When referring to Linn Energy, ~~LLC~~Inc. (formerly known as Linn Energy, LLC) (“~~LINN~~Successor,” “LINN Energy” or the “Company”), the intent is to refer to LINN Energy, a newly formed Delaware corporation, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made. Linn Energy, Inc. is a successor issuer of Linn Energy, LLC pursuant to Rule 15d‑5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When referring to the “Predecessor” in reference to the period prior to the emergence from bankruptcy, the intent is to refer to Linn Energy, LLC, the predecessor that will be dissolved following the effective date of the Plan (as defined below) and resolution of all outstanding claims, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made.

~~The reference~~ Redeemable noncontrolling interests on the condensed consolidated balance sheet as of March 31, 2017, relate to ~~“Berry” herein refers to Berry Petroleum Company,~~the noncontrolling Class B unitholders of the Company’s subsidiary, Linn Energy Holdco LLC ~~which is an indirect 100% wholly owned subsidiary of LINN Energy. The reference to “LinnCo” herein refers to LinnCo, LLC, which is an affiliate of LINN Energy.~~(“Holdco”). See Note 12 and Note 17 for additional information.

The condensed consolidated financial statements have been prepared as if the Company iswill continue as a going concern and reflect the application of Accounting Standards Codification 852 “Reorganizations” (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to the Chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in “reorganization items, net” on the Company’s condensed consolidated statements of operations. In addition, prepetition unsecured and under-secured obligations that may be impacted by the bankruptcy reorganization process have been classified as “liabilities subject to compromise” on the Company’s condensed consolidated balance sheet at ~~September 30,~~December 31, 2016. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less.

value of assets on a liquidation basis or their availability to satisfy liabilities; (ii) the amount of prepetition liabilities that may be allowed for claims or contingencies, or the status and priority thereof; (iii) the effect on unitholders’ deficit accounts of any changes that may be made to the Company’s capitalization; or (iv) the effect on operations of any changes that may be made to the Company’s business. While operating as debtor-in-possession under Chapter 11 of the Bankruptcy Code, the Company may sell or otherwise dispose of or liquidate assets or settle liabilities in amounts other than those reflected on its condensed consolidated financial statements ~~subject~~prior to the approval of the Bankruptcy Court or otherwise as permitted in the ordinary course of business. Further, a plan of reorganization could materially change the amounts and classifications on the Company’s historical condensed consolidated financial statements.that date. See Note 3 for additional information.

In November 2015, the FASB issued an ASU that is intended to simplify the presentation of deferred taxes by requiring that all deferred taxes be classified as noncurrent, presented as a single noncurrent amount for each tax-paying component of an entity. The ASU is effective for fiscal years beginning after December 15, 2016; however, the Company early adopted it on January 1, 2016, on a retrospective basis. The adoption of this ASU resulted in the reclassification of previously-classified net current deferred taxes of approximately $22 million from “other current assets,” as well as previously-classified net noncurrent deferred tax liabilities of approximately $11 million from “other noncurrent liabilities,” to “other noncurrent assets” resulting in net noncurrent deferred taxes of approximately $11 million on the Company’s consolidated balance sheet at December 31, 2015. There was no impact to the consolidated statements of operations.

In April 2015, the FASB issued an ASU that is intended to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the

~~carrying amount of that debt liability, consistent with debt discounts.~~ The Company adopted this ASU on January 1, 2016, on a retrospective basis. The adoption of this ASU resulted in the reclassification of approximately $37 million of unamortized deferred financing fees (which excludes deferred financing fees associated with the Company’s Credit Facilities, as defined in Note 6, which were not reclassified) from an asset to a direct deduction from the carrying amount of the associated debt liability on the consolidated balance sheet at December 31, 2015. There was no impact to the consolidated statements of operations.

In August 2014, the FASB issued an ASU that provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. This ASU is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter (early adoption permitted). The Company does not expectexpects the adoption of this ASU to ~~have a material~~ impact on its consolidated ~~financial statements or~~balance sheets resulting from an increase in both assets and liabilities related ~~disclosures.~~to the Company’s leasing activities.

Prior to the Petition Date, on May 10, 2016, the Debtors entered into a restructuring support agreement (“Bank RSA”) with certain holders (“Consenting Bank Creditors”) collectively holding or controlling at least 66.67% by aggregate outstanding principal amounts under (i) the Company’s Sixth Amended and Restated Credit Agreement (“LINN Credit Facility”) and (ii) Berry’s Second Amended and Restated Credit Agreement (“Berry Credit Facility”).

The Bank RSA sets forth, subject to certain conditions, the commitment of the Consenting Bank Creditors to support a comprehensive restructuring of the Debtors’ long-term debt. The restructuring transactions contemplated by the Bank RSA will be effectuated through one or more plans of reorganization (“Plan”) filed in the Chapter 11 proceedings.

The Bank RSA provides that the Consenting Bank Creditors will support the use of the LINN Debtors’ and Berry’s cash collateral under specified terms and conditions, including adequate protection terms. The Bank RSA obligates the Debtors and the Consenting Bank Creditors to, among other things, support and not interfere with consummation of the restructuring transactions contemplated by the Bank RSA and, as to the Consenting Bank Creditors, vote their claims in favor of the Plan. The Bank RSA may be terminated upon the occurrence of certain events, including the failure to meet specified milestones relating to, among other requirements, the filing, confirmation and consummation of the Plan, and in the event of certain breaches by the parties under the Bank RSA. The Bank RSA is subject to termination if the effective date of the Plan has notexchange for

~~On October 21, 2016,~~Unsecured Notes) against the LINN Debtors (the “LINN Unsecured Claims”) received their pro rata share of cash from two cash distribution pools totaling $40 million, as divided between a $2.3 million cash distribution pool for the payment in full of allowed LINN Unsecured Claims in an amount equal to $2,500 or less (and larger claims for which the holders irrevocably agreed to reduce such claims to $2,500), and a $37.7 million cash distribution pool for pro rata distributions to all remaining allowed general LINN Unsecured Claims. As a result, all outstanding LINN Unsecured Claims were fully satisfied, settled, released and discharged as of the Effective Date.

~~The LINN RSA sets forth, subject to certain conditions, the commitment~~directors, consisting of the ~~LINN Debtors and the Consenting LINN Creditors to support a comprehensive restructuring~~Chief Executive Officer of the LINN Debtors’ long-term debt (the “Restructuring”). The LINN RSA obligates the LINN Debtors and the Consenting LINN Creditors to, among other things, support and not interfere with consummation of the Restructuring and, as to the Consenting LINN Creditors, vote their claims in favor of the Plan. The LINN RSA may be terminated upon the occurrence of certain events, including the failure to meet specified milestones relating to the filing, confirmation and consummation of the Plan, and in the event of certain breachesPredecessor, one director selected by the ~~parties under the~~ Successor and five directors selected by a six-person selection committee.

~~Subject~~ASC 852 which resulted in the Company becoming a new entity for financial reporting purposes. In accordance with ASC 852, the Company was required to ~~certain exceptions, under~~adopt fresh start accounting upon its emergence from Chapter 11 because (i) the ~~Bankruptcy Code, the Debtors may assume, assign or reject certain executory contracts and unexpired leases subject to the approval~~holders of existing voting ownership interests of the Bankruptcy Court and satisfaction of certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtors’ estate for damages. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with anyPredecessor received less than 50% of the ~~Debtors in this Quarterly Report on Form 10-Q, including where applicable a quantification~~voting shares of the Successor and (ii) the reorganization value of the Company’s ~~obligations under any such executory contract or unexpired lease~~assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims.

~~Subject to certain exceptions, under~~ the Bankruptcy Code, the filing of Bankruptcy Petitions automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the Petition Date. Absent an order of the Bankruptcy Court, substantially all of the Debtors’ prepetition liabilities are subject to settlement under the Bankruptcy Code. Although the filing of Bankruptcy Petitions triggered defaultsrelated adjustments thereto were recorded on the ~~Debtors’ debt obligations, creditors are stayed from taking any actions against~~statement of operations for the ~~Debtors as~~two months ended February 28, 2017.

In order to successfully exit bankruptcy, the Debtors will need to propose, and obtain confirmation by the Bankruptcy Court of, a Plan that satisfies the requirements of the Bankruptcy Code. A Plan would, among other things, resolve the Debtors’ prepetition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to exit from bankruptcy.

~~In addition to being voted on by holders of impaired claims and equity interests, a Plan must satisfy certain requirements of the Bankruptcy Code and must be approved, or~~ confirmed by the Bankruptcy Court ~~in order~~estimated an enterprise value of $2.35 billion. The Plan enterprise value was prepared using an asset based methodology, as discussed further below. The enterprise value was then adjusted to ~~become effective. A Plan would be accepted by holders~~determine the equity value of ~~claims against~~the Successor of approximately $2.03 billion. Adjustments to determine the equity value are presented below (in thousands):

Under certain circumstances set forth in Section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm a Plan even if such Plan has not been accepted by all impaired classes of claims and equity interests. The precise requirements and evidentiary showing for confirming a Plan notwithstanding its rejection by one or more impaired classes of claims or equity interests depends upon a number of factors, including the status and seniority of the claims or equity interests in the rejecting class (i.e., unsecured or secured claims, subordinated or senior claims). Generally, with respect to units, a Plan may be “crammed down” even if the unitholders receive no recovery if the proponent of the Plan demonstrates that (1) no class junior to the units are receiving or retaining property under the Plan and (2) no class of claims or interests senior to the units are being paid more than in full.

~~On October 21, 2016, the Debtors filed a proposed Plan with the Bankruptcy Court.~~

Continued low commodity prices have resulted in significantly lower levels of cash flow from operating activities and have limited the Company’s ability to access the capital markets. In addition, eachtax basis of the Company’s ~~Credit Facilities is~~oil and natural gas properties as of the Effective Date. The Class B units are incentive interest awards that were granted on the Effective Date by Holdco to certain members of its management (see Note 12), and the associated fair value was recorded as a liability of approximately $7 million in “other accrued liabilities” and temporary equity of approximately $29 million in “redeemable noncontrolling interests” on the condensed consolidated balance sheet at February 28, 2017.

The significant risks and uncertainties related to the Company’s liquidity and Chapter 11 proceedings described above raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitmentsEffective Date (reflected in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty. If the Company cannot continue as a going concern, adjustments to the carrying values and classification of its assets and liabilities and the reported amounts of income and expenses could be required and could be material.

In order to decrease the Company’s level of indebtedness and maintain the Company’s liquidity at levels sufficient to meet its commitments, the Company undertook a number of actions, including minimizing capital expenditures and further reducing its recurring operating expenses. Despite taking these actions, the Company did not have sufficient liquidity to satisfy its debt service obligations, meet other financial obligations and comply with its debt covenants. As a result, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code.

The Company’s filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under its Credit Facilities, its Second Lien Notes and its senior notes. Additionally, other events of default, including cross-defaults, are present, including the failure to make interest payments on the Company’s Second Lien Notes and senior notes,column “Reorganization Adjustments”) as well as ~~the receipt of a going concern explanatory paragraph~~fair value and other required accounting adjustments resulting from the ~~Company’s independent registered public~~adoption of fresh start accounting ~~firm on~~(reflected in the Company’s consolidated financial statements for the year ended December 31, 2015. Under the Bankruptcy Code, the creditors under these debt agreements are stayed from taking any action against the Company as a result of an event of default. See Note 6 forcolumn “Fresh Start Adjustments”). The explanatory notes provide additional ~~details about the Company’s debt.~~

The Company’s Credit Facilities contain a requirement to deliver audited consolidated financial statements without a going concern or like qualification or exception. Consequently, the filing of the Company’s 2015 Annual Report on Form 10-K which included such explanatory paragraph resulted in a default under the LINN Credit Facility as of the filing date, March 15, 2016, subject to a 30 day grace period.

On April 12, 2016, the Company entered into amendments to both the LINN Credit Facility and the Berry Credit Facility. The amendments provided for, among other things, an agreement that (i) certain events would not become defaults or events of default until May 11, 2016, (ii) the borrowing bases would remain constant until May 11, 2016, unless reduced as a result of swap agreement terminations or collateral sales and (iii) the Company, the administrative agent and the lenders would negotiate in good faith the terms of a restructuring support agreement in furtherance of a restructuring of the capital structure of the Company and its subsidiaries. In addition, the amendmentinformation with regard to the ~~Berry Credit Facility provided Berry with access~~adjustments recorded, the methods used to ~~previously restricted cash of $45 million in order to fund ordinary course operations.~~

~~As a condition to closing~~determine the ~~amendments, in April 2016, (a) the Company made a $100 million permanent repayment of a portion of the borrowings outstanding under the LINN Credit Facility~~fair values and ~~(b) the Company and certain of its subsidiaries provided control agreements over certain deposit accounts.~~

Pursuant to the terms of the amendment to the LINN Credit Facility and as a result of the execution of the Bank RSA, in May 2016, the Company made a $350 million permanent repayment of a portion of the borrowings outstanding under the LINN Credit Facility.significant assumptions.

Transition Services will be reduced to specified accounting and administrative functions. The settlement agreement required the parties to commence good faith negotiations with each other regarding the terms of a potential comprehensive and consensual restructuring, including a potential restructuring under a Chapter 11 plan of reorganization. The settlement agreement provided that in the event the parties were unable to reach agreement on the terms of a consensual restructuring on or before the commencement of such Chapter 11 proceedings (or such later date as mutually agreed to by the parties), the parties would support entry by the Bankruptcy Court of a settlement order that, among other things, (i) approves the issuance of additional notes, in the principal amount of $1.0 billion plus certain accrued interest, on a proportionate basis to existing holders of the Second Lien Notes and (ii) releases the mortgages and other collateral upon the issuance of the additional notes (the “Settlement Order”).

