its unitholders.  Any material reduction in the anticipated cash flow and after-tax return to LINN Energy unitholders would reduce the value of the LINN Energy units we own and the value of our shares.  In addition, if LINN Energy were treated as a corporation for U.S. federal income tax purposes, that would constitute a Terminal Transaction.


Also, because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships and limited liability companies to entity level taxation through the imposition of state income, franchise or other forms of taxation.  For example, LINN Energy is required to pay Texas franchise tax on its total revenue apportioned to Texas at a maximum effective rate of 0.7%.  Imposition of a tax on LINN Energy by any other state would reduce the amount of cash available for distribution to us.


Risks Relating to the SEC Inquiry and Shareholder Litigation


We and LINN Energy will incur significant costs associated with the pending SEC inquiry and other legal proceedings, and the ultimate outcome of these matters is uncertain.


We, LINN Energy and our and LINN Energy’s current and former directors and officers are the subjects of a number of purported class action lawsuits and derivative lawsuits, and there is an ongoing private SEC inquiry regarding us and LINN Energy.  We cannot predict the duration, outcome or impact of these pending matters, but the lawsuits could result in judgments against us and LINN Energy and directors and officers named as defendants.  Furthermore, we are unable to predict the timing or outcome of the SEC inquiry or estimate the nature or amount of any possible sanction or enforcement action the SEC could seek to impose, which could include fines, penalties, damages, sanctions, administrative remedies and modifications to our and LINN Energy’s disclosure, accounting and business practices, including a prohibition on specific conduct or a potential restatement of our or LINN Energy’s financial statements, any of which could be material.  Our and LINN Energy’s legal expenses incurred in defending the lawsuits and responding to the SEC inquiry have been significant and we and LINN Energy expect them to continue to be significant in the future.  In addition, members of our and LINN Energy’s senior management have been required to divert significant attention and resources to these matters, reducing the time, attention and resources they have available to devote to managing our and LINN Energy’s respective businesses.  These additional expenses and diversion of attention and resources, along with any reputational issues raised by these lawsuits and inquiry, may materially affect our and LINN Energy’s businesses and results of operations and consequently LINN Energy’s cash flow.  Further, if LINN Energy reduces its distributions to its unitholders, our Board of Directors will be required by LinnCo’s limited liability company agreement to reduce the cash dividend to our shareholders to be equal to 100% of such distribution, net of reserves for income taxes payable by us as determined by our Board of Directors.


Our and LINN Energy’s abilities to grow and LINN Energy’s ability to increase cash flow are limited by reduced access to capital markets.


LINN Energy’s business model depends on access to capital markets at an acceptable cost to fund acquisitions and its capital expenditures.  Due to uncertainty regarding the timing, duration and subject matter of the SEC’s inquiry and negative press


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related to such inquiry, we and LINN Energy are limited in our abilities to access the capital markets.  If this situation persists, LINN Energy may not be able to access the capital markets on acceptable terms, or at all, to make acquisitions or fund its capital expenditures necessary to sustain or increase current production, which may reduce its ability to generate higher revenues and consequently its ability to increase cash flow and sustain or increase distributions.  Further, if LINN Energy is unable to increase its distributions to its unitholders, our Board of Directors will be unable to independently increase the cash dividend to our shareholders because it is required to pay dividends equal to 100% of distributions from LINN Energy, net of reserves for income taxes payable by us as determined by our Board of Directors.


Failure to complete or delays in completing our pending merger with Berry could have an adverse impact on LINN Energy’s unit price and LINN Energy’s business.


We expect to complete the merger by January 31, 2014.  However, due to the pending SEC inquiry the timing of our pending merger with Berry is uncertain.  If the merger is not completed, or there are delays in completing the merger, LINN Energy’s unit price may decline and its business could be adversely affected and LINN Energy would be subject to a number of risks, including the following:


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|• | the current trading price of LINN Energy units may reflect a market assumption that the merger will be completed and a failure to complete or delays in completing the merger could result in a further decline in the price of LINN Energy units;

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|• | LINN Energy may not realize the benefits expected from the merger, including cost savings, increased production, enhanced financial and competitive position and diversification of operating locations and assets;

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|• | LINN Energy will be required to pay certain costs relating to the merger, including certain investment banking, financing, legal and accounting fees and expenses, whether or not the merger is completed; and

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|• | LINN Energy may be responsible, under certain circumstances, for the net losses resulting from the termination of the derivatives transactions entered into by Berry at LINN Energy’s request on or after the date of the merger agreement, which net losses could be significant.

There can be no assurance that these risks will not materialize, and if any of them do, they may have an adverse effect on our and LINN Energy’s financial position, results of operations and net cash provided by operating activities.


The SEC inquiry, shareholder litigation and other factors may make the market price of our shares and LINN Energy units highly volatile.


The market price of our common shares and LINN Energy units could fluctuate substantially in the future due to the factors discussed in this “Risk Factors” section, including the risks relating to the SEC inquiry and shareholder litigation, and other factors including rumors or dissemination of false information; changes in coverage or earnings estimates by analysts; our or LINN Energy’s ability to meet analysts’ or market expectations; and sales of our common shares or LINN Energy units by existing shareholders or unitholders, respectively.  For example, after the announcement of the SEC inquiry, the price of our common shares and LINN Energy units dropped significantly.  Currently a number of purported class action lawsuits have been filed against us and LINN Energy as well as derivative demands on behalf of certain purchasers of our common shares and LINN Energy units.  Litigation of this kind could result in additional substantial litigation costs, a damages award against us and LINN Energy, further diversion of management’s attention and additional volatility in the market price of our common shares or LINN Energy units.


Negative press from the SEC inquiry and shareholder litigation or otherwise could have a material adverse effect on LINN Energy’s business, financial condition and results of operations.


The negative press resulting from the SEC inquiry and shareholder litigation matters have harmed LINN Energy’s reputation and could otherwise result in a loss of future business with LINN Energy’s counterparties and business partners.  It could also adversely affect the public’s perception of LINN Energy and lead to reluctance by new parties to do business with LINN Energy.  If LINN Energy’s business partners and customers curtail their relationships with LINN Energy, LINN Energy could experience higher costs of doing business due to less favorable terms and/or the need to find alternative partners.  There can be no assurance that LINN Energy’s business partners and customers will not attempt to end or curtail their relationships with LINN Energy, which could consequently affect our business, financial condition and results of operations.


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Risks Relating to the Merger


The Berry merger exchange ratio is fixed and will not be adjusted in the event of any change in either our share price or Berry’s stock price.


Upon the consummation of the merger with Berry, each share of Berry common stock will be converted into the right to receive 1.68 LinnCo common shares, with cash paid in lieu of fractional shares.  This exchange ratio was fixed in the merger agreement we entered into with Berry and will not be adjusted for changes in the market price of either our common shares or Berry common stock.  Changes in the price of our common shares prior to the merger will affect the market value of the merger consideration that the Berry stockholders will receive on the date of the merger.  Stock price changes may result from a variety of factors (many of which are beyond our control or the control of Berry and LINN Energy), including the following factors:


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|• | market reaction to the announcement of the merger and the prospects of the combined company;

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|• | changes in our, Berry’s and LINN Energy’s respective businesses, operations, assets, liabilities and prospects;

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|• | changes in market assessments our, Berry’s or LINN Energy’s business, operations, financial position and prospects;

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|• | market assessments of the likelihood that the merger will be completed;

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|• | interest rates, general market and economic conditions and other factors generally affecting the price of our common shares and Berry common stock;

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|• | the status of LINN Energy’s SEC inquiry and litigation;

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|• | federal, state and local legislation, governmental regulation and legal developments in the businesses in which we, Berry and LINN Energy operate; and

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|• | other factors beyond our, Berry’s and LINN Energy’s control, including those described or referred to elsewhere in this “Risk Factors” section.

The price of our common shares at the closing of the merger may vary from the price on the date the merger agreement was executed, on the date of this quarterly report and on the date of the Berry special meeting and our annual meeting.  As a result, the market value of the merger consideration represented by the exchange ratio will also vary.


Because the merger will be completed after the dates of our annual meeting, the Berry special meeting and the LINN Energy annual meeting, the exact market value of our common shares that Berry stockholders will receive upon completion of the merger will be unknown on such date.  Our shareholders should consider the following two risks:


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|• | If the price of our common shares increases between the date the merger agreement was signed or the date of our annual meeting and the effective time of the merger, Berry stockholders will receive our common shares that have a market value upon completion of the merger that is greater than the market value of such shares calculated pursuant to the exchange ratio when the merger agreement was signed or the date of our annual meeting, respectively.  Therefore, while the number of our common shares to be issued per share of Berry common stock is fixed, our common shareholders cannot be sure of the market value of the consideration that will be paid to Berry stockholders upon completion of the merger.

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|• | If the price of our common shares declines between the date the merger agreement was signed or the date of the Berry special meeting and the effective time of the merger, including for any of the reasons described above, Berry stockholders will receive our common shares that have a market value upon completion of the merger that is less than the market value of such shares calculated pursuant to the exchange ratio on the date the merger agreement was signed or on the date of the Berry special meeting, respectively.  Therefore, while the number of our common shares to be issued per share of Berry common stock is fixed, Berry stockholders cannot be sure of the market value of our common shares they will receive upon completion of the merger or the market value of our common shares at any time after the completion of the merger.

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The Berry merger and related transactions are subject to approval by Berry stockholders, our shareholders and LINN Energy unitholders.


In order for the Berry merger to be completed, the Berry stockholders must adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, which requires approval by a majority of the votes entitled to be cast by all outstanding shares of Berry common stock as of the record date for the Berry special meeting.  While a vote of our common shareholders is not required to approve the merger, the approval of our common shareholders is required under NASDAQ Marketplace Rule 5635(a) in order for us to be authorized to issue our common shares to the Berry stockholders in connection with the merger.  Approval of the issuance of our common shares to the Berry stockholders under NASDAQ rules requires the affirmative vote of a majority of votes cast by holders of our common shares at the our annual meeting.  Additionally, our common shareholders must approve certain amendments to our limited liability company agreement, which requires the affirmative vote of a majority of our outstanding voting shares and a majority of our outstanding common shares, voting as separate classes.  In addition, in order for the merger to be completed, the LINN Energy unitholders must approve the issuance of LINN Energy units to us in connection with the contribution of Berry to LINN Energy, which requires the affirmative vote of a majority of the votes cast by holders of LINN Energy units at the LINN Energy annual meeting under NASDAQ Marketplace Rule 5635(a).