~~The settlement agreement will terminate upon, among other events, entry by the Bankruptcy Court of a final, non-appealable order denying the Company’s motion seeking entry of the Settlement Order.~~

~~The Company failed to make an interest payment on its Second Lien Notes of approximately $68 million due June 15, 2016.~~

~~The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations~~Transition Period under the ~~Second Lien Indenture. However, under~~TSSA ended April 30, 2017, and the ~~Bankruptcy Code, holders of the Second Lien Notes are stayed from taking any action against the Company as a result of the default.~~

The Company deferred making interest payments totaling approximately $60 million due March 15, 2016, including approximately $30 million on LINN Energy’s 7.75% senior notes due February 2021, approximately $12 million on LINN Energy’s 6.50% senior notes due September 2021 and approximately $18 million on Berry’s 6.375% senior notes due September 2022, which resulted in the Company being in default under these senior notes. The indentures governing each of the applicable series of notes provided the Company aAccounting Period ends June 30, ~~day grace period to make the interest payments.~~

On April 14, 2016, within the 30 day interest payment grace period provided for in the indentures governing the notes, the Company and Berry made interest payments of approximately $60 million in satisfaction of their respective obligations.

~~The Company failed to make interest payments due on its senior notes subsequent to April 14, 2016.~~

The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the indentures governing the senior notes. However, under the Bankruptcy Code, holders of the senior notes are stayed from taking any action against the Company as a result of the default.2017.

As a result of the Company’s failure to comply with the NASDAQ Global Select Market (“NASDAQ”) continued listing requirements, on May 24, 2016, the Company’s units began trading over the counter on the OTC Markets Group Inc.’s Pink marketplace under the trading symbol “LINEQ.”

Under the Company’s limited liability company agreement, unitholders are entitled to receive a distribution of available cash, which includes cash on hand plus borrowings less any reserves established by the Company’s Board of Directors to provide for the proper conduct of the Company’s business (including reserves for future capital expenditures, including drilling, acquisitions and anticipated future credit needs) or to fund distributions, if any, over the next four quarters. Monthly distributions were paid by the Company through September 2015. In October 2015, the Company’s Board of Directors determined to suspend payment of the Company’s distribution. The Company’s Board of Directors will continue to evaluate the Company’s ability to reinstate the distribution; however, as a result of the Chapter 11 proceedings, the Company cannot pay any distributions without the prior approval of the Bankruptcy Court. Distributions paid by the Company during 2015 are presented on the condensed consolidated statement of cash flows.

The Company evaluates the impairment of its unproved oil and natural gas properties whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying values of unproved properties are reduced to fair value based on management’s experience in similar situations and other factors such as the lease terms of the properties and the relative proportion of such properties on which proved reserves have been found in the past. For the nine months ended September 30, 2016, the Company recorded noncash impairment charges (before and after tax) of approximately $13 million associated with unproved oil and natural gas properties in California. The Company recorded no impairment charges for ~~unproved properties for~~ the ~~three~~one month ended March 31, 2017, or the two months ended ~~September 30, 2016, or the nine months ended September 30, 2015.~~

The impairment charges in 2016 were due to a decline in commodity prices and changes in expected capital development. The carrying values of the impaired unproved properties were reduced to fair value, estimated using inputs characteristic of a Level 3 fair value measurement. The impairment charges are included in “impairment of long-lived assets” on the condensed consolidated statement of operations.February 28, 2017.

$276 million, net of costs to sell of approximately $1 million, and the Company recognized a net gain of approximately $174 million for the three months ended September 30, 2015. The gain is included in “(gains) losses on sale of assets and other, net” on the condensed consolidated statements of operations. The Company used the net proceeds from the sale to repay a portion of the outstanding indebtedness under the LINN Credit Facility.

In January 2015, the Company granted 567,320 performance units (the maximum number of units available to be earned) to certain executive officers. The 2015 performance unit awards vest three years from the award date. The vesting of these units is determined based on the Company’s performance compared to the performance of a predetermined group of peer companies over a specified performance period, and the value of vested units is to be paid in cash. To date, no performance units have vested and no amounts have been paid to settle any such awards. Performance unit awards that are settled in cash are recorded as a liability with the changes in fair value recognized over the vesting period. Based on the performance criteria, there was no liability recorded for these performance unit awards at September 30, 2016.

~~Redetermination~~until August 28, 2020, any scheduled redetermination of the borrowing base ~~under~~resulting in a decrease of the LINN Credit Facility, based primarily on reserve reports using lender commodity price expectations at such time, occurs semi-annually. The lenders under the LINN Credit Facility agreed to defer the April 2016 borrowing base ~~redetermination~~will cause the borrowing base to ~~May 11, 2016.~~

~~The Company’s obligations under the LINN Credit Facility are secured by mortgages on certain of its material subsidiaries’ oil~~be allocated into a conforming revolving loan tranche and ~~natural gas properties and other personal property as well as~~ a ~~pledge of all ownership interests~~non-conforming revolving loan tranche that, in the Company’s direct and indirect material subsidiaries. The Company is required to maintain: 1) mortgages on properties representing at least 90% of the total value of oil and natural gas properties included on its most recent reserve report; 2) a minimum liquidity requirementaggregate, equal ~~to the greater of $500 million and 15% of the then effective available borrowing base after giving effect to certain redemptions or repurchases of certain debt; and 3) an EBITDA to~~$1.4 billion. Interest Expense ratio of at least 2.0 to 1.0 currently, 2.25 to 1.0 from March 31, 2017 through June 30, 2017 and 2.5 to 1.0 thereafter. Additionally, the obligations under the LINN Credit Facility are guaranteed by all of the Company’s material subsidiaries, other than Berry, and are required to be guaranteed by any future material subsidiaries.

~~At the Company’s election, interest~~ on borrowings under the ~~LINN Credit Facility~~revolving loan is determined by reference to ~~either~~ the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ~~between 1.75% and 2.75%~~of (a) 3.50% per annum ~~(depending on~~in the ~~then-current level~~case of ~~borrowings under~~ the ~~LINN Credit Facility) or the alternate base rate (“ABR”) plus an applicable margin between 0.75%~~conforming revolving loan tranche and ~~1.75%~~(b) 5.50% per annum ~~(depending on~~in the ~~then-current level of borrowings under the LINN Credit Facility). Interest is generally payable monthly for loans bearing interest based on the ABR and at the end~~case of the ~~applicable interest period for loans bearing interest at~~non-conforming revolving loan tranche. The revolving loan is not subject to amortization. The conforming revolving loan tranche matures on February 27, 2021, and the ~~LIBOR. The Company is required to pay a commitment fee to the lenders under the LINN Credit Facility, which accrues at a rate per annum of 0.50%~~non-conforming revolving loan tranche matures on ~~the average daily unused amount of the maximum commitment amount of the lenders.~~August 28, 2020.

Berry’s Second Amended and Restated Credit Agreement (“Berry Credit Facility”) provides for a senior secured revolving credit facility, subject to the then-effective borrowing base. The maturity date is April 2019. At September 30, 2016, the Company had approximately $898 million in total borrowings outstanding (including outstanding letters of credit) under the Berry Credit Facility and there was no remaining availability.

~~See Note 2 for details of the amendment to the Berry Credit Facility entered into on April 12, 2016.~~

Redetermination of the borrowing base under the Berry Credit Facility, based primarily on reserve reports using lender commodity price expectations at such time, occurs semi-annually. The lenders under the Berry Credit Facility agreed to defer the April 2016 borrowing base redetermination to May 11, 2016.

Berry’s obligations under the Berry Credit Facility are secured by mortgages on its oil and natural gas properties and other personal property. Berry is required to maintain: 1) mortgages on properties representing at least 90% of the present value of oil and natural gas properties included on its most recent reserve report, and 2) an EBITDAX to Interest Expense ratio of at least 2.0 to 1.0 currently, 2.25 to 1.0 from March 31, 2017 through June 30, 2017 and 2.5 to 1.0 thereafter. In accordance with the amendment described in Note 2, the lenders had agreed that the failure to maintain the EBITDAX to Interest Expense ratio would not result in a default or event of default until May 11, 2016.

At Berry’s election, interest on borrowings under the Berry Credit Facility is determined by reference to either the LIBOR plus an applicable margin between 1.75% and 2.75% per annum (depending on the then-current level of borrowings under the Berry Credit Facility) or a Base Rate (as defined in the Berry Credit Facility) plus an applicable margin between 0.75% and 1.75% per annum (depending on the then-current level of borrowings under the Berry Credit Facility). Interest is generally payable monthly for loans bearing interest based on the Base Rate and at the end of the applicable interest period for loans bearing interest at the LIBOR. Berry is required to pay a commitment fee to the lenders under the Berry Credit Facility, which accrues at a rate per annum of 0.50% on the average daily unused amount of the maximum commitment amount of the lenders.

~~The Company refers to the LINN Credit Facility and the Berry Credit Facility, collectively, as the “Credit Facilities.”~~

The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the Credit Facilities. However, under the Bankruptcy Code, the creditors under these debt agreements are stayed from taking any action against the Company as a result of the default. The automatic stay under the Bankruptcy Code does not apply to letters of credit issued under the prepetition Credit Facilities and third parties may draw on their letters of credit if the terms of a particular letter of credit so provide. During the three months and nine months ended September 30, 2016, approximately $16 million and $20 million, respectively, in letters of credit draws were made from the Berry Credit Facility.

On November 20, 2015, the Company issued $1.0 billion in aggregate principal amount of 12.00% senior secured second lien notes due December 2020 (“Second Lien Notes”) in exchange for approximately $2.0 billion in aggregate principal amount of certain of its outstanding senior notes. The exchanges were accounted for as a troubled debt restructuring (“TDR”). TDR accounting requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized.

In connection with the issuance of the Second Lien Notes, the Company entered into a Registration Rights Agreement with each of the holders (collectively, the “Registration Rights Agreements”). Under the Registration Rights Agreements, the Company agreed to use its reasonable efforts to file with the SEC and cause to become effective a registration statement relating to an offer to issue new notes having terms substantially identical to the Second Lien Notes in exchange for outstanding Second Lien Notes within 370 days following the issuance of the Second Lien Notes. In certain circumstances, the Company may be required to file a shelf registration statement to cover resales of the Second Lien Notes. The Company will be obligated

to file one or more registration statements as described above only if the restrictive legend on the Second Lien Notes has not been removed and the Second Lien Notes are not freely tradable pursuant to Rule 144 under the Securities Act of 1933, as amended, as of the 370th day following the issuance of the Second Lien Notes. If the Company fails to satisfy these obligations, the Company may be required to pay additional interest to holders of the Second Lien Notes under certain circumstances.

The Company made no repurchases of its senior notes during the nine months ended September 30, 2016. During the nine months ended September 30, 2015, the Company repurchased on the open market approximately $783 million of its outstanding senior notes as follows:

In connection with the repurchases, the Company paid approximately $557 million in cash and recorded a gain on extinguishment of debt of approximately $214 million for the nine months ended September 30, 2015.

The Second Lien Indenture contains covenants that, among other things, may limit the Company’s ability and the ability of the Company’s restricted subsidiaries to: (i) declare or pay distributions on, purchase or redeem the Company’s units or purchase or redeem the Company’s or its restricted subsidiaries’ indebtedness secured by liens junior in priority to liens securing the Second Lien Notes, unsecured indebtedness or subordinated indebtedness; (ii) make investments; (iii) incur or guarantee additional indebtedness or issue certain types of equity securities; (iv) create certain liens; (v) sell assets; (vi) consolidate, merge or transfer all or substantially all of the Company’s assets; (vii) enter into agreements that restrict distributions or other payments from the Company’s restricted subsidiaries to the Company; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.

The Company’s senior notes contain covenants that, among other things, may limit its ability to: (i) pay distributions on, purchase or redeem the Company’s units or redeem its subordinated debt; (ii) make investments; (iii) incur or guarantee additional indebtedness or issue certain types of equity securities; (iv) create certain liens; (v) sell assets; (vi) consolidate, merge or transfer all or substantially all of the Company’s assets; (vii) enter into agreements that restrict distributions or other payments from the Company’s restricted subsidiaries to the Company; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.

Berry’s senior notes contain covenants that, among other things, may limit its ability to: (i) incur or guarantee additional indebtedness; (ii) pay distributions or dividends on Berry’s equity or redeem its subordinated debt; (iii) create certain liens; (iv) enter into agreements that restrict distributions or other payments from Berry’s restricted subsidiaries to Berry; (v) sell assets; (vi) engage in transactions with affiliates; and (vii) consolidate, merge or transfer all or substantially all of Berry’s assets.

In addition, any cash generated by Berry is currently being used by Berry to fund its activities. Historically, to the extent that Berry generated cash in excess of its needs and determined to distribute such amounts to LINN Energy, the indentures governing Berry’s senior notes limited the amount it could distribute to LINN Energy to the amount available under a “restricted payments basket,” and Berry could not distribute any such amounts unless it is permitted by the indentures to incur additional debt pursuant to the consolidated coverage ratio test set forth in the Berry indentures. During the pendency of the bankruptcy proceedings, Berry will not distribute cash to LINN Energy using the restricted payments basket.

The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the Second Lien Indenture and the senior notes. However, under the Bankruptcy Code, holders of the Second Lien Notes and the senior notes are stayed from taking any action against the Company as a result of the default.

~~In April 2016 and May 2016, in connection with the Company’s restructuring efforts, LINN Energy canceled (prior to the contract settlement dates) all of its then-outstanding~~2019. The Company did not enter into any commodity derivative contracts ~~for net proceeds of approximately $1.2 billion. The net proceeds were used to make permanent repayments of a portion of~~during the ~~borrowings outstanding under~~two months ended February 28, 2017, or the ~~LINN Credit Facility.~~three months ended March 31, 2016.

Also, in May 2016 and July 2016, as a result of the Chapter 11 proceedings, Berry’s counterparties canceled (prior to the contract settlement dates) all of Berry’s then-outstanding derivative contracts for net proceeds of approximately $2 million. The net proceeds were used to make permanent repayments of a portion of the borrowings outstanding under the Berry Credit Facility.

At December 31, ~~2015,~~2016, net outstanding checks of approximately ~~$21~~$18 million and $6 million, respectively, were reclassified and included in “accounts payable and accrued expenses” on the condensed consolidated balance sheets. ~~At September 30, 2016, no net outstanding checks were reclassified.~~ Net outstanding checks are presented as cash flows from financing activities and included in “other” on the ~~condensed~~ consolidated statements of cash flows.

~~ownership of LINN Energy’s outstanding units increased from approximately 37% at December 31, 2015, to approximately 71% at September 30, 2016.~~

~~LINN Energy has~~Predecessor had agreed to provide to LinnCo, or to pay on LinnCo’s behalf, any financial, legal, accounting, tax advisory, financial advisory and engineering fees, and 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. These expenses include 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, the ~~Company has~~Predecessor had 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. All expenses and costs paid by ~~LINN Energy~~the Predecessor on LinnCo’s behalf ~~are~~were expensed by ~~LINN Energy.~~the Predecessor.

~~The Company did not pay any distributions to LinnCo during the three months or nine months ended September 30,~~March 31, 2016. During the three months and nine months ended September 30, 2015, the Company paid approximately $41 million and $121 million, respectively, in distributions to LinnCo attributable to LinnCo’s interest in LINN Energy.

One of the Company’s directors is the President and Chief Executive Officer of Superior Energy Services, Inc. (“Superior”), which provides oilfield services to the Company. For the three months and nine months ended September 30, 2016, the Company incurred expenditures of approximately $1 million and $4 million, respectively, and for the three months and nine months ended September 30, 2015, the Company incurred expenditures of approximately $2 million and $7 million, respectively, related to services rendered by Superior and its subsidiaries.

Linn Energy, LLC’s senior notes due May 2019, senior notes due November 2019, senior notes due April 2020, Second Lien Notes, senior notes due February 2021 and senior notes due September 2021 are guaranteed by all of the Company’s material subsidiaries, other than Berry Petroleum Company, LLC, which is an indirect 100% wholly owned subsidiary of the Company.

The following condensed consolidating financial information presents the financial information of Linn Energy, LLC, the guarantor subsidiaries and the non-guarantor subsidiary in accordance with SEC Regulation S-X Rule 3‑10. The condensed consolidating financial information for the co-issuer, Linn Energy Finance Corp., is not presented as it has no assets, operations or cash flows. The financial information may not necessarily be indicative of the financial position or results of operations had the guarantor subsidiaries or non-guarantor subsidiary operated as independent entities. There are no restrictions on the Company’s ability to obtain cash dividends or other distributions of funds from the guarantor subsidiaries.

~~Results for the three months ended September 30, 2016, included the following:~~

~~Results for the nine months ended September 30, 2016, included the following:~~

OnNote 2, on May 11, 2016 (the “Petition Date”), ~~the Company,~~Linn Energy, LLC, certain of ~~the Company’s~~its direct and indirect subsidiaries, and LinnCo (collectively, ~~with the Company,~~ the “LINN Debtors”) and Berry (collectively with the LINN Debtors, the “Debtors”), filed voluntary petitions (“Bankruptcy Petitions”) for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”). The Debtors’ Chapter 11 cases ~~are being~~were administered jointly under the caption In re Linn Energy, ~~LLC.,~~LLC, et al., Case No. 16‑60040.

~~The condensed consolidated financial statements have been prepared as if~~ During the ~~Company is a going concern and reflect the application~~pendency of ~~Accounting Standards Codification 852 “Reorganizations” (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to~~ the Chapter 11 ~~filing, distinguish transactions and events that are directly associated with~~proceedings, the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in “reorganization items, net” on the Company’s condensed consolidated statements of operations. In addition, prepetition unsecured and under-secured obligations that may be impacted by the bankruptcy reorganization process have been classified as “liabilities subject to compromise” on the Company’s condensed consolidated balance sheet at September 30, 2016. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less.

~~The~~ Debtors ~~are operating~~operated their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. The ~~Bankruptcy Court has granted certain relief requested by~~Company emerged from bankruptcy effective February 28, 2017.

Prior to the Petition Date, on May 10, 2016, the Debtors entered into a restructuring support agreement (“Bank RSA”) with certain holders (“Consenting Bank Creditors”) collectively holding or controlling at least 66.67% by aggregate outstanding principal amounts under (i) the Company’s Sixth Amended and Restated Credit Agreement (“LINN Credit Facility”) and (ii) Berry’s Second Amended and Restated Credit Agreement (“Berry Credit Facility”).three months ended March 31, 2016.

The LINN RSA sets forth, subject to certain conditions, the commitment of the LINN Debtors and the Consenting LINN Creditors to support a comprehensive restructuring of the LINN Debtors’ long-term debt (the “Restructuring”). On October 21, 2016, the Debtors filed a proposed Plan with the Bankruptcy Court. ~~See “Process for Plan of Reorganization” below for certain principal terms~~

~~The LINN RSA obligates~~respective Plans, the LINN Debtors and the Consenting LINN Creditors to, among other things, support and not interfere with consummation of the Restructuring and, as to the Consenting LINN Creditors, vote their claims in favor of the Plan. The LINN RSA may be terminated upon the occurrence of certain events, including the failure to meet specified milestones relating to the filing, confirmation and consummation of the Plan, and in the event of certain breaches by the parties under the LINN RSA. The LINN RSA is subject to termination if the effective date of the Plan has not occurred by March 1, 2017. There can be no assurance that the Restructuring will be consummated.

In connection with the proposed Plan, on October 25, 2016, the Company entered into a backstop commitment agreement (“Backstop Commitment Agreement”) with the parties thereto (collectively, the “Backstop Parties”), pursuant to which the Backstop Parties, which are also Consenting Noteholders under the LINN RSA, have agreed to backstop a $530 million new money investment in the LINN Debtors pursuant to the rights offerings to be conducted in accordance with the Plan.

In accordance with the Plan, the Backstop Commitment Agreement and the rights offerings procedures filed in the Chapter 11 cases, the LINN Debtors will offer eligible creditors, including the Backstop Parties, the right to purchase new common stock or limited liability company interests in the reorganized Company (“New Common Stock”) upon emergence from the Chapter 11 cases for an aggregate purchase price of $530 million. The rights offerings will consist of the following offerings:

Under the Backstop Commitment Agreement, certain Backstop Parties have agreed to purchase their pro rata share of the Unsecured Rights Offering Shares and the Secured Rights Offering Shares, as applicable, that are not duly subscribed to

~~Subject~~claims relating to ~~Bankruptcy Court approval,~~the Second Lien Notes and the Unsecured Notes) against the LINN Debtors ~~will pay~~(the “LINN Unsecured Claims”) received their pro rata share of cash from two cash distribution pools totaling $40 million, as divided between a $2.3 million cash distribution pool for the ~~Backstop Parties on the Plan effective date a commitment premium~~payment in full of allowed LINN Unsecured Claims in an amount equal to ~~4.0% of~~$2,500 or less (and larger claims for which the ~~$530~~holders irrevocably agreed to reduce such claims to $2,500), and a $37.7 million ~~committed amount (the “Backstop Commitment Premium”), of which 3.0% will be paid in~~ cash distribution pool for pro rata distributions to all remaining allowed general LINN Unsecured Claims. As a result, all outstanding LINN Unsecured Claims were fully satisfied, settled, released and 1.0% will be paid in the form of New Common Stock at the discounted per share price set forth in the Backstop Commitment Agreement. The Backstop Commitment Premium shall be fully earned and nonrefundabledischarged as of the ~~date~~Effective Date.

~~The Backstop Parties’ commitments~~agreed to, backstop the rights offerings, and the other transactions contemplated by the Backstop Commitment Agreement, are conditioned upon the satisfaction of all conditions to the effectiveness of the Plan and other applicable conditions precedent set forth in the Backstop Commitment Agreement. The issuances of New Common Stock pursuant to the rights offerings and the Backstop Commitment Agreement are conditioned upon, among other things, ~~confirmation~~file a registration statement with the Securities and Exchange Commission within 60 days of the ~~Plan by~~Effective Date covering the ~~Bankruptcy Court,~~offer and ~~the Plan’s effectiveness upon the Company’s emergence from its Chapter 11 cases.~~

On July 11, 2016, the Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of the Debtors, subject to the assumptions filed in connection therewith. The schedules and statements may be subject to further amendment or modification after filing. Holders of prepetition claims are required to file proofs of claims by the applicable deadline for filing certain proofs of claims in the Debtors’ Chapter 11 cases, which was September 16, 2016, for general claims and is November 7, 2016, for governmental claims. Differences between amounts scheduled by the Debtors and claims by creditors will be investigated and resolved in connection with the claims resolution process.

Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assign or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and satisfaction of certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtors’ estate for damages. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with any of the Debtors in this Quarterly Report on Form 10-Q, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with the applicable Debtor, is qualified by any overriding rejection rights the Company has under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.“Registrable Securities” (as defined therein).

Under the Bankruptcy Code, unless creditors agree otherwise, prepetition liabilities and postpetition liabilities must be satisfied in full before the holders of the Company’s existing common units representing limited liability company interests (“units”) are entitledright to ~~receive~~prepay any settlement or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or unitholders, if any, will not be determined until confirmation and implementation of a plan or plans of reorganization. No assurance can be given as to what values, if any, will be ascribed in the Chapter 11 proceedings to each of these constituencies or what types or amounts of settlements, if any, they will receive. A plan of reorganization could result in holders of the Debtors’ liabilities and/or units receiving no settlement on account of their interests and cancellation of their holdings. The Company believes that it is highly likely that its existing units will be canceled in the Chapter 11 proceedings and will be entitled to a limited recovery, if any. Any trading in the Company’s units during the pendency of the Chapter 11 proceedings is highly speculative and poses substantial risks to purchasers of the Company’s units.

In order to successfully exit bankruptcy, the Debtors will need to propose, and obtain confirmation by the Bankruptcy Court of, a Plan that satisfies the requirements of the Bankruptcy Code. A Plan would, among other things, resolve the Debtors’ prepetition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to exit from bankruptcy.

In addition to being voted on by holders of impaired claims and equity interests, a Plan must satisfy certain requirements of the Bankruptcy Code and must be approved, or confirmed, by the Bankruptcy Court in order to become effective. A Plan would be accepted by holders of claims against and equity interests in the Debtors if (i) at least one-half in number and two-thirds in dollar amount of claims actually voting in each class of claims impaired by the Plan have voted to accept the Plan and (ii) at least two-thirds in amount of equity interests impaired by the Plan actually voting has voted to accept the Plan. A class of claims or equity interests that does not receive or retain any propertyborrowings under the ~~Plan on account of such claims or interests is deemed to have voted to reject the Plan.~~

~~Under certain circumstances set forth in Section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm~~Successor Credit Facility at any time without a Plan even if such Plan has not been accepted by all impaired classes of claims and equity interests. The precise requirements and evidentiary showing for confirming a Plan notwithstanding its rejection by one or more impaired classes of claims or equity interests depends upon a number of factors, including the status and seniority of the claims or equity interests in the rejecting class (i.e., unsecured or secured claims, subordinated or senior claims). Generally,prepayment penalty, other than customary “breakage” costs with respect to ~~units, a Plan may be “crammed down” even if~~eurodollar loans.

~~On October 21, 2016, the Debtors filed a proposed Plan~~date of each scheduled borrowing base redetermination commencing with the ~~Bankruptcy Court. Certain principal terms~~first scheduled borrowing base redetermination and (b) the date of ~~the proposed Plan, as filed on October 21, 2016,~~each additional borrowing base redetermination done in conjunction with ~~respect~~an asset sale and (ii) a maximum total net debt to ~~the LINN Debtors include:~~

The Plan contemplates a New LINN Exit Facility consisting of (i) a term loan in the amount of $300 million (the “New LINN Term Loan”) and (ii) a revolving loan in the initial amount of $1.4 billion (the “New LINN Revolving Loan”). The New LINN Term Loan will mature on the earlier of June 30, 2021, or the day prior to the fourth anniversary of the date of emergence from bankruptcy (the “Closing Date”), with interest payable at LIBOR plus 7.50% and amortized principal payments payable quarterly, beginning March 31, 2017. The New LINN Revolving Loan will be composed of two tranches as follows: (a) a conforming tranche with an initial amount of $1.4 billion subject to the borrowing base (the “Conforming Tranche”), and (b) a non-conforming tranche with an initial amount of $0 (the “Non-Conforming Tranche”). The Conforming Tranche will mature on the earlier of (i) June 30, 2021, or (ii) the day prior to the fourth anniversary of the Closing Date, with an interest rate of LIBOR plus 3.50%. The Non-Conforming Tranche will mature on the earlier of (i) December 31, 2020, or (ii) the day prior to the date that is three years and six months after the Closing Date, with an interest rate of LIBOR plus 5.50%. The New LINN Exit Facility will contain a variety of other terms and conditions including annual year-end borrowing base redeterminations beginning April 1, 2018, conditions precedent to funding, financial and other covenants ~~and certain representations and warranties.~~

The Plan also provides for the establishment of a customary employee incentive plan at the reorganized Company under which a pool of equity having a value equal to (i) 8% of the equity value of the reorganized LINN Debtors as of the Plan effective date (the “Company Group Emergence Value”) as follows: (A) 2.5% of the Company Group Emergence Value in the form of restricted stock units to be issued at emergence; (B) 1.5% of the Company Group Emergence Value in the form of profits interests that will vest based on time and performance; and (C) the remaining 4% of the Company Group Emergence Value in a form of equity-based awards as determined by the board of directors of the reorganized Company; and (ii) an additional 2.0% of the Company Group Emergence Value, which will be issued at emergence in the form of profits interests that vest once the equity value of the reorganized LINN Debtors (as equitably adjusted for subsequent contributions and distributions) is equal to 1.5 times the Company Group Emergence Value.

~~Certain principal terms of the proposed Plan, as filed on October 21, 2016, with respect to Berry include:~~

~~There can be no assurance at this time that the Debtors will be able to successfully confirm and consummate the Plan.~~

For the duration of the Company’s Chapter 11 proceedings, the Company’s operations and ability to develop and execute its business plan are subject to the risks and uncertainties associated with the Chapter 11 process as described in Item 1A. “Risk Factors.” As a result of these risks and uncertainties, the number of the Company’s units and unitholders, assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of the Company’s operations, properties and capital plans included in this quarterly report may not accurately reflect its operations, properties and capital plans following the Chapter 11 process.