LINN Energy may experience difficulties in integrating the Berry business, which could cause the combined company to fail to realize many of the anticipated potential benefits of the merger.


LINN Energy entered into the merger agreement because it believes that the transaction will be beneficial to Berry and its stockholders, us and our shareholders and LINN Energy and its unitholders.  Achieving the anticipated benefits of the transaction will depend in part upon whether LINN Energy is able to integrate the business of Berry in an efficient and effective manner.  LINN Energy may not be able to accomplish this integration process smoothly or successfully.  The difficulties of integrating Berry’s business with that of LINN Energy potentially will include, among other things, the necessity of coordinating geographically separated organizations and addressing possible differences incorporating cultures and management philosophies, and the integration of certain operations following the transaction, which will require the dedication of significant management resources and which may temporarily distract management’s attention from the day-to-day business of the combined company.


An inability to realize the full extent of the anticipated benefits of the transaction, as well as any delays encountered in the transition process, could have an adverse effect upon the revenues, level of expenses and operating results of LINN Energy after the acquisition of Berry, which may affect the value of LINN Energy units and thus our common shares after the closing of the merger.


The terms of Berry’s indebtedness may restrict Berry ’ s ability to make distributions to LINN Energy.


Berry’s credit facility and the indentures governing its outstanding notes contain, and any future indebtedness may also contain, a number of restrictive covenants that impose operating restrictions on Berry, including restrictions on Berry’s ability to make distributions to LINN Energy.  Any such restrictions on Berry’s ability to make distributions to LINN Energy would adversely affect LINN Energy’s ability to make distributions to its unitholders, including us.


The market price of our common shares after the merger may be affected by factors different from those affecting our or Berry’s shares currently.


Our, Berry’s and LINN Energy’s businesses differ and, accordingly, the results of operations of LINN Energy after the acquisition of Berry and the market price of our common shares and LINN Energy units after the merger may be affected by factors that differ from those currently affecting our, Berry’s or LINN Energy’s independent results of operations.


The pendency of the Berry merger could adversely affect our, Berry’s and LINN Energy’s business and operations.


In connection with the pending merger, some customers or vendors of each of Berry and LINN Energy may delay or defer decisions, which could negatively impact our, Berry’s and LINN Energy’s revenues, earnings, cash flows and expenses, regardless of whether the merger is completed.  In addition, due to operating covenants in the merger agreement, we and each of Berry and LINN Energy may be unable, during the pendency of the merger, to pursue certain strategic transactions, undertake certain significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions that are not in the ordinary course of business.


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 Item 1A.    Risk Factors - Continued


The Berry merger is subject to the receipt of consents and approvals from governmental entities that may impose conditions that could have an adverse effect on us.


Before the merger may be completed, various waivers, approvals, clearances or consents must be obtained from the Federal Trade Commission, Federal Energy Regulatory Commission and the Antitrust Division of the Department of Justice and other authorities in the United States.  These governmental entities may impose conditions on the completion of the merger or require changes to the terms of the merger.  Although we and Berry do not currently expect that any such conditions or changes will be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of us and LINN Energy following the merger, any of which might have an adverse effect on us or LINN Energy following the merger.


Failure to complete the Berry merger could negatively affect our and Berry’s stock price and LINN Energy’s unit price, respectively, and their respective future businesses and financial results.


If the Berry merger is not completed, our, Berry’s and LINN Energy’s ongoing businesses may be adversely affected and we, Berry and LINN Energy will be subject to several risks and consequences, including the following:


|  |                                                                                                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | under the merger agreement, Berry may be required, under certain circumstances, to pay us a termination fee of $83.7 million or $25.7 million in respect of our expenses;

|  |                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | under the merger agreement, we may be required, under certain circumstances, to pay Berry a termination fee of $83.7 million or $25.7 million in respect of Berry’s expenses;

|  |                                                                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | We, Berry and LINN Energy will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;

|  |                                                                                 
|- | --------------------------------------------------------------------------------
|• | We, Berry and LINN Energy would not realize the expected benefits of the merger;

|  |                                                                                                                                                                                                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | under the merger agreement, we and each of Berry and LINN Energy is subject to certain restrictions on the conduct of its business prior to completing the merger which may adversely affect its ability to execute certain of its business strategies;

|  |                                                                                                                                                                                                                                                                                           
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | matters relating to the merger may require substantial commitments of time and resources by Berry, our and LINN Energy management, which could otherwise have been devoted to other opportunities that may have been beneficial to Berry, us and LINN Energy as independent companies; and

|  |                                                                                                                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | We, Berry or LINN Energy may be responsible for the net losses resulting from the termination of the derivative transactions entered into by Berry on or after the date of the merger agreement, which net losses could be significant.

In addition, if the merger is not completed, we, Berry and LINN Energy may experience negative reactions from the financial markets and from their respective customers and employees.  We, Berry and/or LINN Energy also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against us, Berry or LINN Energy to attempt to force them to perform their respective obligations under the merger agreement.


We and LINN Energy expect to incur substantial expenses related to the merger.


We and LINN Energy expect to incur substantial expenses in connection with completing the merger and integrating the business, operations, networks, systems, technologies, policies and procedures of Berry with our own.  There are a large number of systems that must be integrated, including billing, management information, purchasing, accounting and finance, sales, payroll and benefits, fixed assets, lease administration and regulatory compliance.  Although we and LINN Energy have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of integration expenses.  Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.  Due to these factors, the transaction and integration expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the Berry business following the completion of the merger.  As a result of these expenses,


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 Item 1A.    Risk Factors - Continued


we and LINN Energy expect to take charges against our respective earnings before and after the completion of the merger.  The charges taken in connection with the merger are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.


Following the merger, Berry and LINN Energy may be unable to retain key employees.


Our and LINN Energy’s success after the merger will depend in part upon LINN Energy’s ability to retain key Berry and LINN Energy employees.  Key employees may depart either before or after the merger because of issues relating to the uncertainty and difficulty of integration or a desire not to remain following the merger.  Accordingly, no assurance can be given that LINN Energy will be able to retain key Berry or LINN Energy employees to the same extent as in the past.


Pending litigation against us, Berry, and LINN Energy could result in an injunction preventing completion of the merger, the payment of damages in the event that the merger is completed and/or may adversely affect the combined company’s business, financial condition or results of operations following the merger.


Purported stockholder class actions have been filed against, among others, us, Berry, LINN Energy and the members of the Berry board of directors.  Multiple actions seek an injunction barring or rescinding the merger and damages in connection with the proposed transactions.  If a final settlement is not reached, or if dismissals of these actions are not obtained, these lawsuits could prevent or delay the completion of the merger, and result in substantial costs to us, Berry and LINN Energy, including costs associated with the indemnification of directors.  Additional lawsuits related to the merger may be filed against us, Berry, LINN Energy and each of their respective directors.  The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect the combined company’s business, financial condition or results of operations.


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Item 1B.    Unresolved Staff Comments


None


Item 2.    Properties


LinnCo has no properties.  Its assets consist of a small amount of working capital and the LINN Energy units that it owns.  See Item 1. “Business” for additional information.


Item 3.    Legal Proceedings


The Company is not a party to any litigation; however, legal proceedings that affect LINN Energy may also affect the Company.  See “Legal Proceedings” within LINN Energy’s Annual Report on Form 10-K for the year ended December 31, 2012, included in this filing as Exhibit 99.1 and incorporated herein by reference.


Item 4.    Mine Safety Disclosures


Not applicable


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|        |                                                                                                             
|------- | ------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s shares are listed on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “LNCO” and began trading on October 12, 2012, after pricing of its initial public offering (“IPO”).  At the close of business on January 31, 2013, there were approximately six shareholders of record.


The following sets forth the range of high and low last reported sales prices per share, as reported by NASDAQ, for the period indicated.  In addition, dividends declared during the period are presented.


Share Price RangeCashDividendsDeclaredPer SharePeriodHighLow2012:October 12 – December 31$39.48$35.27$0.71(1)


|    |                                                                  
|--- | -----------------------------------------------------------------
|(1) | This amount is net of the tax reserve of $0.015 per common share.

Dividends


Within five (5) business days after receiving a cash distribution related to its interest in LINN Energy units, LinnCo is required to pay the cash received, net of reserves for its income tax liability (“tax reserve”), as dividends to its shareholders.  The amount of the tax reserve is calculated on a quarterly basis and is determined based on the tax liability estimate for the entire year.  The current quarter tax reserve can be increased or reduced, at the Company management’s discretion, to account for the over/(under) tax reserve recorded in prior quarters.  Because the tax reserve is an estimate, upon filing the annual tax returns, if the actual amount of tax due is greater or less than the total amount of tax reserved, the subsequent tax reserve, at Company management’s discretion, could be adjusted accordingly.  Any such adjustments are subject to approval by the Company’s Board of Directors (“Board”).


Shareholder Return Performance Presentation


The performance graph below compares the total shareholder return on the Company’s shares, with the total return of the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the Alerian MLP Index, a weighted composite of 50 prominent energy master limited partnerships.  Total return includes the change in the market price, adjusted for reinvested dividends or distributions, for the period shown on the performance graph and assumes that $100 was invested in the Company on October 12, 2012, and LINN Energy, the S&P 500 Index and the Alerian MLP Index on the same date.  The results shown in the graph below are not necessarily indicative of future performance.





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 Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Continued





October 12, 2012December 31, 2012LinnCo$100$96LINN Energy$100$88Alerian MLP Index$100$95S&P 500 Index$100$100


Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate this Annual Report on Form 10-K or future filings with the Securities and Exchange Commission (“SEC”), in whole or in part, the preceding performance information shall not be deemed to be “soliciting material” or to be “filed” with the SEC or incorporated by reference into any filing except to the extent this performance presentation is specifically incorporated by reference therein.


Use of Proceeds


On October 11, 2012, the Company’s registration statement on Form S-1 (File No. 333-182305) was declared effective by the SEC for its IPO pursuant to which LinnCo sold 34,787,500 common shares representing limited liability company interests with limited voting rights at a price to the public of $36.50 per share.  Barclays, Citigroup, RBC Capital Markets, Wells Fargo Securities, BofA Merrill Lynch, Credit Suisse, Raymond James and UBS Investment Bank acted as the joint book-running managers in the transaction.