Continued low commodity prices have resulted in significantly lower levels of cash flow from operating activities and have limited the Company’s ability to access the capital markets. In addition, each of the Company’s Credit Facilities is subject to scheduled redeterminations of its borrowing base, semi-annually, based primarily on reserve reports using lender commodity price expectations at such time. The lenders under the Credit Facilities agreed to defer the April 2016 borrowing base redeterminations to May 11, 2016. Continued low commodity prices, reductions in the Company’s capital budget and the resulting reserve write-downs, along with the termination of the Company’s hedges, were expected to adversely impact upcoming redeterminations and have a significant negative impact on the Company’s liquidity. The Company’s filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under its Credit Facilities, its Second Lien Notes and its senior notes.

The significant risks and uncertainties related to the Company’s liquidity and Chapter 11 proceedings described above raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty. If the Company cannot continue as a going concern, adjustments to the carrying values and classification of its assets and liabilities and the reported amounts ~~of income and expenses could be required and could be material.~~

In order to decrease the Company’s level of indebtedness and maintain the Company’s liquidity at levels sufficient to meet its commitments, the Company undertook a number of actions, including minimizing capital expenditures and further reducing its recurring operating expenses. Despite taking these actions, the Company did not have sufficient liquidity to satisfy its debt service obligations, meet other financial obligations and comply with its debt covenants. As a result, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code.

The Company’s filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under its Credit Facilities, its Second Lien Notes and its senior notes. Additionally, other events of default, including cross-

defaults, are present, including the failure to make interest payments on the Company’s Second Lien Notes and senior notes, as well as the receipt of a going concern explanatory paragraph from the Company’s independent registered public accounting firm on the Company’s consolidated financial statements for the year ended December 31, 2015. Under the Bankruptcy Code, the creditors under these debt agreements are stayed from taking any action against the Company as a result of an event of default. See Note 6 for additional details about the Company’s debt.

The Company’s Credit Facilities contain a requirement to deliver audited consolidated financial statements without a going concern or like qualification or exception. Consequently, the filing of the Company’s 2015 Annual Report on Form 10-K which included such explanatory paragraph resulted in a default under the LINN Credit Facility as of the filing date, March 15, 2016, subject to a 30 day grace period.

On April 12, 2016, the Company entered into amendments to both the LINN Credit Facility and the Berry Credit Facility. The amendments provided for, among other things, an agreement that (i) certain events would not become defaults or events of default until May 11, 2016, (ii) the borrowing bases would remain constant until May 11, 2016, unless reduced as a result of swap agreement terminations or collateral sales and (iii) the Company, the administrative agent and the lenders would negotiate in good faith the terms of a restructuring support agreement in furtherance of a restructuring of the capital structure of the Company and its subsidiaries. In addition, the amendment to the Berry Credit Facility provided Berry with access to previously restricted cash of $45 million in order to fund ordinary course operations.

~~As a condition to closing the amendments, in April 2016, (a) the Company made a $100 million permanent repayment of a portion of the borrowings~~ outstanding under the ~~LINN Credit Facility and (b) the Company and certain of its subsidiaries provided control agreements over certain deposit accounts.~~

Pursuant to the terms of the amendment to the LINN Credit Facility and as a result of the execution of the Bank RSA, in May 2016, the Company made a $350 million permanent repayment of a portion of the borrowings outstanding under the LINNSuccessor Credit Facility.

The indenture governing the Second Lien Notes (“Second Lien Indenture”) required the Company to deliver mortgages by February 18, 2016, subject to a 45 day grace period. The Company elected to exercise its right to the grace period, which resulted in the Company being in default under the Second Lien Indenture.

On April 4, 2016, the Company entered into a settlement agreement with certain holders of the Second Lien Notes and agreed to deliver, and make arrangements for recordation of, the mortgages. The Company has since delivered and made arrangements for recordation of the mortgages.

The settlement agreement required the parties to commence good faith negotiations with each other regarding the terms of a potential comprehensive and consensual restructuring, including a potential restructuring under a Chapter 11 plan of reorganization. The settlement agreement provided that in the event the parties were unable to reach agreementListing on the terms of a consensual restructuring on or before the commencement of such Chapter 11 proceedings (or such later date as mutually agreed to by the parties), the parties would support entry by the Bankruptcy Court of a settlement order that, among other things, (i) approves the issuance of additional notes, in the principal amount of $1.0 billion plus certain accrued interest, on a proportionate basis to existing holders of the Second Lien Notes and (ii) releases the mortgages and other collateral upon the issuance of the additional notes (the “Settlement Order”).

~~The settlement agreement will terminate upon, among other events, entry by the Bankruptcy Court of a final, non-appealable order denying the Company’s motion seeking entry of the Settlement Order.~~

~~The Company failed to make an interest payment on its Second Lien Notes of approximately $68 million due June 15, 2016.~~

The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the Second Lien Indenture. However, under the Bankruptcy Code, holders of the Second Lien Notes are stayed from taking any action against the Company as a result of the default.

The Company deferred making interest payments totaling approximately $60 million due March 15, 2016, including approximately $30 million on LINN Energy’s 7.75% senior notes due February 2021, approximately $12 million on LINN Energy’s 6.50% senior notes due September 2021 and approximately $18 million on Berry’s 6.375% senior notes due September 2022, which resulted in the Company being in default under these senior notes. The indentures governing each of the applicable series of notes provided the Company a 30 day grace period to make the interest payments.

On April 14, 2016, within the 30 day interest payment grace period provided for in the indentures governing the notes, the Company and Berry made interest payments of approximately $60 million in satisfaction of their respective obligations.

~~The Company failed to make interest payments due on its senior notes subsequent to April 14, 2016.~~

The filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the indentures governing the senior notes. However, under the Bankruptcy Code, holders of the senior notes are stayed from taking any action against the Company as a result of the default.

In October 2016, the Company entered into commodity derivative contracts consisting of oil swaps for November 2016 through December 2017 and natural gas swaps for January 2017 through December 2018. Including these new hedges, as of October 31, 2016, the Company had oil swaps of 610 MBbls at an average price of $50.91 per Bbl for the remainder of 2016 and 2,373 MBbls at an average price of $51.74 per Bbl for 2017, and natural gas swaps of 22,265 MMMBtus at an average price of $3.05 per MMBtu for the remainder of 2016, 113,150 MMMBtus at an average price of $3.14 per MMBtu for 2017 and 14,600 MMMBtus at an average price of $3.01 per MMBtu for 2018.

~~In September 2016, the Company entered into commodity derivative contracts consisting of natural gas swaps for October 2016 through December 2017 and oil swaps for January 2017 through December 2017.~~

In April 2016 and May 2016, in connection with the Company’s restructuring efforts, LINN Energy canceled (prior to the contract settlement dates) all of its then-outstanding derivative contracts for net proceeds of approximately $1.2 billion. The net proceeds were used to make permanent repayments of a portion of the borrowings outstanding under the LINN Credit Facility. Also, in May 2016 and July 2016, as a result of the Chapter 11 proceedings, Berry’s counterparties canceled (prior to the contract settlement dates) all of Berry’s then-outstanding derivative contracts for net proceeds of approximately $2 million. The net proceeds were used to make permanent repayments of a portion of the borrowings outstanding under the Berry Credit Facility.

In March 2016, LinnCo filed a Registration Statement on Form S-4 related to an offer to exchange each outstanding unit representing limited liability company interests of LINN Energy for one common share representing limited liability company interests of LinnCo. The initial offer expired on April 25, 2016, and on April 26, 2016, LinnCo commenced a subsequent offering period that expired on August 1, 2016. During the exchange period, 123,100,715 LINN Energy units were exchanged for an equal number of LinnCo shares. As a result of the exchanges of LINN Energy units for LinnCo shares, LinnCo’s ownership of LINN Energy’s outstanding units increased from approximately 37% at December 31, 2015, to approximately 71% at September 30, 2016.

For 2016, the Company estimates its total capital expenditures, excluding acquisitions, will be approximately $235 million, including approximately $160 million related to its oil and natural gas capital program and approximately $60 million related to its plant and pipeline capital. The 2016 budget contemplates continued low commodity prices and is under continuous review

and subject to ongoing adjustments. The Company expects to fund its capital expenditures primarily from net cash provided by operating activities; however, there is uncertainty regarding the Company’s liquidity as discussed above. In addition, at this level of capital spending, the Company expects its total reserves to decline.

See above for a description of the amendments to the Credit Facilities entered into in April 2016. During the nine months ended September 30, 2016, the Company borrowed approximately $979 million under the LINN Credit Facility and made repayments of approximately $1.8 billion of a portion of the borrowings outstanding under the Credit Facilities and term loan. The repayments include approximately $841 million in commodity derivative settlements paid by the counterparties to the lenders under the LINN Credit Facility. As of September 30, 2016, total borrowings outstanding (including outstanding letters of credit) under the LINN Credit Facility and the Berry Credit Facility were approximately $1.9 billion and $898 million, respectively, with no remaining availability for either.

The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. See Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Note 7 and Note 8 for additional details about the Company’s commodity derivatives. For information about the Company’s credit risk related to derivative contracts, see “Counterparty Credit Risk” under “Liquidity and Capital Resources” below.

~~During the three months ended September 30, 2015, the Company recorded~~ a ~~net gain of approximately $174 million, including costs to sell of approximately $1 million, on the sale of its remaining position in Howard County~~decline in the ~~Permian Basin (the “Howard County Assets Sale”).~~Company’s estimates of proved reserves.

The ~~$1.0 billion in aggregate principal amount of~~ Second Lien Notes ~~issued in November 2015~~ were accounted for as a troubled debt restructuring which requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized. For the ~~three~~two months ended ~~September 30, 2016,~~February 28, 2017, unrecorded contractual interest on the Second Lien Notes was ~~approximately $30~~$20 million.

liability companies are subject to Texas margin tax. In addition, certain of the ~~Company’s~~Predecessor’s subsidiaries ~~are Subchapter C-corporations~~were C corporations subject to federal and state income taxes. The Company recognized an income tax benefit of approximately $4$3 million and $166,000 for the ~~three~~one month ended March 31, 2017, and the two months ended ~~September 30, 2016,~~February 28, 2017, respectively, compared to income tax expense of approximately $2$10 million for the three months ended ~~September 30, 2015. The income tax benefit is primarily due to lower income~~March 31, 2016.

Oil, natural gas and NGL sales decreased by approximately $415 million or 30% to approximately $960 million for the nine months ended September 30, 2016, from approximately $1.4 billion for the nine months ended September 30, 2015, due to lower oil, natural gas and NGL prices and lower production volumes. Lower oil, natural gas and NGL prices resulted in a decrease in revenues of approximately $138 million, $94 million and $8 million, respectively.

Average daily production volumes decreased to approximately 1,089 MMcfe/d for the nine months ended September 30, 2016, from 1,206 MMcfe/d for the nine months ended September 30, 2015. Lower oil and natural gas production volumes resulted in a decrease in revenues of approximately $142 million and $38 million, respectively. Higher NGL production volumes resulted in an increase in revenues of approximately $5 million.

Losses on oil and natural gas derivatives were approximately $73 million for the nine months ended September 30, 2016, compared to gains of approximately $783 million for the nine months ended September 30, 2015, representing a variance of approximately $856 million. Losses on oil and natural gas derivatives were primarily due to changes in fair value of the derivative contracts, and the comparison from period to period was impacted by the declining maturity schedule of the Company’s hedges. The fair value on unsettled derivative contracts changes as future commodity price expectations change compared to the contract prices on the derivatives. If the expected future commodity prices increase compared to the contract prices on the derivatives, losses are recognized; and if the expected future commodity prices decrease compared to the contract prices on the derivatives, gains are recognized.

~~See above under “Executive Overview” for details about the Company’s commodity derivatives cancellations in 2016.~~

The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. See Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Note 7 and Note 8 for additional details about the Company’s commodity derivatives. For information about the Company’s credit risk related to derivative contracts, see “Counterparty Credit Risk” under “Liquidity and Capital Resources” below.

Marketing revenues represent third-party activities associated with company-owned gathering systems, plants and facilities. Marketing and other revenues decreased by approximately $11 million or 14% to approximately $69 million for the nine months ended September 30, 2016, from approximately $80 million for the nine months ended September 30, 2015. The decrease was primarily due to lower revenues generated by the Jayhawk natural gas processing plant in Kansas, principally driven by a change in contract terms, and lower electricity sales revenues generated by the Company’s California cogeneration facilities, partially offset by higher helium sales revenue in the Hugoton Basin.

Lease operating expenses include expenses such as labor, field office, vehicle, supervision, maintenance, tools and supplies, and workover expenses. Lease operating expenses decreased by approximately $97 million or 21% to approximately $371 million for the nine months ended September 30, 2016, from approximately $468 million for the nine months ended September 30, 2015. The decrease was primarily due to cost savings initiatives and lower workover activities, as well as a decrease in steam costs caused by lower prices for natural gas used in steam generation and a decrease in steam injection volumes. Lease operating expenses per Mcfe also decreased to $1.24 per Mcfe for the nine months ended September 30, 2016, from $1.42 per Mcfe for the nine months ended September 30, 2015.

Transportation expenses decreased by approximately $7 million or 5% to approximately $157 million for the nine months ended September 30, 2016, from approximately $164 million for the nine months ended September 30, 2015. The decrease was primarily due to reduced costs as a result of certain contracts terminated in the Chapter 11 proceedings and lower production volumes, partially offset by higher costs from nonoperated properties in the Rockies region. Transportation expenses per Mcfe increased to $0.52 per Mcfe for the nine months ended September 30, 2016, from $0.50 per Mcfe for the nine months ended September 30, 2015.

Marketing expenses represent third-party activities associated with company-owned gathering systems, plants and facilities. Marketing expenses decreased by approximately $11 million or 24% to approximately $36 million for the nine months ended September 30, 2016, from approximately $47 million for the nine months ended September 30, 2015. The decrease was primarily due to lower expenses associated with the Jayhawk natural gas processing plant in Kansas, principally driven by a change in contract terms, and lower electricity generation expenses incurred by the Company’s California cogeneration facilities.