The offering commenced as of October 2, 2012, and did not terminate before all of the securities registered in the registration statement were sold.  On October 17, 2012, the Company closed the sale of such shares, resulting in net proceeds of approximately $1.2 billion after deducting the underwriting discount and structuring fee of approximately $57 million.  Total expenses of the offering were approximately $60 million, which includes the underwriting discount, structuring fee and other offering expenses.  Except as described herein with respect to LINN Energy, no direct or indirect payments were made by the Company to directors, officers or persons owning ten percent or more of its outstanding shares or to their associates, or to the Company’s affiliates.  LinnCo used the net proceeds from the sale of shares to purchase 34,787,500 units from LINN Energy.  LINN Energy used such net proceeds to pay certain expenses of the offering and repay a portion of the outstanding


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 Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Continued


indebtedness under its Credit Facility.  There was no material change in the planned use of proceeds from the Company’s IPO as described in its final Prospectus filed with the SEC on October 12, 2012.


There are no securities authorized for issuance under equity compensation plans, no sales of unregistered equity securities during the periods covered by this report, and the Company did not repurchase any shares during 2012.


|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The selected financial data set forth below should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8. “Financial Statements and Supplementary Data.”


April 30, 2012(Inception) ToDecember 31, 2012(in thousands, exceptper share amounts)Statement of operations data:Equity income from investment in Linn Energy, LLC$34,411General and administrative expenses(1,230)Income tax expense(12,528)Net income20,653Net income per share, basic and diluted1.92Dividends declared per share0.71Weighted average shares outstanding10,747Cash flow data:Net cash provided by (used in):Operating activities$25,221Investing activities(1,212,627)Financing activities1,187,929Balance sheet data:Total assets at December 31, 2012$1,222,340


Selected financial data of LINN Energy is found in Part II, Item 6. “Selected Financial Data” of LINN Energy’s Annual Report on Form 10-K, which is included in this filing as Exhibit 99.1 and incorporated herein by reference as the Company’s results of operations, financial position and cash flows are dependent on the results of operations, financial position and the cash flows of LINN Energy.


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 Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis should be read in conjunction with the financial statements and notes to the financial statements, which are included in this Annual Report on Form 10-K in Item 8. “Financial Statements and Supplementary Data.”  The following discussion contains forward-looking statements that reflect the Company’s future plans, estimates, beliefs and expected performance.  The forward-looking statements are dependent upon events, risks and uncertainties that may be outside the Company’s control.  The Company’s actual results could differ materially from those discussed in these forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those factors discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Item 1A. “Risk Factors.”  In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.


A reference to a “Note” herein refers to the accompanying Notes to Financial Statements contained in Item 8. “Financial Statements and Supplementary Data.”


General


LinnCo, LLC (“LinnCo” or the “Company”) is a Delaware limited liability company formed on April 30, 2012, under the Delaware Limited Liability Company Act, that has elected to be treated as a corporation for U.S. federal income tax purposes.  Linn Energy, LLC (“LINN Energy”), an independent oil and natural gas company that trades on the NASDAQ Global Select Market under the symbol “LINE,” owns LinnCo’s sole voting share.


LinnCo’s success is dependent upon the operation and management of LINN Energy and its resulting performance.  Therefore, LINN Energy’s Annual Report on Form 10-K for the year ended December 31, 2012, has been included in this filing as Exhibit 99.1 and incorporated herein by reference.


Business


At no time after LinnCo’s formation and prior to the initial public offering (“IPO”) did LinnCo have any operations or own any interest in LINN Energy.  After the IPO and as of December 31, 2012, LinnCo’s sole purpose was to own units representing limited liability company interests (“units”) in LINN Energy and it expected to have no significant assets or operations other than those related to its interest in LINN Energy.  In connection with the pending acquisition of Berry Petroleum Company (see Note 8), LinnCo intends to amend its limited liability company agreement to permit the acquisition and subsequent contribution of assets to LINN Energy.


Acquisition - Subsequent Event


On February 21, 2013, LinnCo and Berry Petroleum Company (“Berry”) announced they had signed a definitive merger agreement under which LinnCo would acquire all of the outstanding common shares of Berry.  The transaction has a preliminary value of approximately $4.3 billion, including the assumption of debt, and is expected to close by June 30, 2013, subject to approvals by Berry and LinnCo shareholders, LINN Energy’s unitholders and regulatory agencies.


Under the terms of the agreement, Berry’s shareholders will receive 1.25 of LinnCo common shares for each Berry common share they own.  This transaction, which is expected to be a tax-free exchange to Berry’s shareholders, represents value of $46.2375 per common share, based on the closing price of LinnCo common shares on February 20, 2013.  Upon completion of the merger, LinnCo will contribute Berry assets to LINN Energy in exchange for LINN Energy units.


Results of Operations


Equity Income from Investment in Linn Energy, LLC


The Company’s results of operations primarily consists of its share of earnings of LINN Energy attributed to the units the Company owns.  At December 31, 2012, the Company owned approximately 15% of LINN Energy’s outstanding units.  The percentage ownership of LINN Energy could change over time due to the Company’s ownership of additional units or other issuances or repurchases of units by LINN Energy.  The Company uses the equity method of accounting for its investment in LINN Energy and record earnings (losses) as described below.


Following is summarized statement of operations information for LINN Energy.  Additional information on LINN Energy’s results of operations and financial position are contained in its Annual Report on Form 10-K for the year ended December 31, 2012, included in this filing as Exhibit 99.1 and incorporated herein by reference.


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 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued


Linn Energy, LLC


October 17, 2012To December 31,2012(in thousands)Revenues and other$604,701Expenses(578,170)Other income and (expenses)(85,464)Income tax benefit1,697Net loss$(57,236)


General and Administrative Expenses


The Company’s general and administrative expenses are associated with managing the business and affairs of LinnCo.  For the period from April 30, 2012 (inception) to December 31, 2012, LinnCo incurred total general and administrative expenses of approximately $1 million, all of which were paid by LINN Energy on LinnCo’s behalf.  These expenses included approximately $772,000 related to services provided by LINN Energy necessary for the conduct of LinnCo’s business, such as accounting, legal, tax, information technology and other expenses.  The remaining expenses were primarily related to professional services rendered by third parties.  Because all general and administrative expenses reported by LinnCo on its statement of operations were actually paid by LINN Energy on LinnCo’s behalf, no cash was disbursed by LinnCo.


Income Tax Expense


Income tax expense of approximately $13 million for the period from April 30, 2012 (inception) to December 31, 2012, is based on the Company’s net income for the period, primarily associated with its equity income from its investment in LINN Energy.


Liquidity and Capital Resources


The Company’s authorized capital structure consists of two classes of interests: (1) shares with limited voting rights, which were issued in the IPO and (2) voting shares, 100% of which are held by LINN Energy.  At December 31, 2012, LinnCo’s issued capitalization consisted of $1.2 billion in common shares representing limited liability company interests (“shares”) and $1,000 contributed by LINN Energy in connection with LinnCo’s formation and in exchange for its voting share.  Additional classes of equity interests may be created upon approval by the Board and the holders of a majority of the outstanding shares and voting shares, voting as separate classes.


LINN Energy has agreed to provide to LinnCo, or to pay on LinnCo’s behalf, any legal, accounting, tax advisory, financial advisory and engineering fees, printing costs or other administrative and out-of-pocket expenses incurred by LinnCo, along with any other expenses incurred in connection with any public offering of shares in LinnCo or incurred as a result of being a publicly traded entity, including costs associated with annual, quarterly and other reports to holders of LinnCo shares, tax return and Form 1099 preparation and distribution, NASDAQ listing fees, printing costs, independent auditor fees and expenses, legal counsel fees and expenses, limited liability company governance and compliance expenses and registrar and transfer agent fees.


The Company expects neither to generate nor to require significant cash in its ongoing business.  Any cash received from the sale of additional shares will be immediately used to purchase additional LINN Energy units.  Accordingly, the Company does not anticipate any other sources or needs for additional liquidity.


LinnCo Initial Public Offering


On October 17, 2012, LinnCo closed its IPO as discussed in Note 3, and used all of the net proceeds, after deducting the underwriting discount and structuring fee, to purchase 34,787,500 units from LINN Energy which equal the number of LinnCo shares issued and sold.  LinnCo’s limited liability company agreement requires it to maintain a one-to-one ratio


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 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued


between the number of LinnCo shares outstanding and the number of LINN Energy units it owns.  When LINN Energy makes distributions on its units, LinnCo will pay a dividend on its shares equal to the amount of cash received from LINN Energy with respect to the LINN Energy units owned by LinnCo, net of reserves for income taxes payable by LinnCo.


Dividends


Within five (5) business days after receiving a cash distribution related to its interest in LINN Energy units, LinnCo is required to pay the cash received, net of reserves for its income tax liability (“tax reserve”), as dividends to its shareholders.  The following provides a summary of dividends paid by the Company during the year ended December 31, 2012:


Date PaidPeriod Covered by DividendDividends Per ShareTotal Dividends(in millions)November 2012July 1 - September 30, 2012$0.71(1)$25


|    |                                                                  
|--- | -----------------------------------------------------------------
|(1) | This amount is net of the tax reserve of $0.015 per common share.

On January 24, 2013, LINN Energy’s Board declared a cash distribution of $0.725 per unit with respect to the fourth quarter of 2012.  The distribution attributable to LinnCo’s interest in LINN Energy, totaling approximately $25 million, was paid to LinnCo on February 14, 2013.


On January 24, 2013, the Company’s Board declared a cash dividend of $0.71 per common share with respect to the fourth quarter of 2012, which is net of a tax reserve of $0.015 per common share from the LINN Energy distribution of $0.725 per unit.  The dividend, totaling approximately $25 million after deducting the estimated income tax reserve of approximately $522,000, was paid on February 15, 2013, to shareholders of record as of the close of business on February 7, 2013.


Critical Accounting Policies and Estimates


The discussion and analysis of the Company’s financial condition and results of operations is based upon the financial statements, which have been prepared in accordance with GAAP.  The preparation of these financial statements requires management of the Company to make estimates and assumptions about future events.  These estimates and the underlying assumptions affect the amount of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of expenses.  These estimates and assumptions are based on management’s best estimates and judgment.  Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.  Such estimates and assumptions are adjusted when facts and circumstances dictate.  As future events and their effects cannot be determined with precision, actual results could differ from these estimates.  Any changes in estimates resulting from continuous changes in the economic environment will be reflected in the financial statements in future periods.


Accounting for Investment in Linn Energy, LLC


The Company uses the equity method of accounting related to its ownership interest in LINN Energy’s net income (losses).  The Company records its share of LINN Energy’s net income (losses) in the period in which it is earned.  At December 31, 2012, the Company owned approximately 15% of LINN Energy’s outstanding units.  The Company’s ownership percentage could change as LINN Energy issues or repurchases units.  Changes in the Company’s ownership percentage affect its net income (losses).


The initial carrying amount of the Company’s investment in LINN Energy exceeded the Company’s ownership interest in LINN Energy’s underlying net assets by approximately $516 million.  The difference was attributable to proved and unproved oil and natural gas properties, senior notes and equity method goodwill.  These amounts are included in “investment in Linn Energy, LLC” on the balance sheet and are amortized over the lives of the related assets and liabilities.  Such amortization is included in the equity income from the Company’s investment in LINN Energy.  Equity method goodwill is not amortized; however, the investment is reviewed for impairment.  Impairment testing is performed when events or circumstances warrant such testing and considers whether there is an inability to recover the carrying value of an investment that is other than temporary.  As of December 31, 2012, no such impairment had occurred with respect to the Company’s investment in LINN Energy.


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 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued


Income Taxes


The Company is a limited liability company that has elected to be treated as a corporation for U.S. federal income tax purposes.  Deferred income tax assets and liabilities are recognized for temporary differences between the basis of the Company’s assets and liabilities for financial and tax reporting purposes.  At December 31, 2012, the majority of the Company’s temporary difference and associated deferred tax expense resulted from its investment in LINN Energy.


|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk

The nature of the Company’s business and operations is such that no activities or transactions are conducted or entered into by the Company that would require it to have a discussion under this item.


For a discussion of these matters as they pertain to LINN Energy, please read Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of LINN Energy’s Annual Report on Form 10-K, which is included in this filing as Exhibit 99.1 and incorporated herein by reference as activities of LINN Energy have an impact on the Company’s results of operations and financial position.


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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data




INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA








PageReport of Independent Registered Public Accounting Firm (Financial Statements)25Balance Sheet as of December 31, 201226Statement of Operations for the period from April 30, 2012 (inception) to December 31, 201227Statement of Shareholders’ Equity for the period from April 30, 2012 (inception) to December 31, 201228Statement of Cash Flows for the period from April 30, 2012 (inception) to December 31, 201229Notes to Financial Statements30Supplemental Quarterly Data (Unaudited)36





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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders


LinnCo, LLC:


We have audited the accompanying balance sheet of LinnCo, LLC as of December 31, 2012, and the related statements of operations, shareholders’ equity, and cash flows for the period from April 30, 2012 (inception) to December 31, 2012.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.


We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of LinnCo, LLC as of December 31, 2012, and the results of its operations and its cash flows for the period from April 30, 2012 (inception) to December 31, 2012, in conformity with U.S. generally accepted accounting principles.





/s/ KPMG LLP





Houston, Texas


February 28, 2013


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LinnCo, LLC


BALANCE SHEET





December 31, 2012(in thousands, except share amounts)ASSETSCash$523Investment in Linn Energy, LLC1,221,817Total assets$1,222,340LIABILITIES AND SHAREHOLDERS’ EQUITYNoncurrent deferred income tax$13,559Shareholders’ equity:Voting shares; unlimited shares authorized; 1 share issued and outstanding1Common shares; unlimited shares authorized; 34,787,500 shares issued and outstanding1,209,835Additional paid-in capital2,991Accumulated deficit(4,046)1,208,781Total liabilities and shareholders’ equity$1,222,340


The accompanying notes are an integral part of these financial statements.





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LinnCo, LLC


STATEMENT OF OPERATIONS





April 30, 2012(Inception) ToDecember 31, 2012(in thousands, except per share amounts)Equity income from investment in Linn Energy, LLC$34,411General and administrative expenses(1,230)Income before income taxes33,181Income tax expense(12,528)Net income$20,653Net income per share, basic and diluted$1.92Weighted average shares outstanding10,747Dividends declared per share$0.71


The accompanying notes are an integral part of these financial statements.


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LinnCo, LLC


STATEMENT OF SHAREHOLDERS’ EQUITY





April 30, 2012 (Inception) To December 31, 2012SharesShare AmountAdditional Paid-In CapitalAccumulated DeficitTotal Shareholders’ Equity(in thousands, except shares)Sale of voting share to LinnEnergy, LLC1$1$—$—$1Sale of common shares, net of underwriting discounts and expenses of $59,90934,787,5001,209,835——1,209,835Deferred tax in equity investment—(1,031)—(1,031)Capital contributions from Linn Energy, LLC—4,022—4,022Dividends to shareholders——(24,699)(24,699)Net income——20,65320,65334,787,501$1,209,836$2,991$(4,046)$1,208,781


The accompanying notes are an integral part of these financial statements.





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LinnCo, LLC


STATEMENT OF CASH FLOWS





April 30, 2012(Inception) ToDecember 31, 2012(in thousands)Cash flow from operating activities:Net income$20,653Adjustments to reconcile net income to net cash provided by operating activities:Equity income from investment in Linn Energy, LLC(34,411)Noncash general and administrative expenses paid by Linn Energy, LLC1,230Deferred income tax12,528Cash distributions received25,221Net cash provided by operating activities25,221Cash flow from investing activities:Investment in Linn Energy, LLC(1,212,627)Net cash used in investing activities(1,212,627)Cash flow from financing activities:Proceeds from sale of voting share1Proceeds from sale of common shares1,269,744Dividends paid to shareholders(24,699)Offering expenses and fees(57,117)Net cash provided by financing activities1,187,929Net increase in cash and cash equivalents523Cash and cash equivalents:Beginning—Ending$523


The accompanying notes are an integral part of these financial statements.





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LinnCo, LLC


NOTES TO FINANCIAL STATEMENTS





Note 1 – Basis of Presentation and Significant Accounting Policies


Nature of Business


LinnCo, LLC (“LinnCo” or the “Company”) is a Delaware limited liability company formed on April 30, 2012.  As of December 31, 2012, LinnCo’s sole purpose was to own units representing limited liability company interests (“units”) in Linn Energy, LLC (“LINN Energy”) and it expected to have no significant assets or operations other than those related to its interest in LINN Energy.  In connection with the pending acquisition of Berry Petroleum Company (see Note 8), LinnCo intends to amend its limited liability company agreement to permit the acquisition and subsequent contribution of assets to LINN Energy.  LINN Energy is an independent oil and natural gas company that trades on the NASDAQ Global Select Market under the symbol “LINE.”  At December 31, 2012, LINN Energy’s last reported sales price per unit, as reported by NASDAQ, was $35.24 and the Company owned approximately 15% of LINN Energy’s outstanding units.


The operations of the Company are governed by the provisions of a limited liability company agreement executed by and among its members.  Pursuant to applicable provisions of the Delaware Limited Liability Company Act (the “Delaware Act”) and the Amended and Restated Limited Liability Company Agreement of LinnCo, LLC (the “Agreement”), shareholders have no liability for the debts, obligations and liabilities of the Company, except as expressly required in the Agreement or the Delaware Act.  The Company will remain in existence unless and until dissolved in accordance with the terms of the Agreement.


Principles of Reporting


The Company presents its financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).  Investments in noncontrolled entities over which the Company exercises significant influence are accounted for under the equity method.


Reimbursement of LinnCo ’ s Costs


LINN Energy has agreed to provide to LinnCo, or to pay on LinnCo’s behalf, any legal, accounting, tax advisory, financial advisory and engineering fees, printing costs or other administrative and out-of-pocket expenses incurred by LinnCo, along with any other expenses incurred in connection with any public offering of common shares representing limited liability company interests (“shares”) in LinnCo or incurred as a result of being a publicly traded entity, including costs associated with annual, quarterly and other reports to holders of LinnCo shares, tax return and Form 1099 preparation and distribution, NASDAQ listing fees, printing costs, independent auditor fees and expenses, legal counsel fees and expenses, limited liability company governance and compliance expenses and registrar and transfer agent fees.  In addition, LINN Energy has agreed to indemnify LinnCo and its officers and directors for damages suffered or costs incurred (other than income taxes payable by LinnCo) in connection with carrying out LinnCo’s activities.


For the period from April 30, 2012 (inception) to December 31, 2012, LinnCo incurred total general and administrative expenses of approximately $1 million , all of which were paid by LINN Energy on LinnCo’s behalf.  These expenses included approximately $772,000 related to services provided by LINN Energy necessary for the conduct of LinnCo’s business, such as accounting, legal, tax, information technology and other expenses.  The remaining expenses were primarily related to professional services rendered by third parties.  During the same period, LINN Energy also paid, on LinnCo’s behalf, approximately $3 million of certain offering costs in connection with LinnCo’s October 2012 initial public offering (“IPO”) (see Note 3).  Because all expenses and costs were actually paid by LINN Energy on LinnCo’s behalf, no cash was disbursed by LinnCo.


Dividends


Within five (5) business days after receiving a cash distribution related to its interest in LINN Energy units, LinnCo is required to pay the cash received, net of reserves for its income tax liability (“tax reserve”), as dividends to its shareholders.  The amount of the tax reserve is calculated on a quarterly basis and is determined based on the tax liability estimate for the entire year.  The current quarter tax reserve can be increased or reduced, at the Company management’s discretion, to account for the over/(under) tax reserve recorded in prior quarters.  Because the tax reserve is an estimate, upon filing the annual tax


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 LinnCo, LLC
 NOTES TO FINANCIAL STATEMENTS - Continued


returns, if the actual amount of tax due is greater or less than the total amount of tax reserved, the subsequent tax reserve, at Company management’s discretion, could be adjusted accordingly.  Any such adjustments are subject to approval by the Company’s Board of Directors (“Board”).


Use of Estimates


The preparation of the accompanying financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions about future events.  These estimates and the underlying assumptions affect the amount of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of income and expenses.  These estimates and assumptions are based on management’s best estimates and judgment.  Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.  Such estimates and assumptions are adjusted when facts and circumstances dictate.  As future events and their effects cannot be determined with precision, actual results could differ from these estimates.  Any changes in estimates resulting from continuous changes in the economic environment will be reflected in the financial statements in future periods.


Cash Equivalents


For purposes of the statement of cash flows, the Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents.


Accounting for Investment in Linn Energy, LLC


The Company uses the equity method of accounting related to its ownership interest in LINN Energy’s net income (losses).  The Company records its share of LINN Energy’s net income (losses) in the period in which it is earned.  At December 31, 2012, the Company owned approximately 15% of LINN Energy’s outstanding units.  The Company’s ownership percentage could change as LINN Energy issues or repurchases additional units.  Changes in the Company’s ownership percentage affect its net income (losses).