General and administrative expenses are costs not directly associated with field operations and reflect the costs of employees including executive officers, related benefits, office leases and professional fees. General and administrative expenses decreased by approximately $42 million or 17% to approximately $196 million for the nine months ended September 30, 2016, from approximately $238 million for the nine months ended September 30, 2015. The decrease was primarily due to lower salaries and benefits related expenses, lower acquisition expenses, lower professional services expenses and lower various other administrative expenses. General and administrative expenses for the nine months ended September 30, 2015, was impacted by advisory fees related to alliance agreements entered into with certain private capital investors. General and administrative expenses per Mcfe also decreased to $0.66 per Mcfe for the nine months ended September 30, 2016, from $0.72 per Mcfe for the nine months ended September 30, 2015.

Professional services expenses of approximately $46 million for the nine months ended September 30, 2016, related to the Chapter 11 proceedings that were incurred since the Petition Date, have been recorded in “reorganization items, net” on the condensed consolidated statement of operations.

Exploration costs decreased by approximately $1 million or 32% to approximately $3 million for the nine months ended September 30, 2016, from approximately $4 million for the nine months ended September 30, 2015. The decrease was primarily due to lower leasehold impairment expenses on unproved properties.

Depreciation, depletion and amortization decreased by approximately $188 million or 30% to approximately $450 million for the nine months ended September 30, 2016, from approximately $638 million for the nine months ended September 30, 2015. The decrease was primarily due to lower rates as a result of the impairments recorded in the prior year and the first quarter of 2016, as well as lower total production volumes. Depreciation, depletion and amortization per Mcfe also decreased to $1.51 per Mcfe for the nine months ended September 30, 2016, from $1.94 per Mcfe for the nine months ended September 30, 2015.

~~During the nine months ended September 30, 2015, the Company recorded a net gain of approximately $174 million, including costs to sell of approximately $1 million, on the Howard County Assets Sale.~~

The $1.0 billion in aggregate principal amount of Second Lien Notes issued in November 2015 were accounted for as a troubled debt restructuring, which requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized. For the period from May 12, 2016, through September 30, 2016, unrecorded contractual interest on the Second Lien Notes was approximately $46 million.

The Company has incurred and is expected to continue to incur significant costs associated with the reorganization. These costs, which are expensed as incurred, are expected to significantly affect the Company’s results of operations. Reorganization items represent costs and income directly associated with the Chapter 11 proceedings since the Petition Date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined.

The Company is a limited liability company treated as a partnership for federal and state income tax purposes, with the exception of the state of Texas, in which income tax liabilities and/or benefits are passed through to its unitholders. Limited liability companies are subject to Texas margin tax. In addition, certain of the Company’s subsidiaries are Subchapter C-corporations subject to federal and state income taxes. The Company recognized income tax expense of approximately $3 million for the nine months ended September 30, 2016, compared to an income tax benefit of approximately $8 million for the nine months ended September 30, 2015. The increased income tax expense is primarily due to additional expense recognized related to unit-based compensation in 2016 for which there was no windfall benefit offset as in 2015.

~~In order~~4.5 to decrease the Company’s level of indebtedness and maintain the Company’s liquidity at levels sufficient to meet its commitments, the Company undertook a number of actions, including minimizing capital expenditures and further reducing its recurring operating expenses. Despite taking these actions, the Company did not have sufficient liquidity to satisfy its debt1.0 thereafter.

Although the Company believes its cash flow from operations and cash on hand will be adequate to meet the operating costs of its existing business, there are no assurances that the Company’s cash flow from operations and cash on hand will be sufficient to continue to fund its operations or to allow the Company to continue as a going concern until a Plan is confirmed by the Bankruptcy Court or other alternative restructuring transaction is approved by the Bankruptcy Court and consummated. The Company’s long-term liquidity requirements, the adequacy of its capital resources and its ability to continue as a going concern are difficult to predict at this time and ultimately cannot be determined until a Plan has been confirmed, if at all, by the Bankruptcy Court. See Item 1A. “Risk Factors” in this Quarterly Report on Form 10‑Q and in the Annual Report on Form 10‑K for the year ended December 31, 2015, for risks relating to liquidity and Chapter 11 proceedings.

The Company has utilized funds from debt and equity offerings, borrowings under its Credit Facilities and net cash provided by operating activities for capital resources and liquidity. To date, the primary use of capital has been for acquisitions and the development ofstatements, oil and natural gas ~~properties. For~~engineering reports and budgets, maintenance and operation of property (including oil and natural gas properties), restrictions on the ~~nine months ended September 30, 2016,~~incurrence of liens and indebtedness, mergers, consolidations and sales of assets, transactions with affiliates and other customary covenants.

Cash provided by operating activities for the nine months ended September 30, 2016, was approximately $885 million, compared to approximately $1.0 billion for the nine months ended September 30, 2015. The decrease was primarily due to lower production related revenues principally due to lower commodity prices and lower production volumes, partially offset by lower expenses.


⁽¹⁾	Marketing and other revenues for the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $6 million and $23 million, respectively, of management fee revenues recognized by the Company from Berry. Management fee revenues are included in “other revenues” on the condensed consolidated statements of operations.

⁽²⁾

General and administrative expenses for the one month ended March 31, 2017, the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $4 million, $50 million and $9 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the three months ended March 31, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

~~Investing Activities~~



	Successor		Predecessor
	One Month Ended March 31, 2017		Two Months Ended February 28, 2017		Three Months Ended March 31, 2016
Average daily production:
Natural gas (MMcf/d)	496		495		535
Oil (MBbls/d)	25.6		25.1		29.5
NGL (MBbls/d)	23.2		21.4		24.3
Total (MMcfe/d)	788		775		858

Weighted average prices: ⁽¹⁾
Natural gas (Mcf)	$	2.48	$	3.41	$	1.97
Oil (Bbl)	$	47.07	$	49.50	$	29.91
NGL (Bbl)	$	16.82	$	24.41	$	10.61

Average NYMEX prices:
Natural gas (MMBtu)	$	2.63	$	3.66	$	2.09
Oil (Bbl)	$	49.67	$	53.04	$	33.45

Costs per Mcfe of production:
Lease operating expenses	$	1.11	$	1.16	$	1.13
Transportation expenses	$	0.56	$	0.57	$	0.54
General and administrative expenses ⁽²⁾	$	0.43	$	1.57	$	1.07
Depreciation, depletion and amortization	$	0.87	$	1.24	$	1.35
Taxes, other than income taxes	$	0.31	$	0.34	$	0.25

Average daily production – discontinued operations:
Total (MMcfe/d)	—		—		255


⁽¹⁾	Does not include the effect of gains (losses) on derivatives.

⁽²⁾

General and administrative expenses for the one month ended March 31, 2017, the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $4 million, $50 million and $9 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the three months ended March 31, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Revenues and Other

Oil, Natural Gas and NGL Sales

Oil, natural gas and NGL sales increased by approximately $91 million or 46% to approximately $87 million and $204 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $200 million for the three months ended March 31, 2016, due to higher oil, natural gas and NGL prices, partially offset by lower production volumes. Higher oil, natural gas and NGL prices resulted in an increase in revenues of approximately $74 million, $61 million and $25 million, respectively.

Average daily production volumes decreased to approximately 788 MMcfe/d and 775 MMcfe/d for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately 858 MMcfe/d for the three months ended March 31, 2016. Lower oil, natural gas and NGL production volumes resulted in a decrease in revenues of approximately $44 million, $20 million and $5 million, respectively.

The following ~~provides a comparative summary of cash flow from investing activities:~~table sets forth average daily production by region:

Nine Months Ended
September 30,
2016 2015
(in thousands)
Cash flow from investing activities:
Capital expenditures $ (179,332 ) $ (554,735 )
Decrease in restricted cash 53,418
—
Proceeds from sale of properties and equipment and other (3,149 ) 364,195
$ (129,063 ) $ (190,540 )



	Successor	Predecessor
	One Month Ended March 31, 2017	Two Months Ended February 28, 2017	Three Months Ended March 31, 2016
Average daily production (MMcfe/d):
Rockies	287	294	347
Hugoton Basin	169	159	188
Mid-Continent	127	109	97
TexLa	77	80	72
Permian Basin	46	49	62
California	29	30	34
Michigan/Illinois	29	29	30
South Texas	24	25	28
	788	775	858

The ~~primary use~~increases in average daily production volumes in the Mid-Continent and TexLa primarily reflect increased development capital spending in the regions. The decreases in average daily production volumes in the remaining regions primarily reflect lower production volumes as a result of ~~cash in investing activities is for~~reduced development capital spending throughout the ~~development of the~~ Company’s various regions, as well as marginal well shut-ins, driven by continued low commodity prices.

Gains (Losses) on Oil and Natural Gas Derivatives

Losses on oil and natural gas ~~properties.~~derivatives were approximately $12 million for the one month ended March 31, 2017, and gains on oil and natural gas derivatives were approximately $93 million and $109 million for the two months ended February 28, 2017, and the three months ended March 31, 2016, respectively. Gains and losses on oil and natural gas derivatives were primarily due to changes in fair value of the derivative contracts. The fair value on unsettled derivative contracts changes as future commodity price expectations change compared to the contract prices on the derivatives. If the expected future commodity prices increase compared to the contract prices on the derivatives, losses are recognized; and if the expected future commodity prices decrease compared to the contract prices on the derivatives, gains are recognized.

The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. See Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Note 7 and Note 8 for additional details about the Company’s commodity derivatives. For information about the Company’s credit risk related to derivative contracts, see “Counterparty Credit Risk” under “Liquidity and Capital ~~expenditures~~Resources” below.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Marketing and Other Revenues

Marketing revenues represent third-party activities associated with company-owned gathering systems, plants and facilities. Other revenues primarily include management fee revenues recognized by the Company from Berry (in the Predecessor periods) and helium sales revenue. Marketing and other revenues decreased by approximately $15 million or 42% to approximately $5 million and $17 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $37 million for the three months ended March 31, 2016. The decrease was primarily due to the inclusion of management fee revenues from Berry included in the Predecessor periods and lower revenues generated by the Jayhawk natural gas processing plant in Kansas, partially offset by higher helium sales revenue in the Hugoton Basin.

Expenses

Lease Operating Expenses

Lease operating expenses include expenses such as labor, field office, vehicle, supervision, maintenance, tools and supplies, and workover expenses. Lease operating expenses decreased by approximately $8 million or 9% to approximately $27 million and $53 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $88 million for the three months ended March 31, 2016. The decrease was primarily due to reduced labor costs for field operations as a result of cost savings initiatives. Lease operating expenses per Mcfe were $1.11 per Mcfe and $1.16 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $1.13 per Mcfe for the three months ended March 31, 2016.

Transportation Expenses

Transportation expenses decreased by approximately $2 million or 5% to approximately $14 million and $26 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $42 million for the three months ended March 31, 2016. The decrease was primarily due to reduced costs as a result of lower production volumes. Transportation expenses per Mcfe increased to $0.56 per Mcfe and $0.57 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $0.54 per Mcfe for the three months ended March 31, 2016.

Marketing Expenses

Marketing expenses represent third-party activities associated with company-owned gathering systems, plants and facilities. Marketing expenses remained relatively consistent at approximately $3 million and $5 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to approximately $8 million the three months ended March 31, 2016.

General and Administrative Expenses

General and administrative expenses are costs not directly associated with field operations and reflect the costs of employees including executive officers, related benefits, office leases and professional fees. In addition, general and administrative expenses in the Predecessor periods include expenses incurred by LINN Energy associated with the operations of Berry. General and administrative expenses decreased by approximately $2 million or 2% to approximately $10 million and $72 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $84 million for the three months ended March 31, 2016. The decrease was primarily due to lower professional services expenses, the inclusion of costs associated with the operations of Berry in the Predecessor periods and lower various other administrative expenses including insurance and rent, partially offset by higher noncash share-based compensation expenses principally driven by the immediate vesting of certain awards on the Effective Date. General and administrative expenses per Mcfe were $0.43 per Mcfe and $1.57 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $1.07 per Mcfe for the three months ended March 31, 2016.

For professional services expenses related to the Chapter 11 proceedings that were incurred since the Petition Date and prior to the Effective Date, see “Reorganization Items, Net.”

Exploration Costs

Exploration costs decreased by approximately $3 million to approximately $55,000 and $93,000 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $3 million for the three months ended March 31, 2016. The decrease was primarily due to lower seismic data expenses.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization decreased by approximately $28 million or 26% to approximately $21 million and $56 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $105 million for the three months ended March 31, 2016. The decrease was primarily due to lower rates as a result of the application of fresh start accounting and impairments recorded in the first quarter of 2016, as well as lower total production volumes. Depreciation, depletion and amortization per Mcfe also decreased to $0.87 per Mcfe and $1.24 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from $1.35 per Mcfe for the three months ended March 31, 2016.

Impairment of Long-Lived Assets

The Company recorded no impairment charges for the one month ended March 31, 2017, or the two months ended February 28, 2017. During the three months ended March 31, 2016, the Company recorded a noncash impairment charge of approximately $123 million associated with proved oil and natural gas properties in the Mid-Continent region due to a decline in commodity prices, changes in expected capital development and a decline in the Company’s estimates of proved reserves.

Taxes, Other Than Income Taxes



	Successor		Predecessor
	One Month Ended March 31, 2017		Two Months Ended February 28, 2017		Three Months Ended March 31, 2016
(in thousands)
Severance taxes	$	3,921	$	9,223	$	7,103
Ad valorem taxes	3,482		6,359		12,340
Other	99		165		311
	$	7,502	$	15,747	$	19,754

Severance taxes, which are a function of revenues generated from production, increased primarily due to higher oil, natural gas and NGL prices partially offset by lower production volumes. Ad valorem taxes, which are based on the value of reserves and production equipment and vary by location, decreased primarily due to lower ~~spending~~estimated valuations on ~~development activities throughout~~certain of the Company’s ~~various operating regions as a result~~properties.