The initial carrying amount of the Company’s investment in LINN Energy exceeded the Company’s ownership interest in LINN Energy’s underlying net assets by approximately $516 million .  The difference was attributable to proved and unproved oil and natural gas properties, senior notes and equity method goodwill.  These amounts are included in “investment in Linn Energy, LLC” on the balance sheet and are amortized over the lives of the related assets and liabilities.  Such amortization is included in the equity income from the Company’s investment in LINN Energy.  Equity method goodwill is not amortized; however, the investment is reviewed for impairment.  Impairment testing is performed when events or circumstances warrant such testing and considers whether there is an inability to recover the carrying value of an investment that is other than temporary.  As of December 31, 2012, no such impairment had occurred with respect to the Company’s investment in LINN Energy.


Income Taxes


The Company is a limited liability company that has elected to be treated as a corporation for U.S. federal income tax purposes.  Deferred income tax assets and liabilities are recognized for temporary differences between the basis of the Company’s assets and liabilities for financial and tax reporting purposes.  The Company’s deferred tax assets and deferred tax liabilities were approximately $10 million and $23 million , respectively, at December 31, 2012.  At December 31, 2012, the majority of the Company’s temporary difference and associated deferred tax expense resulted from its investment in LINN Energy.


Earnings Per Share


Both basic and diluted earnings per share are computed by dividing net earnings attributable to shareholders by the weighted average number of shares outstanding during each period.  There are no securities outstanding that may be converted into or exercised for shares.


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 LinnCo, LLC
 NOTES TO FINANCIAL STATEMENTS - Continued


Note 2 – Capitalization


LinnCo’s authorized capital structure consists of two classes of interests: (1) shares with limited voting rights and (2) voting shares, 100% of which are currently held by LINN Energy.  At December 31, 2012, LinnCo’s issued capitalization consisted of $1.2 billion in shares and $1,000 contributed by LINN Energy in connection with LinnCo’s formation and in exchange for its voting share.  LinnCo is authorized to issue an unlimited number of shares and voting shares.  Additional classes of equity interests may be created upon approval by the Board and the holders of a majority of the outstanding shares and voting shares, voting as separate classes.


On October 17, 2012, LinnCo issued shares for cash to the public as discussed in Note 3, and used all of the net proceeds, after deducting the underwriting discount and structuring fee, to purchase a number of units from LINN Energy equal to the number of LinnCo shares issued and sold.  LinnCo’s limited liability company agreement requires it to maintain a one-to-one ratio between the number of LinnCo shares outstanding and the number of LINN Energy units it owns.  When LINN Energy makes distributions on its units, LinnCo will pay a dividend on its shares equal to the amount of cash received from LINN Energy with respect to the LINN Energy units owned by LinnCo, net of reserves for income taxes payable by LinnCo.


Note 3 – Business


On October 11, 2012, the Securities and Exchange Commission declared effective a registration statement with respect to an IPO of LinnCo’s shares.  On October 17, 2012, the Company closed the IPO of 34,787,500 shares to the public at a price of $36.50 per share ( $34.858 per share, net of underwriting discount and structuring fee) for net proceeds of approximately $1.2 billion (after underwriting discount and structuring fee of approximately $57 million ).  The net proceeds from the IPO were used to acquire 34,787,500 LINN Energy units which are equal to the number of LinnCo shares sold in the offering.  As of December 31, 2012, in addition to underwriting discount and structuring fee, the Company had also incurred approximately $3 million of other costs related to the offering.


At no time after LinnCo’s formation and prior to the IPO did LinnCo have any operations or own any interest in LINN Energy.  After the IPO and as of December 31, 2012, LinnCo’s sole purpose was to own LINN Energy units and it expected to have no significant assets or operations other than those related to its interest in LINN Energy.  In connection with the pending acquisition of Berry Petroleum Company (see Note 8), LinnCo intends to amend its limited liability company agreement to permit the acquisition and subsequent contribution of assets to LINN Energy.


Note 4 – Summarized Financial Information for Linn Energy, LLC


Following is summarized statement of operations and balance sheet information for LINN Energy.  Additional information on LINN Energy’s results of operations and financial position are contained in its Annual Report on Form 10-K for the year ended December 31, 2012, which is included in this filing as Exhibit 99.1 and incorporated herein by reference.


Summarized Linn Energy, LLC Statement of Operations Information


October 17, 2012 To December 31, 2012(in thousands)Revenues and other$604,701Expenses(578,170)Other income and (expenses)(85,464)Income tax benefit1,697Net loss$(57,236)





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 LinnCo, LLC
 NOTES TO FINANCIAL STATEMENTS - Continued


Summarized Linn Energy, LLC Balance Sheet Information


December 31, 2012(in thousands)Current assets$811,428Noncurrent assets10,639,81011,451,238Current liabilities823,132Noncurrent liabilities6,200,926Unitholders’ capital$4,427,180





Note 5 – Income Taxes


The Company is a limited liability company that has elected to be treated as a corporation for U.S. federal income tax purposes.  Income tax expense consisted of the following:


April 30, 2012 (Inception) To December 31, 2012(in thousands)Deferred taxes:Federal$11,867State661$12,528





During the period from April 30, 2012 (inception) to December 31, 2012, the Company also recorded approximately $1 million of deferred taxes, related to issuance costs, to equity.  As of December 31, 2012, the Company had approximately $2 million of net operating loss carryforwards for federal income tax purposes which will begin expiring in 2032 .


A reconciliation of the federal statutory tax rate to the effective tax rate is as follows:


April 30, 2012 (Inception) To December 31, 2012Federal statutory rate35.0%State, net of federal tax benefit2.0Other items0.8Effective rate37.8%





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 LinnCo, LLC
 NOTES TO FINANCIAL STATEMENTS - Continued


Significant components of the deferred tax assets and liabilities were as follows: December 31, 2012(in thousands)Deferred tax assets:Net operating loss carryforwards$622Unamortized intangible drilling costs9,029Total deferred tax assets9,651Deferred tax liabilities:Investment in LINN Energy(23,210)Total deferred tax liabilities(23,210)Net deferred tax liabilities$(13,559)


Net deferred tax assets and liabilities were classified on the balance sheet as follows:


December 31, 2012(in thousands)Noncurrent deferred tax assets$9,651Noncurrent deferred tax liabilities(23,210)Net noncurrent deferred tax liabilities$(13,559)





In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.  At December 31, 2012, based upon the projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the full benefits of its deferred tax assets and therefore the Company has not recorded a valuation allowance against the deferred tax assets.  The amount of deferred tax assets considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.


In accordance with the applicable accounting standard, the Company recognizes only the impact of income tax positions that, based on their merits, are more likely than not to be sustained upon audit by a taxing authority.  To evaluate its current tax positions in order to identify any material uncertain tax positions, the Company developed a policy of identifying and evaluating uncertain tax positions that considers support for each tax position, industry standards, tax return disclosures and schedules, and the significance of each position.  It is the Company’s policy to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.  The Company had no material uncertain tax positions at December 31, 2012.


Note 6 – Distribution Received and Dividend Paid


On October 23, 2012, LINN Energy’s Board declared a cash distribution of $0.725 per unit with respect to the third quarter of 2012.  The distribution attributable to LinnCo’s interest in LINN Energy, totaling approximately $25 million , was paid to LinnCo on November 14, 2012.


On October 23, 2012, the Company’s Board declared a cash dividend of $0.71 per common share with respect to the third quarter of 2012, which was net of a tax reserve of $0.015 per common share from the LINN Energy distribution of $0.725 per unit.  The dividend, totaling approximately $25 million after deducting the estimated income tax reserve of approximately $522,000 , was paid by the Company on November 15, 2012.


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 LinnCo, LLC
 NOTES TO FINANCIAL STATEMENTS - Continued


Note 7 – Supplemental Disclosures to the Statement of Cash Flows


LinnCo incurred and recorded approximately $4 million of general and administrative expenses and certain offering costs.  All of these expenses and costs were paid by LINN Energy on LinnCo’s behalf, and therefore, were accounted for as capital contributions and reflected as noncash transactions for LinnCo.


Note 8 – Subsequent Events


Acquisition


On February 21, 2013, LinnCo and Berry Petroleum Company (“Berry”) announced they had signed a definitive merger agreement under which LinnCo would acquire all of the outstanding common shares of Berry.  The transaction has a preliminary value of approximately $4.3 billion , including the assumption of debt, and is expected to close by June 30, 2013, subject to approvals by Berry and LinnCo shareholders, LINN Energy’s unitholders and regulatory agencies.


Under the terms of the agreement, Berry’s shareholders will receive 1.25 of LinnCo common shares for each Berry common share they own.  This transaction, which is expected to be a tax-free exchange to Berry’s shareholders, represents value of $46.2375 per common share, based on the closing price of LinnCo common shares on February 20, 2013.  Upon completion of the merger, LinnCo will contribute Berry assets to LINN Energy in exchange for LINN Energy units.


Distribution Received and Dividend Paid


On January 24, 2013, LINN Energy’s Board declared a cash distribution of $0.725 per unit with respect to the fourth quarter of 2012.  The distribution attributable to LinnCo’s interest in LINN Energy, totaling approximately $25 million , was paid to LinnCo on February 14, 2013.


On January 24, 2013, the Company’s Board declared a cash dividend of $0.71 per common share with respect to the fourth quarter of 2012, which is net of a tax reserve of $0.015 per common share from the LINN Energy distribution of $0.725 per unit.  The dividend, totaling approximately $25 million after deducting the estimated income tax reserve of approximately $522,000 , was paid on February 15, 2013, to shareholders of record as of the close of business on February 7, 2013.


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LinnCo, LLC


SUPPLEMENTAL QUARTERLY DATA (Unaudited)


The following discussion and analysis should be read in conjunction with the “Financial Statements” and “Notes to Financial Statements,” which are included in this Annual Report on Form 10-K in Item 8. “Financial Statements and Supplementary Data.”


Quarterly Financial Data


PeriodApril 30 (Inception) To June 30July 1 To September 30October 1 To December 31(in thousands, except per share amount)2012:Equity income from investment in Linn Energy, LLC$—$—$34,411General and administrative expenses(155)(351)(724)Income tax expense——(12,528)Net income (loss)(155)(351)21,159Net income per share, basic and dilutedN/AN/A$0.74


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|        |                                                                                     
|------- | ------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None


|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures


The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, and the Company’s Audit Committee of the Board of Directors, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.


The Company carried out an evaluation under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2012.


Management’s Annual Report on Internal Control Over Financial Reporting


This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s independent registered public accounting firm due to a transition period established by SEC rules for newly public companies.


Changes in the Company’s Internal Control Over Financial Reporting


There were no changes in the Company’s internal controls over financial reporting during the fourth quarter of 2012 that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.


|         |                  
|-------- | -----------------
|Item 9B. | Other Information

None


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Part III


|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors, Executive Officers and Corporate Governance

Linn Energy, LLC (“LINN Energy”) owns our sole voting share and is entitled to elect our entire board of directors.


All of our officers are also officers of LINN Energy. Four of the directors of LINN Energy serve on our board of directors. As of the date of this Annual Report, our board of directors consists of Mark E. Ellis, George A. Alcorn, Terrence S. Jacobs, Michael C. Linn, Joseph P. McCoy and Linda M. Stephens. Our common shareholders will be able to indirectly vote on matters on which LINN Energy unitholders are entitled to vote. Our shareholders are not entitled to vote to elect our directors. Under the listing rules of the NASDAQ Global Select Market (“NASDAQ”), we are considered a “controlled company” such that our board of directors will be exempt from the requirement that it have a majority of independent directors meeting the NASDAQ’s independence standards. In addition, because we rely on the “controlled company” exemption, we do not have a compensation committee or a nominating and corporate governance committee. We are, however, required to have an audit committee of the board of directors composed entirely of independent directors. Our board of directors is composed of six directors, including four independent directors constituting our audit committee.


The following table sets forth specific information for our executive officers and directors. All of our directors are elected annually by, and may be removed by, LINN Energy as the owner of our sole voting share. Executive officers are appointed for one-year terms.


NameAgePositionMark E. Ellis57Chairman, President and Chief Executive Officer; DirectorKolja Rockov42Executive Vice President and Chief Financial OfficerArden L. Walker, Jr.53Executive Vice President and Chief Operating OfficerDavid B. Rottino47Senior Vice President of Finance and Chief Accounting OfficerGeorge A. Alcorn81Independent DirectorTerrence S. Jacobs70Independent DirectorMichael C. Linn61DirectorJoseph P. McCoy62Independent DirectorLinda M. Stephens64Independent Director


Mark E. Ellis is the Chairman, President and Chief Executive Officer and has served in such capacity since LinnCo’s formation in April 2012.  Mr. Ellis is also the Chairman, President and Chief Executive Officer of LINN Energy and has served in such capacity since December 2011.  He previously served as President, Chief Executive Officer and Director of LINN Energy from January 2010 to December 2011 and from December 2007 to January 2010, Mr. Ellis served as President and Chief Operating Officer of LINN Energy.  Mr. Ellis is a member of the Society of Petroleum Engineers and the National Petroleum Council.  Mr. Ellis serves on the boards of America’s Natural Gas Alliance, American Exploration & Production Council, Industry Board of Petroleum Engineering at Texas A&M University, the Visiting Committee of Petroleum Engineering at the Colorado School of Mines, Houston Museum of Natural Science and The Center for the Performing Arts at The Woodlands.  In addition, he is Chairman of the Board for The Center for Hearing and Speech, and holds a position as trustee on the Texas A&M University 12th Man Foundation Board of Trustees.


Kolja Rockov is the Executive Vice President and Chief Financial Officer and has served in such capacity since LinnCo’s formation in April 2012.  He is also the Executive Vice President and Chief Financial Officer of LINN Energy and has served in such capacity since joining LINN Energy in March 2005.  Mr. Rockov has more than 15 years of experience in the oil and natural gas finance industry.  From October 2004 until he joined LINN Energy in March 2005, Mr. Rockov served as a Managing Director in the Energy Group at RBC Capital Markets, where he was primarily responsible for investment banking coverage of the U.S. exploration and production sector.  Mr. Rockov is the founding chairman of a philanthropic organization benefitting Texas Children's Cancer Center in Houston, which has raised more than $1 million since 2009.


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 Item 10.Directors, Executive Officers and Corporate Governance - Continued


Arden L. Walker, Jr. is the Executive Vice President and Chief Operating Officer and has served in such capacity since LinnCo's formation in April 2012.  Mr. Walker is also the Executive Vice President and Chief Operating Officer of LINN Energy and has served in such capacity since January 2011.  From January 2010 to January 2011, he served as Senior Vice President and Chief Operating Officer of LINN Energy.  Mr. Walker joined LINN Energy in February 2007 as Senior Vice President, Operations and Chief Engineer.  Mr. Walker is a member of the Society of Petroleum Engineers and Independent Petroleum Association of America.  He also serves on the boards of the Sam Houston Area Council of the Boy Scouts of America and Theatre Under The Stars.


David B. Rottino is the Senior Vice President of Finance and Chief Accounting Officer and has served in such capacity since LinnCo's formation in April 2012.  Mr. Rottino is also the Senior Vice President of Finance, Business Development and Chief Accounting Officer of LINN Energy and has served in such capacity since July 2010.  From June 2008 to July 2010, Mr. Rottino served as the Senior Vice President and Chief Accounting Officer of LINN Energy.  Prior to joining LINN Energy, Mr. Rottino served as Vice President and E&P Controller for El Paso Corporation from June 2006 to May 2008.  Mr. Rottino is a Certified Public Accountant.  In addition, he currently serves on the Board of Camp for All.


George A. Alcorn was appointed to our board of directors in April 2012. Mr. Alcorn is an independent director and serves on the Audit Committee. Mr. Alcorn also serves on the LINN Energy board of directors, to which he was appointed in January 2006, and is Chairman of the LINN Energy Nominating and Governance Committee. Mr. Alcorn serves as President of Alcorn Exploration, Inc., a private exploration and production company. Mr. Alcorn is also a member of the board of directors of EOG Resources, Inc. He is a past chairman of the Independent Petroleum Association of America (IPAA) and a founding member and past chairman of the Natural Gas Council.


Terrence S. Jacobs was appointed to our board of directors in May 2012. Mr. Jacobs is an independent director and serves on the Audit Committee and the Conflicts Committee. Prior to his resignation in October 2012, Mr. Jacobs served on the LINN Energy board of directors since January 2006. Since 1995, Mr. Jacobs has served as President and CEO of Penneco Oil Company, which provides ongoing leasing, marketing, exploration and drilling operations for natural gas and crude oil in Pennsylvania, West Virginia and Wyoming. Mr. Jacobs currently serves on the boards of directors of Penneco Oil Company and affiliates, CMS Mid-Atlantic, Inc., the Pennsylvania Independent Oil and Gas Association and Duquesne University. Mr. Jacobs served as President of the Independent Oil and Gas Association of Pennsylvania from 1999 to 2001 and from 2003 to 2005 and has served as a director of the IPAA for the states of Delaware, Maryland, Pennsylvania and New York-West from 2000-2006. He is a member of the National Petroleum Council, and he is presently serving as Chairman of the Tax Committee of the IPAA. Mr. Jacobs is a Certified Public Accountant in Pennsylvania.


Michael C. Linn was appointed to our board of directors in April 2012. He is also the Founder of LINN Energy and has served as a Director of LINN Energy since December 2011. Prior to that, he was Executive Chairman of the LINN Energy board of directors since January 2010. He served as Chairman and Chief Executive Officer of LINN Energy from December 2007 to January 2010; Chairman, President and Chief Executive Officer of LINN Energy from June 2006 to December 2007; and President, Chief Executive Officer and Director of LINN Energy from March 2003 to June 2006. Mr. Linn also serves on the Board of Directors and is Chairman of the Risk Committee for Nabors Industries, Ltd, Board of Directors for Black Stone Minerals and is a Senior Advisor for Quantum Energy Partners, LLC. Mr. Linn currently serves on: National Petroleum Council; IPAA-Chairman of Political Action Committee; Texas Representative for the Legal and Regulatory Affairs Committee of the Interstate Oil and Gas Compact Commission. He previously served on the following: IPAA-Chairman-Board of Directors; Natural Gas Supply Association-Director; National Gas Council - Chairman and Director; Independent Oil and Gas Associations of New York, Pennsylvania and West Virginia - Chairman and President of each. He was named as the 2011 IPAA Chief Roughneck of the Year, inducted into the All American Wildcatters, and received The Woodrow Wilson Award for Public Service.


Joseph P. McCoy was appointed to our board of directors in April 2012. Mr. McCoy is an independent director and will serve as Chairman of the Audit Committee. Mr. McCoy also serves on the LINN Energy board of directors, to which he was appointed in September 2007, and is Chairman of the LINN Energy Audit Committee. Mr. McCoy served as Senior Vice President and Chief Financial Officer of Burlington Resources Inc. from 2005 until 2006 and Vice President and Controller (Chief Accounting Officer) of Burlington Resources Inc. from 2001 until 2005. Prior to joining Burlington Resources, Mr. McCoy spent 27 years with Atlantic Richfield and affiliates in a variety of financial positions. Mr. McCoy has served on the Boards of Directors of Global Geophysical Services, Inc. and Scientific Drilling International since 2011 and served as a member of the board of directors of Rancher Energy, Inc. and BPI Energy Corp. from 2007 to 2009. Since 2006, other than his service on LinnCo’s board of directors and the other boards identified above, Mr. McCoy has been retired.


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 Item 10.Directors, Executive Officers and Corporate Governance - Continued


Linda M. Stephens was appointed to our board of directors in February 2013. She is an independent director and serves on the Audit Committee and the Conflicts Committee. From August 1989 to April 2009, Ms. Stephens held various positions with Royal Bank of Canada/RBC Capital Markets culminating with her position as Managing Director, Head U.S. Energy, Corporate Banking. Since 2009, Ms. Stephens has been retired.


Qualifications of Director Nominees


The board of directors of LINN Energy found that each of the nominees possesses the following experience, qualifications, attributes and skills that, combined with those qualifications identified above, led the board of directors of LINN Energy to conclude that such nominee should serve as a member of our board of directors:


George A. Alcorn


|  |                                                                                        
|- | ---------------------------------------------------------------------------------------
|• | As President of Alcorn Exploration, Inc., brings significant knowledge of our business.

|  |                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------
|• | Brings significant experience in the oil and natural gas industry, including as former chairman of the IPAA.

|  |                                                                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As member of the board of directors and committees of EOG Resources, Inc., brings experience and expertise serving on public company boards and as nominating committee chair.

Mark E. Ellis


|  |                                                                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As LINN Energy’s current Chairman, President and Chief Executive Officer, is well suited to inform the board of directors of significant strategic matters and to lead the board of directors as Chairman.

|  |                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------
|• | Brings significant experience in the oil and natural gas industry, including membership in the Society of Petroleum Engineers.

|  |                                            
|- | -------------------------------------------
|• | As an engineer, brings technical expertise.