Other Income and (Expenses)



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
(in thousands)
Interest expense, net of amounts capitalized	$	(4,917	)	$	(18,406	)	$	(85,267	)
Other, net	(388		)	(149		)	68
	$	(5,305	)	$	(18,555	)	$	(85,199	)

Interest expense decreased primarily due to the Company’s discontinuation of ~~continued low commodity prices. The Company made no acquisitions of properties during~~interest expense recognition on the ~~nine~~senior notes for the two months ended ~~September 30, 2016, or September 30, 2015. In addition, during the second quarter of 2016, restricted cash was reduced by approximately $53 million~~February 28, 2017, as a result of the ~~amendment~~Chapter 11 proceedings, lower outstanding debt and lower amortization of discounts and financing fees. For the two months ended February 28, 2017, contractual interest, which was not recorded, on the senior notes was approximately $37 million. See “Debt” under “Liquidity and Capital Resources” below for additional details.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

The Second Lien Notes were accounted for as a troubled debt restructuring which requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized. For the two months ended February 28, 2017, unrecorded contractual interest on the Second Lien Notes was $20 million.

Reorganization Items, Net

The Company incurred significant costs associated with the reorganization. Reorganization items represent costs and income directly associated with the Chapter 11 proceedings since the Petition Date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments were determined. The following table summarizes the components of reorganization items included on the condensed consolidated statements of operations:



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017
(in thousands)
Gain on settlement of liabilities subject to compromise	$	—		$	3,724,750
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement	—			(1,000,000		)
Fresh start valuation adjustments	—			(591,525		)
Income tax benefit related to implementation of the Plan	—			264,889
Legal and other professional advisory fees	(2,570		)	(46,961		)
Terminated contracts	—			(6,915		)
Other	5			(13,049		)
Reorganization items, net	$	(2,565	)	$	2,331,189

Income Tax Expense (Benefit)

Effective February 28, 2017, upon the consummation of the Plan, the Successor became a C corporation. Prior to the ~~Berry Credit Facility~~consummation of the Plan, the Predecessor was a limited liability company treated as a partnership for federal and state income tax purposes, with the exception of the state of Texas, in which income tax liabilities and/or benefits were passed through to its unitholders. Limited liability companies are subject to Texas margin tax. In addition, certain of the Predecessor’s subsidiaries were C corporations subject to federal and state income taxes. The Company recognized an income tax benefit of approximately $3 million and $166,000 for the one month ended March 31, 2017, and the ~~Bank RSA. See Note 2 for additional details. Proceeds from sale~~two months ended February 28, 2017, respectively, compared to income tax expense of ~~properties and equipment and other~~approximately $10 million for the ~~nine~~three months ended ~~September 30, 2015, include~~March 31, 2016.

Loss from Discontinued Operations, Net of Income Taxes

Berry was deconsolidated effective December 3, 2016, and its results of operations are reported as discontinued operations for the three months ended March 31, 2016. Loss from discontinued operations, net of income taxes was approximately ~~$276~~$1.1 billion for the three months ended March 31, 2016.

Net Income (Loss)

Net loss decreased by approximately $3.7 billion to net loss of approximately $7 million and net income of approximately $2.4 billion for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from net loss of approximately $1.3 billion for the three months ended March 31, 2016. The decrease was primarily due to gains included in ~~net cash proceeds received from the Howard County Assets Sale in August 2015.~~reorganization items, lower impairment charges and higher production revenues. See discussion above for explanations of variances.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Financing Activities

Successor Credit Facility

On the Effective Date, pursuant to the terms of the Plan, the Company entered into the Successor Credit Facility with Holdco II as borrower and Wells Fargo Bank, National Association, as administrative agent, providing for: 1) a revolving loan with an initial borrowing base of $1.4 billion and 2) a term loan in an original principal amount of $300 million. As of March 31, 2017, total borrowings outstanding under the Successor Credit Facility were approximately $834 million, and there was approximately $853 million of remaining available borrowing capacity (which includes a $7 million reduction for outstanding letters of credit).

There are no scheduled borrowing base redeterminations until April 1, 2018. After such time and until August 28, 2020, any scheduled redetermination of the borrowing base resulting in a decrease of the borrowing base will cause the borrowing base to be allocated into a conforming revolving loan tranche and a non-conforming revolving loan tranche that, in the aggregate, equal $1.4 billion. Interest on borrowings under the revolving loan is determined by reference to the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of (a) 3.50% per annum in the case of the conforming revolving loan tranche and (b) 5.50% per annum in the case of the non-conforming revolving loan tranche. The revolving loan is not subject to amortization. The conforming revolving loan tranche matures on February 27, 2021, and the non-conforming revolving loan tranche matures on August 28, 2020.

The term loan incurs interest at a rate of LIBOR plus 7.50% per annum, amortizes quarterly, and matures on February 27, 2021.

Holdco II has the right to prepay any borrowings under the Successor Credit Facility at any time without a prepayment penalty, other than customary “breakage” costs with respect to eurodollar loans.

The obligations under the Successor Credit Facility are secured by mortgages covering approximately 95% of the total value of the proved reserves of the oil and natural gas properties of the Company, and certain equipment and facilities associated therewith, along with liens on substantially all personal property of the Company and are guaranteed by the Company, Linn Energy Holdco LLC and Holdco II’s subsidiaries, subject to customary exceptions. Under the Successor Credit Facility, the Company is required to maintain certain financial covenants including the maintenance of (i) an asset coverage ratio of at least 1.1 to 1.0, tested on (a) the date of each scheduled borrowing base redetermination commencing with the first scheduled borrowing base redetermination and (b) the date of each additional borrowing base redetermination done in conjunction with an asset sale and (ii) a maximum total net debt to last twelve months EBITDAX ratio of 6.75 to 1.0 for March 31, 2018 through December 31, 2018, 6.5 to 1.0 for March 31, 2019 through March 31, 2020, and 4.5 to 1.0 thereafter.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

The Successor Credit Facility also contains customary affirmative and negative covenants, including as to compliance with laws (including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and annual financial statements, oil and natural gas engineering reports and budgets, maintenance and operation of property (including oil and natural gas properties), restrictions on the incurrence of liens and indebtedness, mergers, consolidations and sales of assets, transactions with affiliates and other customary covenants.

The Successor Credit Facility contains customary events of default and remedies for credit facilities of this nature. Failure to comply with the financial and other covenants in the Successor Credit Facility would allow the lenders, subject to customary cure rights, to require immediate payment of all amounts outstanding under the Successor Credit Facility.

Listing on the OTCQB Market

As a result of cancellation of the Predecessor’s units on the Effective Date, the units ceased to trade on the OTC Markets Group Inc.’s Pink marketplace. In April 2017, the Successor’s Class A common stock was approved for trading on the OTCQB market under the symbol “LNGG.”

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Results of Operations

The following table reflects the Company’s results of operations for each of the Successor and Predecessor periods presented:



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
(in thousands)
Revenues and other:
Natural gas sales	$	38,070		$	99,561		$	96,025
Oil sales	37,290			73,323			80,316
NGL sales	12,085			30,882			23,508
Total oil, natural gas and NGL sales	87,445			203,766			199,849
Gains (losses) on oil and natural gas derivatives	(11,959		)	92,691			109,453
Marketing and other revenues ⁽¹⁾	4,947			16,561			37,397
	80,433			313,018			346,699
Expenses:
Lease operating expenses	27,166			53,224			88,387
Transportation expenses	13,723			25,972			41,994
Marketing expenses	2,539			4,820			7,833
General and administrative expenses ⁽²⁾	10,411			71,745			83,720
Exploration costs	55			93			2,693
Depreciation, depletion and amortization	21,362			56,484			105,215
Impairment of long-lived assets	—			—			123,316
Taxes, other than income taxes	7,502			15,747			19,754
Losses on sale of assets and other, net	445			672			1,269
	83,203			228,757			474,181
Other income and (expenses)	(5,305		)	(18,555		)	(85,199		)
Reorganization items, net	(2,565		)	2,331,189			—
Income (loss) from continuing operations before income tax	(10,640		)	2,396,895			(212,681		)
Income tax expense (benefit)	(3,384		)	(166		)	10,246
Income (loss) from continuing operations	(7,256		)	2,397,061			(222,927		)
Loss from discontinued operations, net of income taxes	—			—			(1,124,819		)
Net income (loss)	$	(7,256	)	$	2,397,061		$	(1,347,746	)


⁽¹⁾	Marketing and other revenues for the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $6 million and $23 million, respectively, of management fee revenues recognized by the Company from Berry. Management fee revenues are included in “other revenues” on the condensed consolidated statements of operations.

⁽²⁾

General and administrative expenses for the one month ended March 31, 2017, the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $4 million, $50 million and $9 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the three months ended March 31, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued



	Successor		Predecessor
	One Month Ended March 31, 2017		Two Months Ended February 28, 2017		Three Months Ended March 31, 2016
Average daily production:
Natural gas (MMcf/d)	496		495		535
Oil (MBbls/d)	25.6		25.1		29.5
NGL (MBbls/d)	23.2		21.4		24.3
Total (MMcfe/d)	788		775		858

Weighted average prices: ⁽¹⁾
Natural gas (Mcf)	$	2.48	$	3.41	$	1.97
Oil (Bbl)	$	47.07	$	49.50	$	29.91
NGL (Bbl)	$	16.82	$	24.41	$	10.61

Average NYMEX prices:
Natural gas (MMBtu)	$	2.63	$	3.66	$	2.09
Oil (Bbl)	$	49.67	$	53.04	$	33.45

Costs per Mcfe of production:
Lease operating expenses	$	1.11	$	1.16	$	1.13
Transportation expenses	$	0.56	$	0.57	$	0.54
General and administrative expenses ⁽²⁾	$	0.43	$	1.57	$	1.07
Depreciation, depletion and amortization	$	0.87	$	1.24	$	1.35
Taxes, other than income taxes	$	0.31	$	0.34	$	0.25

Average daily production – discontinued operations:
Total (MMcfe/d)	—		—		255


⁽¹⁾	Does not include the effect of gains (losses) on derivatives.

⁽²⁾

General and administrative expenses for the one month ended March 31, 2017, the two months ended February 28, 2017, and the three months ended March 31, 2016, include approximately $4 million, $50 million and $9 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the three months ended March 31, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Revenues and Other

Oil, Natural Gas and NGL Sales

Oil, natural gas and NGL sales increased by approximately $91 million or 46% to approximately $87 million and $204 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $200 million for the three months ended March 31, 2016, due to higher oil, natural gas and NGL prices, partially offset by lower production volumes. Higher oil, natural gas and NGL prices resulted in an increase in revenues of approximately $74 million, $61 million and $25 million, respectively.

Average daily production volumes decreased to approximately 788 MMcfe/d and 775 MMcfe/d for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately 858 MMcfe/d for the three months ended March 31, 2016. Lower oil, natural gas and NGL production volumes resulted in a decrease in revenues of approximately $44 million, $20 million and $5 million, respectively.

The following table sets forth average daily production by region:



	Successor	Predecessor
	One Month Ended March 31, 2017	Two Months Ended February 28, 2017	Three Months Ended March 31, 2016
Average daily production (MMcfe/d):
Rockies	287	294	347
Hugoton Basin	169	159	188
Mid-Continent	127	109	97
TexLa	77	80	72
Permian Basin	46	49	62
California	29	30	34
Michigan/Illinois	29	29	30
South Texas	24	25	28
	788	775	858

The increases in average daily production volumes in the Mid-Continent and TexLa primarily reflect increased development capital spending in the regions. The decreases in average daily production volumes in the remaining regions primarily reflect lower production volumes as a result of reduced development capital spending throughout the Company’s various regions, as well as marginal well shut-ins, driven by continued low commodity prices.

Gains (Losses) on Oil and Natural Gas Derivatives

Losses on oil and natural gas derivatives were approximately $12 million for the one month ended March 31, 2017, and gains on oil and natural gas derivatives were approximately $93 million and $109 million for the two months ended February 28, 2017, and the three months ended March 31, 2016, respectively. Gains and losses on oil and natural gas derivatives were primarily due to changes in fair value of the derivative contracts. The fair value on unsettled derivative contracts changes as future commodity price expectations change compared to the contract prices on the derivatives. If the expected future commodity prices increase compared to the contract prices on the derivatives, losses are recognized; and if the expected future commodity prices decrease compared to the contract prices on the derivatives, gains are recognized.

The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. See Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Note 7 and Note 8 for additional details about the Company’s commodity derivatives. For information about the Company’s credit risk related to derivative contracts, see “Counterparty Credit Risk” under “Liquidity and Capital Resources” below.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Marketing and Other Revenues

Marketing revenues represent third-party activities associated with company-owned gathering systems, plants and facilities. Other revenues primarily include management fee revenues recognized by the Company from Berry (in the Predecessor periods) and helium sales revenue. Marketing and other revenues decreased by approximately $15 million or 42% to approximately $5 million and $17 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $37 million for the three months ended March 31, 2016. The decrease was primarily due to the inclusion of management fee revenues from Berry included in the Predecessor periods and lower revenues generated by the Jayhawk natural gas processing plant in Kansas, partially offset by higher helium sales revenue in the Hugoton Basin.

Expenses

Lease Operating Expenses

Lease operating expenses include expenses such as labor, field office, vehicle, supervision, maintenance, tools and supplies, and workover expenses. Lease operating expenses decreased by approximately $8 million or 9% to approximately $27 million and $53 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $88 million for the three months ended March 31, 2016. The decrease was primarily due to reduced labor costs for field operations as a result of cost savings initiatives. Lease operating expenses per Mcfe were $1.11 per Mcfe and $1.16 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $1.13 per Mcfe for the three months ended March 31, 2016.

Transportation Expenses

Transportation expenses decreased by approximately $2 million or 5% to approximately $14 million and $26 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $42 million for the three months ended March 31, 2016. The decrease was primarily due to reduced costs as a result of lower production volumes. Transportation expenses per Mcfe increased to $0.56 per Mcfe and $0.57 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $0.54 per Mcfe for the three months ended March 31, 2016.

Marketing Expenses

Marketing expenses represent third-party activities associated with company-owned gathering systems, plants and facilities. Marketing expenses remained relatively consistent at approximately $3 million and $5 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to approximately $8 million the three months ended March 31, 2016.