Terrence S. Jacobs


|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As President and CEO of Penneco Oil Company, brings strategic experience and is well suited to serve as a link between the board of directors and management.

|  |                                                                                                                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | Brings significant experience in the oil and natural gas industry, including as former President of the Independent Oil and Gas Association of Pennsylvania and member of the National Petroleum Council.

|  |                                                                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As a certified public accountant and Chairman of the Tax Committee of the IPAA, brings tax expertise and experience in the preparation and review of financial statements and disclosure documents.

Michael C. Linn


|  |                                                                                                                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As LINN Energy’s founder, brings historical knowledge and strategic experience and is well suited to serve as a link between the board of directors and management.

|  |                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------
|• | Brings significant experience in the oil and natural gas industry, including as former chairman of the IPAA.

|  |                                        
|- | ---------------------------------------
|• | As an attorney, brings legal expertise.

Joseph P. McCoy


|  |                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------
|• | As former Chief Financial Officer of Burlington Resources Inc., brings significant knowledge of our business.

|  |                                                                                                                                                                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As former director of Rancher Energy, Inc. and BPI Energy Corp. and current director of Global Geophysical Services, Inc. and Scientific Drilling International brings experience serving on public company boards.

|  |                                                                                                                                                                                                                                   
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As former Chief Financial Officer and Chief Accounting Officer of Burlington Resources Inc., brings significant financial expertise and experience in the preparation and review of financial statements and disclosure documents.

Linda M. Stephens


|  |                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | As former Managing Director, Head U.S. Energy, Corporate Banking of Royal Bank of Canada/RBC Capital Markets brings significant financial expertise and experience in the preparation and review of financial statements and disclosure documents.

|  |                                                                                 
|- | --------------------------------------------------------------------------------
|• | Brings expertise and experience in banking, including credit/financial analysis.

|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|• | As a former director of LINN Energy, brings experience serving on public company boards.




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 Item 10.Directors, Executive Officers and Corporate Governance - Continued


Corporate Governance


Section 16(a) Beneficial Ownership Reporting Compliance


Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of our common shares to file reports of ownership and changes in ownership concerning our common shares with the SEC and to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of the Section 16(a) filings that have been received by us and written representations that no other reports were filed, we believe that all filings required to be made under Section 16(a) during 2012 were timely made.


Governance Guidelines and Codes of Ethics


Our board of directors has adopted Corporate Governance Guidelines to assist it in the exercise of its responsibility to provide effective governance over our affairs for the benefit of our shareholders. In addition, we have adopted a Code of Business Conduct and Ethics, which sets forth legal and ethical standards of conduct for all our employees, as well as our directors. We also have adopted a separate code of ethics which applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller. All of these documents are available on our website, www.linnco.com , and will be provided free of charge to any shareholder requesting a copy by writing to our Corporate Secretary, LinnCo, LLC, 600 Travis, Suite 5100, Houston, Texas 77002. If any substantive amendments are made to the Code of Ethics for our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller or if we grant any waiver, including any implicit waiver, from a provision of such code, we will disclose the nature of such amendment or waiver within four business days on our website. The information on our website is not, and shall not be deemed to be, a part of this Annual Report or incorporated into any other filings we make with the SEC.


Audit Committee


Our board of directors has a standing audit committee. The Audit Committee assists our board of directors in its general oversight of our financial reporting, internal controls and audit functions, and is directly responsible for the appointment, retention, compensation and oversight of the work of our independent public accountant. During 2012, the Audit Committee held three meetings. The Audit Committee is currently comprised of four directors: Mr. McCoy (Chairman), Mr. Alcorn, Mr. Jacobs and Ms. Stephens.  Each member of the Audit Committee is “independent” as defined by the NASDAQ listing standards and applicable SEC rules, and is financially literate. Mr. McCoy has been designated the “audit committee financial expert.” Shareholders should understand that this designation is a disclosure requirement of the SEC related to Mr. McCoy’s experience and understanding with respect to certain accounting and auditing matters. The designation does not impose on Mr. McCoy any duties, obligations or liability that are greater than are generally imposed on him as a member of the Audit Committee and the board of directors, and his designation as an audit committee financial expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or board of directors.


Our Audit Committee also annually reviews related party transactions and other specific matters that our board of directors believes may involve conflicts of interest. The Audit Committee determines if the related party transaction or resolution of the conflict of interest is in the best interest of our company.  In accordance with our limited liability company agreement, any conflict of interest matters approved by the Audit Committee will be conclusively deemed to be fair and reasonable to our company and approved by all of our shareholders.


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|Item 11. | Executive Compensation

Our executive officers and employees are also executive officers of, or employed directly by, LINN Energy. LINN Energy makes compensation decisions for, and pays compensation directly to, such individuals, and they do not receive additional compensation from LinnCo. As such, we have not paid or accrued any obligations with respect to compensation or benefits for our executive officers or employees. We do not expect to pay any salaries, bonuses or equity awards to such executive officers or employees.


For information about LINN Energy’s executive compensation, see “Executive Compensation” in Amendment No. 1 to LINN Energy’s Annual Report on Form 10-K/A, included in this filing as Exhibit 99.2 and incorporated herein by reference.


Director Compensation


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 Item 11.Executive Compensation - Continued


Officers or employees of LINN Energy who also serve as our directors do not receive additional compensation. Each of our independent directors receives an annual retainer of $15,000 for services as a director. The Audit Committee chair receives an additional $5,000 retainer. In addition, each independent director is reimbursed for out-of-pocket expenses in connection with attending meetings of the board of directors or committees thereof. Each director is indemnified by us for actions associated with being a director to the full extent provided under our limited liability company agreement.


2012 Director Summary Compensation Table


The table below summarizes the compensation we paid to our non-employee directors for the fiscal year ended December 31, 2012.


NameFees Earnedor Paid inCash ($)(1)George A. Alcorn13,000David D. Dunlap(2)13,000Terrence S. Jacobs13,000Michael C. Linn10,000Joseph P. McCoy18,000Linda M. Stephens(3)N/AJeffrey C. Swoveland(2)13,000





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|(1) | Retainers included in such amounts reflect a partial year of service by each of the directors.

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|(2) | Resigned from LinnCo board of directors in February 2013.

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|(3) | Appointed to LinnCo board of directors in February 2013.

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|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth as of October 1, 2013, the number of shares beneficially owned by: (i) each person who is known to us to beneficially own more than 5% of a class of shares; (ii) the current directors and nominees of our board of directors; (iii) each Named Officer; and (iv) all current directors and executive officers as a group. We obtained certain information in the table from filings made with the SEC. Unless otherwise noted, each beneficial owner has sole voting power and sole investment power.


Name of Beneficial OwnerSharesBeneficiallyOwnedPercentage ofSharesBeneficiallyOwnedLinn Energy, LLC(1)(2)Fir Tree, Inc.(3)3,258,0129.4%Robert S. Pitts, Jr.(4)1,851,0005.32%Mark E. Ellis(1)—*Kolja Rockov(1)—*Arden L. Walker, Jr.(1)—*David B. Rottino(1)—*George A. Alcorn(1)—*Terrence S. Jacobs(1)—*Michael C. Linn(1)—*Joseph P. McCoy(1)—*Linda M. Stephens(1)1,418*All executive officers and directors as a group(9 persons)(5)1,418*





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|* | Less than 1% of class based on 34,787,500 common shares outstanding as of October 1, 2013.

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|(1) | The address of each beneficial owner, unless otherwise noted, is c/o LinnCo, LLC, 600 Travis, Suite 5100, Houston, Texas 77002.

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|(2) | LINN Energy owned 100% of our sole voting share and no LinnCo common shares.

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|(3) | Fir Tree, Inc., a New York corporation (“Fir Tree”), may be deemed to beneficially own 3,258,012 shares of common shares purchased by certain private investment funds for which Fir Tree serves as the investment manager (the “Funds”) as a result of being the investment manager of the Funds. This amount consists of (i) 1,618,012 common shares and (ii) 1,640,000 common shares receivable upon the exercise of presently exercisable American-style call options. The business address of Fir Tree is 505 Fifth Avenue, 23rd Floor, New York, New York 10017.

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|(4) | Mr. Pitts is the managing member of Steadfast Capital Management LP, a Delaware limited partnership (the “Investment Manager”) and Steadfast Advisors LP, a Delaware limited partnership (the “Managing General Partner”). The Managing General Partner has the power to vote and dispose of the securities held by Steadfast Capital, L.P., a Delaware limited partnership (“Steadfast Capital”). The Investment Manager has the power to vote and dispose of the securities held by American Steadfast, L.P., a Delaware limited partnership (“American Steadfast”), and Steadfast International Master Fund Ltd., a Cayman Island exempted company (the “Offshore Fund”). Amount beneficially owned by Mr. Pitts includes 86,725 common shares held by Steadfast Capital, 609,782 common shares owned by American Steadfast and 1,154,493 common shares owned by the Offshore Fund. The business address of each of Mr. Pitts, the Investment Manager, the Managing General Partner, Steadfast Capital and American Steadfast is 450 Park Avenue, 20th Floor, New York, New York 10022. The business address of the Offshore Fund is c/o Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, P.O. Box 1350, George Town, Grand Cayman KY1-1108.

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|(5) | Percentage ownership of executive officer and directors is based on total shares outstanding as of October 1, 2013.

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|Item 13. | Certain Relationships and Related Transactions, and Director Independence

In the ordinary course of our business, we purchase products or services from, or engage in other transactions with, various third parties. Occasionally, these transactions may involve entities that are affiliated with one or more members of our board of directors. When they occur, these transactions are conducted in the ordinary course and on an arm’s-length basis.


Review and Approval of Related Party Transactions


We review all relationships and transactions in which our company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. We have developed and implemented processes and controls to obtain information from our directors and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether we or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to us or a related person are disclosed in our annual proxy statement. In addition, our Audit Committee or board of directors (if appropriate) reviews and approves or ratifies or disapproves any related person transaction that is required to be disclosed. In the course of its review of a disclosable related party transaction, consideration is given to:


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|• | the nature of the related person’s interest in the transaction;

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|• | the material terms of the transaction, including, without limitation, the amount and type of transaction;

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|• | the importance of the transaction to the related person;

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|• | the importance of the transaction to us;

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|• | whether the transaction would impair the judgment of a director or executive officer to act in our best interest; and

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|• | any other matters deemed appropriate.

Any director who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction; provided, however, that such director may be counted in determining the presence of a quorum at the meeting where the transaction is considered.


Our Relationship with Linn Energy, LLC


General . As of September 30, 2013, we own approximately 15% of LINN Energy’s outstanding units. LINN Energy controls our management and operations through its ownership of our sole voting share.


Omnibus Agreement . Concurrent with the closing of our initial public offering (“IPO”), we entered into an agreement with LINN Energy (the “Omnibus Agreement”) pursuant to which LINN Energy agrees to provide us certain financial, legal,


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accounting, tax advisory, financial advisory and engineering services or to pay on our behalf or reimburse us for any expenses incurred in connection with securing these services from third parties, as well as printing costs and other administrative and out-of-pocket expenses we incur, along with any other expenses we incurred in connection with the IPO or will incur in any future offering of its shares or as a result of being a publicly traded entity, including costs associated with annual, quarterly and other reports to our shareholders, tax return and Form 1099 preparation and distribution, NASDAQ listing fees, printing costs, independent auditor fees and expenses, legal counsel fees and expenses, limited liability company governance and compliance expenses and registrar and transfer agent fees. LINN Energy will also provide us with cash management services, including treasury services with respect to the payment of dividends and allocation of reserves for taxes. These cash management services are intended to optimize the use of our cash on hand and to reduce the likelihood of a change in the amount of any dividend paid to our shareholders across periods other than as a result of any change in the amount of distributions paid by LINN Energy. In addition, LINN Energy will indemnify us and our officers and directors for damages suffered or costs incurred (other than income taxes payable by us) in connection with carrying out our activities. Finally, LINN Energy has granted us a license to utilize its trademarks.


Future Offerings . We will purchase from LINN Energy a number of LINN Energy units equal to or greater than the number of shares we sell in any future offering for an amount equal to or less than the net cash proceeds of such offering (after deducting underwriting discounts but before payment of other offering expenses) plus any properties or assets received by us in such offering. As a result, LINN Energy will indirectly bear the cost of any underwriting discounts associated with future offerings of our common shares.


Contribution Agreement . In connection with our proposed merger with Berry Petroleum Company (the “merger”), we entered into a contribution agreement with LINN Energy with respect to the issuance of LINN Energy units to us in connection with the contribution by us of all of the outstanding limited liability company interests in Linn Acquisition Company, LLC (“LinnCo Merger Sub”) to LINN Energy (the “Contribution”). The closing of the Contribution is expected to occur on the closing date of the merger. Under the contribution agreement, the number of LINN Energy units to be issued to us in exchange for all of the limited liability company interests in LinnCo Merger Sub will be equal to the greater of (i) the aggregate number of our common shares issued in the LinnCo Merger (as defined in our merger agreement with Berry Petroleum Company) and (ii) the number of LINN Energy units required to cause us to own no less than one-third of all of the outstanding LINN Energy units following the Contribution.


The contribution agreement contains representations, warranties and covenants of the parties customary for a transaction of this type. In addition, certain covenants under the contribution agreement require each party to use reasonable best efforts to cause the Contribution to be consummated, including filing the appropriate government and regulatory approvals. The closing of the Contribution is subject to certain negotiated conditions, including: the representations and warranties of both parties being true and correct in all material respects, the merger having been consummated, and all waiting periods applicable to the merger contemplated by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the rules and regulations promulgated thereunder, having been expired or terminated. Satisfaction of the conditions to the consummation of the contribution is a condition to the closing of the merger.


The contribution agreement provides that we will receive from LINN Energy payments of $6 million, or $0.06 per unit, in each of 2013, 2014 and 2015 to reasonably compensate us for the anticipated actual increase in our tax liability that results from the consummation of the transactions. In addition, the contribution agreement provides that in the event that, within seven years following the Contribution, LINN Energy desires to effect a disposition of a material portion of the assets acquired in a manner that results in a material increase to the tax liability resulting from the allocation of income or gain pursuant to Section 704(c) of the Code (a “Material Disposition Transaction”), such Material Disposition Transaction would be approved by an independent committee appointed for such purpose by our board of directors.


Indemnification of Officers and Directors


Our limited liability company agreement provides that we will generally indemnify officers and members of our board of directors against all losses, claims, damages or similar events. Subject to any terms, conditions or restrictions set forth in our limited liability company agreement, Section 18-108 of the Delaware Limited Liability Company Act (the “LLC Act”) empowers a Delaware limited liability company to indemnify and hold harmless any member or manager or other person from and against all claims and demands whatsoever.  We have also entered into individual indemnity agreements with each of our executive officers and directors which supplement the indemnification provisions in our limited liability company agreement.


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Director Independence


Under NASDAQ’s listing rules, we are considered a “controlled company” such that our board of directors will be exempt from the requirement that it have a majority of independent directors meeting the NASDAQ’s independence standards. We are, however, required to have an audit committee of the board of directors composed entirely of independent directors. The Audit Committee is currently comprised of four directors: Mr. McCoy (Chairman), Mr. Alcorn, Mr. Jacobs and Ms. Stephens.  Each member of the Audit Committee is “independent” as defined by the NASDAQ listing standards and applicable SEC rules.


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|Item 14. | Principal Accounting Fees and Services

Our Audit Committee has selected KPMG LLP to continue as its independent public accountant for 2013. KPMG LLP has served as our independent public accountant since 2012. The Audit Committee has determined to submit KPMG LLP’s selection to shareholders for ratification. Shareholder ratification of the selection of KPMG LLP as our independent public accountant for 2013 is not required by our limited liability company agreement. We are submitting the selection of KPMG LLP to shareholders for ratification as a matter of good corporate practice.


Audit Fees


The fees for professional services rendered by KPMG LLP for the audit of our annual financial statements for the fiscal year ended December 31, 2012, and the reviews of the financial statements included in any of our Quarterly Reports on Forms 10‐Q for that fiscal year were approximately $325,000.


Audit-Related Fees


KPMG LLP also received fees for services in connection with our IPO. These fees totaled approximately $225,000 for the year ended December 31, 2012.


Tax Fees


We incurred no fees in the fiscal year ended December 31, 2012 for tax-related services provided by KPMG LLP.


All Other Fees


We incurred no other fees in the fiscal year ended December 31, 2012 for any other services provided by KPMG LLP.


Audit Committee Approval of Audit and Non-Audit Services


The Audit Committee pre-approves all audit and non-audit services to be provided to us by our independent public accountant in the upcoming year at the last meeting of each calendar year and at subsequent meetings as necessary. The non-audit services to be provided are specified and may not exceed a specified dollar limit. During the course of a fiscal year, if additional non-audit services are identified, these services are presented to the Audit Committee for pre-approval.





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Part IV


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|Item 15. | Exhibits and Financial Statement Schedules

(a) - 1.  Financial Statements:


All financial statements are omitted for the reason that they are not required or the information is otherwise supplied in Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.


(a) - 2.  Financial Statement Schedules:


All schedules are omitted for the reason that they are not required or the information is otherwise supplied in Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.


(a) - 3.  Exhibits:


The exhibits required to be filed by this Item 15 are set forth in the “Index to Exhibits” accompanying this report.


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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


LinnCo, LLCDate:  November 5, 2013By:/s/ Mark E. EllisMark E. EllisChairman, President and Chief Executive OfficerDate:  November 5, 2013By:/s/ David B. RottinoDavid B. RottinoSenior Vice President of Finance andChief Accounting Officer





Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


SignatureTitleDate/s/ Mark E. EllisChairman, President and Chief Executive Officer(Principal Executive Officer)November 5, 2013Mark E. Ellis/s/ Kolja RockovExecutive Vice President and Chief Financial Officer (Principal Financial Officer)November 5, 2013Kolja Rockov/s/ David B. RottinoSenior Vice President of Finance andChief Accounting Officer(Principal Accounting Officer)November 5, 2013David B. Rottino


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INDEX TO EXHIBITS


Exhibit NumberDescription2.1—Agreement and Plan of Merger, dated as of February 20, 2013, by and among Berry Petroleum Company, Bacchus HoldCo, Inc., Bacchus Merger Sub, Inc., LinnCo, LLC, Linn Acquisition Company, LLC and Linn Energy, LLC (incorporated herein by reference to Annex A of Part I of the document included in the Registration Statement on Form S-4 (File No. 333-187484) filed on March 22, 2013)2.2—Contribution Agreement, dated as of February 20, 2013, by and between LinnCo, LLC and Linn Energy, LLC (incorporated herein by reference to Annex B of Part I of the document included in the Registration Statement on Form S-4 (File No. 333-187484)  filed on March 22, 2013)3.1—Certificate of Formation of LinnCo, LLC (incorporated herein by reference to Exhibit 3.1 to Registration Statement on Form S-1 filed on June 25, 2012)3.2—Certificate of Amendment to Certificate of Formation of LinnCo, LLC (incorporated herein by reference to Exhibit 3.6 to Amendment No. 3 to Registration Statement on Form S-1 filed on October 1, 2012)3.3—Amended and Restated Limited Liability Company Agreement of LinnCo, LLC (incorporated herein by reference to Exhibit 3.1 to Current Report on Form 8-K filed on October 17, 2012)10.1—Omnibus Agreement, dated as of October 17, 2012, between LinnCo, LLC and Linn Energy, LLC (incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K filed on October 17, 2012)23.1*—Consent of KPMG LLP23.2*—Consent of DeGolyer & MacNaughton31.1*—Section 302 Certification of Mark E. Ellis, Chairman, President and Chief Executive Officer of LinnCo, LLC31.2*—Section 302 Certification of Kolja Rockov, Executive Vice President and Chief Financial Officer of LinnCo, LLC32.1*—Section 906 Certification of Mark E. Ellis, Chairman, President and Chief Executive Officer of LinnCo, LLC32.2*—Section 906 Certification of Kolja Rockov, Executive Vice President and Chief Financial Officer of LinnCo, LLC99.1**—Linn Energy, LLC’s Annual Report on Form 10-K for the year ended December 31, 201299.2*—Linn Energy, LLC’s Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2012, filed on November 5, 2013101.INS—XBRL Instance Document (previously furnished as Exhibit 101.INS to the Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013)101.SCH—XBRL Taxonomy Extension Schema Document (previously furnished as Exhibit 101.SCH to the Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013)101.CAL—XBRL Taxonomy Extension Calculation Linkbase Document (previously furnished as Exhibit 101.CAL to the Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013)101.DEF—XBRL Taxonomy Extension Definition Linkbase Document (previously furnished as Exhibit 101.DEF to the Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013)101.LAB—XBRL Taxonomy Extension Label Linkbase Document (previously furnished as Exhibit 101.LAB to the Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013)


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101.PRE—XBRL Taxonomy Extension Presentation Linkbase Document (previously furnished as Exhibit 101.PRE to Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013)


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|* | Filed herewith.

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|** | Previously filed.







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