General and Administrative Expenses

General and administrative expenses are costs not directly associated with field operations and reflect the costs of employees including executive officers, related benefits, office leases and professional fees. In addition, general and administrative expenses in the Predecessor periods include expenses incurred by LINN Energy associated with the operations of Berry. General and administrative expenses decreased by approximately $2 million or 2% to approximately $10 million and $72 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $84 million for the three months ended March 31, 2016. The decrease was primarily due to lower professional services expenses, the inclusion of costs associated with the operations of Berry in the Predecessor periods and lower various other administrative expenses including insurance and rent, partially offset by higher noncash share-based compensation expenses principally driven by the immediate vesting of certain awards on the Effective Date. General and administrative expenses per Mcfe were $0.43 per Mcfe and $1.57 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to $1.07 per Mcfe for the three months ended March 31, 2016.

For professional services expenses related to the Chapter 11 proceedings that were incurred since the Petition Date and prior to the Effective Date, see “Reorganization Items, Net.”

Exploration Costs

Exploration costs decreased by approximately $3 million to approximately $55,000 and $93,000 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $3 million for the three months ended March 31, 2016. The decrease was primarily due to lower seismic data expenses.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization decreased by approximately $28 million or 26% to approximately $21 million and $56 million for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from approximately $105 million for the three months ended March 31, 2016. The decrease was primarily due to lower rates as a result of the application of fresh start accounting and impairments recorded in the first quarter of 2016, as well as lower total production volumes. Depreciation, depletion and amortization per Mcfe also decreased to $0.87 per Mcfe and $1.24 per Mcfe for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from $1.35 per Mcfe for the three months ended March 31, 2016.

Impairment of Long-Lived Assets

The Company recorded no impairment charges for the one month ended March 31, 2017, or the two months ended February 28, 2017. During the three months ended March 31, 2016, the Company recorded a noncash impairment charge of approximately $123 million associated with proved oil and natural gas properties in the Mid-Continent region due to a decline in commodity prices, changes in expected capital development and a decline in the Company’s estimates of proved reserves.

Taxes, Other Than Income Taxes



	Successor		Predecessor
	One Month Ended March 31, 2017		Two Months Ended February 28, 2017		Three Months Ended March 31, 2016
(in thousands)
Severance taxes	$	3,921	$	9,223	$	7,103
Ad valorem taxes	3,482		6,359		12,340
Other	99		165		311
	$	7,502	$	15,747	$	19,754

Severance taxes, which are a function of revenues generated from production, increased primarily due to higher oil, natural gas and NGL prices partially offset by lower production volumes. Ad valorem taxes, which are based on the value of reserves and production equipment and vary by location, decreased primarily due to lower estimated valuations on certain of the Company’s properties.

Other Income and (Expenses)



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
(in thousands)
Interest expense, net of amounts capitalized	$	(4,917	)	$	(18,406	)	$	(85,267	)
Other, net	(388		)	(149		)	68
	$	(5,305	)	$	(18,555	)	$	(85,199	)

Interest expense decreased primarily due to the Company’s discontinuation of interest expense recognition on the senior notes for the two months ended February 28, 2017, as a result of the Chapter 11 proceedings, lower outstanding debt and lower amortization of discounts and financing fees. For the two months ended February 28, 2017, contractual interest, which was not recorded, on the senior notes was approximately $37 million. See “Debt” under “Liquidity and Capital Resources” below for additional details.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

The Second Lien Notes were accounted for as a troubled debt restructuring which requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized. For the two months ended February 28, 2017, unrecorded contractual interest on the Second Lien Notes was $20 million.

Reorganization Items, Net

The Company incurred significant costs associated with the reorganization. Reorganization items represent costs and income directly associated with the Chapter 11 proceedings since the Petition Date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments were determined. The following table summarizes the components of reorganization items included on the condensed consolidated statements of operations:



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017
(in thousands)
Gain on settlement of liabilities subject to compromise	$	—		$	3,724,750
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement	—			(1,000,000		)
Fresh start valuation adjustments	—			(591,525		)
Income tax benefit related to implementation of the Plan	—			264,889
Legal and other professional advisory fees	(2,570		)	(46,961		)
Terminated contracts	—			(6,915		)
Other	5			(13,049		)
Reorganization items, net	$	(2,565	)	$	2,331,189

Income Tax Expense (Benefit)

Effective February 28, 2017, upon the consummation of the Plan, the Successor became a C corporation. Prior to the consummation of the Plan, the Predecessor was a limited liability company treated as a partnership for federal and state income tax purposes, with the exception of the state of Texas, in which income tax liabilities and/or benefits were passed through to its unitholders. Limited liability companies are subject to Texas margin tax. In addition, certain of the Predecessor’s subsidiaries were C corporations subject to federal and state income taxes. The Company recognized an income tax benefit of approximately $3 million and $166,000 for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, compared to income tax expense of approximately $10 million for the three months ended March 31, 2016.

Loss from Discontinued Operations, Net of Income Taxes

Berry was deconsolidated effective December 3, 2016, and its results of operations are reported as discontinued operations for the three months ended March 31, 2016. Loss from discontinued operations, net of income taxes was approximately $1.1 billion for the three months ended March 31, 2016.

Net Income (Loss)

Net loss decreased by approximately $3.7 billion to net loss of approximately $7 million and net income of approximately $2.4 billion for the one month ended March 31, 2017, and the two months ended February 28, 2017, respectively, from net loss of approximately $1.3 billion for the three months ended March 31, 2016. The decrease was primarily due to gains included in reorganization items, lower impairment charges and higher production revenues. See discussion above for explanations of variances.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Liquidity and Capital Resources

Historically, the Company has utilized funds from debt and equity offerings, borrowings under its credit facilities and net cash provided by operating activities for capital resources and liquidity, and the primary use of capital has been for acquisitions and the development of oil and natural gas properties. For the one month ended March 31, 2017, and the two months ended February 28, 2017, the Company’s total capital expenditures were approximately $19 million and $46 million, respectively.

See below for details regarding capital expenditures for the periods presented:



	Successor		Predecessor
	One Month Ended March 31, 2017		Two Months Ended February 28, 2017		Three Months Ended March 31, 2016
(in thousands)
Oil and natural gas	$	17,147	$	39,659	$	23,717
Plant and pipeline	2,096		5,176		1,542
Other	167		1,243		2,733
Capital expenditures, excluding acquisitions	$	19,410	$	46,078	$	27,992
Capital expenditures, excluding acquisitions – discontinued operations	$	—	$	—	$	9,303

The increase in capital expenditures was primarily due to oil and natural gas development activities in the SCOOP / STACK and plant and pipeline development activities associated with a processing facility in the Merge. For 2017, the Company estimates its total capital expenditures, excluding acquisitions, will be approximately $413 million, including approximately $300 million related to its oil and natural gas capital program and approximately $102 million related to its plant and pipeline capital. This estimate is under continuous review and subject to ongoing adjustments.

Statements of Cash Flows

The following is a comparative cash flow summary:



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
(in thousands)
Net cash:
Provided by (used in) operating activities	$	17,693		$	(20,814	)	$	291,028
Used in investing activities	(22,384		)	(58,756		)	(91,421		)
Provided by (used in) financing activities	(48,592		)	(560,932		)	857,781
Net increase (decrease) in cash and cash equivalents	$	(53,283	)	$	(640,502	)	$	1,057,388

Operating Activities

Cash provided by ~~financing~~operating activities was approximately $18 million and cash used in operating activities was approximately $21 million for the ~~nine~~one month ended March 31, 2017, and the two months ended ~~September 30, 2016, was approximately $42 million,~~February 28, 2017, respectively, compared to cash provided by operating activities of approximately $291 million for the three months ended March 31, 2016. The decrease was primarily due to lower cash settlements on derivatives partially offset by higher production related revenues principally due to higher commodity prices. In addition, in February 2017, restricted cash increased by approximately $80 million in order to fund the settlement of certain claims and pay certain professional fees in accordance with the Plan.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Investing Activities

The following provides a comparative summary of cash flow from investing activities:



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
(in thousands)
Cash flow from investing activities:
Capital expenditures	$	(22,710	)	$	(58,590	)	$	(76,811	)
Proceeds from sale of properties and equipment and other	326			(166		)	(280		)
Net cash used in investing activities – continuing operations	(22,384		)	(58,756		)	(77,091		)
Net cash used in investing activities – discontinued operations	—			—			(14,330		)
Net cash used in investing activities	$	(22,384	)	$	(58,756	)	$	(91,421	)

The primary use of cash in investing activities is for the development of the Company’s oil and natural gas properties. Capital expenditures increased primarily due to higher spending on development activities in the Company’s Mid-Continent and TexLa regions. The Company made no acquisitions of properties during the three months ended March 31, 2017, or March 31, 2016. Berry was deconsolidated effective December 3, 2016, and its cash flows are reported as discontinued operations for the three months ended March 31, 2016.

Financing Activities

Cash used in financing activities ofwas approximately ~~$501~~$49 million and $561 million for the ~~nine~~one month ended March 31, 2017, and the two months ended ~~September 30, 2015.~~February 28, 2017, respectively, compared to cash provided by financing activities of approximately $858 million for the three months ended March 31, 2016. On February 28, 2017, the Company canceled its obligations under the Predecessor Credit Facility and entered into the Successor Credit Facility (see Note 6), which was a net transaction and is reflected as such on the condensed consolidated statement of cash flows. During the ~~nine~~three months ended ~~September 30,~~March 31, 2016, the Company borrowed approximately $979 million under the ~~LINN~~Predecessor Credit Facility, including approximately $919 million in February 2016 which represented the remaining undrawn amount that was available. In addition, during the nine months ended September 30, 2016, the Company repaid approximately $913 million under the LINN Credit Facility and term loan, and approximately $2 million under the Berry Credit Facility, primarily using the net cash proceeds from canceled derivative contracts (see Note 7).

The following provides a comparative summary of proceeds from borrowings and repayments of debt:

Nine Months Ended
September 30,
2016 2015
(in thousands)
Proceeds from borrowings:
LINN Credit Facility $ 978,500
$ 1,405,000
$ 978,500
$ 1,405,000
Repayments of debt:
LINN Credit Facility $ (814,299 ) $ (1,145,000 )
Berry Credit Facility (1,701 ) —
Term loan (98,911 ) —
Senior notes —
(556,909 )
$ (914,911 ) $ (1,701,909 )



	Successor			Predecessor
	One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
(in thousands)
Proceeds from borrowings:
Successor Credit Facility	$	30,000		$	—		$	—
Predecessor Credit Facility	—			—			978,500
	$	—		$	—		$	978,500
Repayments of debt:
Successor Credit Facility	$	(96,250	)	$	—		$	—
Predecessor Credit Facility	—			(1,038,986		)	(100,000		)
	$	(96,250	)	$	(1,038,986	)	$	(100,000	)

~~See Note 13 for details about borrowings~~In addition, in February 2017, the Company made a $30 million payment to holders of claims under the Second Lien Notes and ~~repayments~~also issued 41,359,806 shares of ~~debt that were reflected as noncash transactions~~Class A common stock to participants in the rights offerings extended by the ~~Company.~~Company to certain holders of claims arising under the Second Lien Notes and the Unsecured Notes for net proceeds of approximately $514 million.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Debt

The following summarizes the Company’s outstanding debt:

September 30, 2016 December 31, 2015
(in thousands, except percentages)

LINN credit facility $ 1,654,745
$ 2,215,000
Berry credit facility 891,259
873,175
Term loan 284,241
500,000
6.50% senior notes due May 2019 562,234
562,234
6.25% senior notes due November 2019 581,402
581,402
8.625% senior notes due April 2020 718,596
718,596
6.75% Berry senior notes due November 2020 261,100
261,100
12.00% senior secured second lien notes due December 2020 ⁽¹⁾
1,000,000
1,000,000
Interest payable on senior secured second lien notes due December 2020 ⁽¹⁾
—
608,333
7.75% senior notes due February 2021 779,474
779,474
6.50% senior notes due September 2021 381,423
381,423
6.375% Berry senior notes due September 2022 572,700
572,700
Net unamortized discounts and premiums ⁽²⁾
—
(8,694 )
Net unamortized deferred financing fees ⁽²⁾
(1,397 ) (37,374 )
Total debt, net 7,685,777
9,007,369
Less current portion, net ⁽³⁾
(2,828,848 ) (3,714,693 )
Less liabilities subject to compromise ⁽⁴⁾
(4,856,929 ) —
Long-term debt, net $ —
$ 5,292,676



	Successor			Predecessor
	March 31, 2017			December 31, 2016
(in thousands, except percentages)
Successor revolving loan	$	540,000		$	—
Successor term loan	293,750			—
Predecessor credit facility	—			1,654,745
Predecessor term loan	—			284,241
6.50% senior notes due May 2019	—			562,234
6.25% senior notes due November 2019	—			581,402
8.625% senior notes due April 2020	—			718,596
12.00% senior secured second lien notes due December 2020	—			1,000,000
7.75% senior notes due February 2021	—			779,474
6.50% senior notes due September 2021	—			381,423
Net unamortized deferred financing fees	—			(1,257		)
Total debt, net	833,750			5,960,858
Less current portion, net ⁽¹⁾	(28,125		)	(1,937,729		)
Less liabilities subject to compromise ⁽²⁾	—			(4,023,129		)
Long-term debt	$	805,625		$	—

⁽¹⁾

~~The issuance~~At March 31, 2017, the current portion of ~~the Second Lien Notes was accounted for as a troubled~~long-term debt ~~restructuring, which requires that interest~~reflects required payments on the ~~Second Lien Notes reduce~~Successor’s term loan in the ~~carrying value of~~next twelve months. Due to covenant violations, the debt with no interest expense recognized. During the nine months ended September 30, 2016, $551 million was written off to reorganization items in connection with the filing of the Bankruptcy Petitions. The remaining amount of approximately $57 million wasPredecessor’s credit facility and term loan were classified as ~~liabilities subject to compromise~~current at ~~September 30,~~December 31, 2016.


⁽²⁾	~~Approximately $41 million in net discounts, premiums and deferred financing fees were written off to reorganization items in connection with the filing of the Bankruptcy Petitions.~~


⁽³⁾	~~Due to existing and anticipated covenant violations, the Company’s Credit Facilities and term loan were classified as current at September 30, 2016, and December 31, 2015.~~ The ~~current portion as of December 31, 2015, also includes approximately $128 million of interest payable on the Second Lien Notes due within one year.~~


⁽⁴⁾	~~The Company’s~~Predecessor’s senior notes and Second Lien Notes were classified as liabilities subject to compromise at ~~September 30,~~December 31, 2016. On the Effective Date, pursuant to the terms of the Plan, all outstanding amounts under these debt instruments were canceled.

As of ~~September~~April 30, ~~2016,~~2017, total borrowings outstanding under the Successor Credit Facility were approximately $814 million, and there was noapproximately $872 million of remaining available borrowing capacity (which includes a $8 million reduction for outstanding letters of credit). Pursuant to the terms of the Plan, on the Effective Date, all obligations under the ~~Credit Facilities.~~ Predecessor’s credit facility, Second Lien Notes and senior notes were canceled.

For additional information related to the Company’s outstanding debt, see Note 6. ~~The Company plans to file Berry’s stand-alone financial statements with the Securities and Exchange Commission at a later date.~~

Counterparty Credit Risk

The Company accounts for its commodity derivatives at fair value. The Company’s counterparties were former participants or affiliates of participants in the Predecessor Credit Facility or are current participants or affiliates of participants in ~~its~~the Successor Credit ~~Facilities.~~Facility. The Successor Credit ~~Facilities are~~Facility is secured by certain of the Company’s and its subsidiaries’ oil, natural gas and NGL ~~reserves;~~reserves and personal property; therefore, the Company is not required to post any collateral. The Company does not receive collateral from its counterparties. ~~While the Company is in bankruptcy, the Bankruptcy Court’s hedging order governs the provision of collateral securing any commodity derivatives.~~ The Company minimizes the credit risk in derivative instruments by: (i) limiting its exposure to any single counterparty; (ii) entering into derivative instruments only with counterparties that meet the Company’s minimum credit quality standard, or have a guarantee from an affiliate that meets the Company’s minimum credit quality

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

standard; and (iii) monitoring the creditworthiness of the Company’s counterparties on an ongoing basis. In accordance with the Company’s standard practice, its commodity derivatives are subject to counterparty netting under agreements governing such derivatives and therefore the risk of loss due to counterparty nonperformance is somewhat mitigated.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Dividends/Distributions

Under the ~~Company’s~~Predecessor’s limited liability company agreement, unitholders ~~are~~were entitled to receive a distribution of available cash, which ~~includes~~included cash on hand plus borrowings less any reserves established by the ~~Company’s~~Predecessor’s Board of Directors to provide for the proper conduct of the ~~Company’s~~Predecessor’s business (including reserves for future capital expenditures, including drilling, acquisitions and anticipated future credit needs) or to fund distributions, if any, over the next four quarters. In October 2015, the ~~Company’s~~Predecessor’s Board of Directors determined to suspend payment of the ~~Company’s~~Predecessor’s distribution. The Successor currently has no intention of paying cash dividends and any future payment of cash dividends would be subject to the restrictions in the Successor Credit Facility.

Off-Balance Sheet Arrangements

The Company does not currently have any off-balance sheet arrangements.

Contingencies

See Part II. Item 1. “Legal Proceedings” for information regarding legal proceedings that the Company is party to and any contingencies related to these legal proceedings.

Commitments and Contractual Obligations

The ~~Company has~~following is a summary of the Company’s commitments and contractual obligations ~~for long-term debt, operating leases and other long-term liabilities that were summarized in the table~~as of contractual obligations in the 2015 Annual Report on Form 10-K. During the nine months ended September 30, 2016, the Company made approximately $758 million in net repayments of a portion of the borrowings outstanding under the Credit Facilities. The Company’s filing of the Bankruptcy Petitions constituted an event of default that accelerated the Company’s obligations under the Credit Facilities, the Second Lien Notes and the senior notes. See Note 6 for additional information about the Company’s debt instruments.March 31, 2017:



	Payments Due
Contractual Obligations	Total		2017		2018 – 2019		2020 – 2021		2022 and Beyond
	(in thousands)
Debt obligations:
Successor revolving loan	$	540,000	$	—	$	—	$	540,000	$	—
Successor term loan	293,750		18,750		87,500		187,500		—
Interest ⁽¹⁾	165,435		35,659		86,705		43,071		—
Operating lease obligations:
Office, property and equipment leases	7,987		2,595		4,860		472		60
Other:
Commodity derivatives	18,701		16,081		2,620		—		—
Asset retirement obligations	358,337		9,858		19,643		17,438		311,398
Other	946		46		122		122		656
	$	1,385,156	$	82,989	$	201,450	$	788,603	$	312,114


⁽¹⁾	Represents interest on the Successor’s revolving loan and the term loan computed at 4.33% and 8.33%, respectively, through contractual maturity.

Critical Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of operations is based on the condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. 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 that are believed to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. Actual results may differ from these estimates and assumptions used in the preparation of the financial statements.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, see Note 1.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. These statements may include discussions about the Company’s:

business strategy;

acquisition and disposition strategy;

financial strategy;

new capital structure and the adoption of fresh start accounting;

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

~~risks associated with the Chapter 11 process, including~~ the Company’s ~~inability~~ability to ~~develop, confirm~~improve its financial results and ~~consummate a plan under Chapter 11 or an alternative restructuring transaction;~~profitability following emergence from bankruptcy and other risks and uncertainties related to the Company’s emergence from bankruptcy;

inability to maintain relationships with suppliers, customers, employees and other third parties ~~as a result of the Chapter 11 filing;~~following emergence from bankruptcy;

failure to satisfy the Company’s short- or long-term liquidity needs, including its inability to generate sufficient cash flow from operations or to obtain adequate financing to fund its capital expenditures and meet working capital needs ~~and its ability to continue as a going concern;~~following emergence from bankruptcy;

large or multiple customer defaults on contractual obligations, including defaults resulting from actual or potential insolvencies;

ability to comply with covenants under the Successor Credit Facility;

effects of legal proceedings;

~~ability to resume payment of distributions in the future or maintain or grow them after such resumption;~~

drilling locations;

oil, natural gas and NGL reserves;

realized oil, natural gas and NGL prices;

production volumes;

capital expenditures;

economic and competitive advantages;

credit and capital market conditions;

regulatory changes;

lease operating expenses, general and administrative expenses and development costs;

future operating results, including results of acquired properties; ~~and~~

plans, objectives, expectations and ~~intentions.~~intentions; and

taxes.

All of these types of statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, are forward-looking statements. These forward-looking statements may be found in Item 2. 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 Quarterly Report on Form 10-Q are largely based on Company expectations, which reflect estimates and assumptions made by 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 Quarterly Report on Form 10-Q are not guarantees of future performance, and it cannot assure any reader that such statements will be realized or the events will occur. Actual results may differ materially from those anticipated or implied in forward-looking statements due to factors set forth in Item 1A. “Risk Factors” in ~~this Quarterly Report on Form 10-Q and in~~ the Annual Report on Form 10-K for the year ended December 31, ~~2015,~~2016, and elsewhere in the Annual Report. 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.

The forward-looking statements related to the Plan involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by other forward-looking statements contained in this Quarterly Report on Form 10-Q, including but not limited to potential adverse effects related to the following: delisting of the Company’s units on NASDAQ; reorganization and related effects on the Company’s outstanding debt and outstanding units; potential effects of the industry downturn on the Company’s business, financial condition and results of operations; potential limitations on the Company’s ability to maintain contracts and other critical business relationships; requirements for adequate liquidity to fund the Company’s operations in the future, including obtaining sufficient financing on acceptable terms; and other matters related to the reorganization and the Company’s indebtedness, including any defaults related thereto.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

The Company’s primary market risks are attributable to fluctuations in commodity prices and interest rates. These risks can affect the Company’s business, financial condition, operating results and cash flows. See below for quantitative and qualitative information about these risks.

The following should be read in conjunction with the financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in the Company’s ~~2015~~2016 Annual Report on Form 10-K. The reference to a “Note” herein refers to the accompanying Notes to Condensed Consolidated Financial Statements contained in Item 1. “Financial Statements.”

Commodity Price Risk

The Company’s most significant market risk relates to prices of oil, natural gas and NGL. The Company expects commodity prices to remain volatile and unpredictable. As commodity prices decline or rise significantly, revenues and cash flows are likewise affected. In addition, future declines in commodity prices may result in noncash write-downs of the Company’s carrying amounts of its assets.

Historically, the Company has hedged a portion of its forecasted production to reduce exposure to fluctuations in oil and natural gas prices and provide long-term cash flow predictability to manage its ~~business, service debt, and if and when resumed, pay distributions.~~business. The Company does not enter into derivative contracts for trading purposes. The appropriate level of production to be hedged is an ongoing consideration based on a variety of factors, including among other things, current and future expected commodity market prices, ~~and~~ the Company’s overall risk profile, including leverage and size and scale ~~considerations. The Company does not enter into derivative contracts~~considerations, as well as any requirements for ~~trading purposes.~~

or restrictions on levels of hedging contained in any credit facility or other debt instrument applicable at the time. In ~~September 2016,~~addition, when commodity prices are depressed and forward commodity price curves are flat or in backwardation, the Company ~~entered into~~may determine that the benefit of hedging its anticipated production at these levels is outweighed by its resultant inability to obtain higher revenues for its production if commodity ~~derivative contracts consisting of natural gas swaps for October 2016 through December 2017 and oil swaps for January 2017 through December 2017.~~

~~In April 2016 and May 2016, in connection with~~prices recover during the Company’s restructuring efforts, LINN Energy canceled (prior to the contract settlement dates) all of its then-outstanding derivative contracts for net proceeds of approximately $1.2 billion. The net proceeds were used to make permanent repayments of a portionduration of the ~~borrowings outstanding under the LINN Credit Facility. Also, in May 2016 and July 2016, as~~contracts. As a result, the appropriate percentage of ~~the Chapter 11 proceedings, Berry’s counterparties canceled (prior~~production volumes to the contract settlement dates) all of Berry’s then-outstanding derivative contracts for net proceeds of approximately $2 million. The net proceeds were used to make permanent repayments of a portion of the borrowings outstanding under the Berry Credit Facility.be hedged may change over time.

At ~~September 30, 2016,~~March 31, 2017, the fair value of fixed price swaps and collars was a net liability of approximately ~~$992,000.~~$8 million. A 10% increase in the index oil and natural gas prices above the ~~September 30, 2016,~~March 31, 2017, prices would result in a net liability of approximately ~~$37~~$88 million, which represents a decrease in the fair value of approximately ~~$36~~$80 million; conversely, a 10% decrease in the index oil and natural gas prices below the ~~September 30, 2016,~~March 31, 2017, prices would result in a net asset of approximately ~~$35~~$71 million, which represents an increase in the fair value of approximately ~~$36~~$79 million.

At December 31, ~~2015,~~2016, the fair value of fixed price swaps and ~~put option contracts~~collars was a net ~~asset~~liability of approximately ~~$1.7 billion.~~$85 million. A 10% increase in the index oil and natural gas prices above the December 31, ~~2015,~~2016, prices would result in a net ~~asset~~liability of approximately ~~$1.5 billion,~~$183 million, which represents a decrease in the fair value of approximately ~~$190~~$98 million; conversely, a 10% decrease in the index oil and natural gas prices below the December 31, ~~2015,~~2016, prices would result in a net asset of approximately ~~$1.9 billion,~~$13 million, which represents an increase in the fair value of approximately ~~$190~~$98 million.

The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. Inputs to the pricing models include publicly available prices and forward price curves generated from a compilation of data gathered from third parties. Company management validates the data provided by third parties by understanding the pricing models used, obtaining market values from other pricing sources, analyzing pricing data in certain situations and confirming that those instruments trade in active markets.

The prices of oil, natural gas and NGL have been extremely volatile, and the Company expects this volatility to continue. Prices for these commodities may fluctuate widely in response to relatively minor changes in the supply of and demand for such commodities, market uncertainty and a variety of additional factors that are beyond its control. Actual gains or losses recognized related to the Company’s derivative contracts depend exclusively on the price of the commodities on the specified settlement dates provided by the derivative contracts. Additionally, the Company cannot be assured that its counterparties will be able to perform under its derivative contracts. If a counterparty fails to perform and the derivative arrangement is terminated, the Company’s cash flows could be impacted.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk - Continued

Interest Rate Risk

At ~~September 30, 2016,~~March 31, 2017, the Company had debt outstanding under ~~its credit facilities~~the Successor’s revolving loan and term loan of approximately ~~$2.8 billion~~$834 million which incurred interest at floating ~~rates (see Note 6).~~rates. A 1% increase in the respective market rates would result in an estimated ~~$28~~$8 million increase in annual interest expense.

At December 31, ~~2015,~~2016, the Company had debt outstanding under ~~its credit facilities and term loan~~the Predecessor Credit Facility of approximately ~~$3.6~~$1.9 billion which incurred interest at floating rates. A 1% increase in the respective market rates would result in an estimated ~~$36~~$19 million increase in annual interest expense.

Item 4. 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 ~~September 30, 2016.~~March 31, 2017.

Changes in the Company’s Internal Control Over Financial Reporting

The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal controls were designed to provide reasonable assurance as to the reliability of its financial reporting and the preparation and presentation of the condensed consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not detect or prevent misstatements. Projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There were no changes in the Company’s internal control over financial reporting during the ~~third~~first quarter of ~~2016~~2017 that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II – Other Information


Item 1.	Legal Proceedings

On May 11, 2016, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16‑60040. On January 27, 2017, the Bankruptcy Court entered the Confirmation Order. Consummation of the Plan was subject to certain conditions set forth in the Plan. On the Effective Date, all of the conditions were satisfied or waived and the Plan became effective and was implemented in accordance with its terms. The LINN Debtors Chapter 11 cases will remain pending until the final resolution of all outstanding claims.

The commencement of the Chapter 11 proceedings automatically stayed certain actions against the Company, including actions to collect prepetition liabilities or to exercise control over the property of the Company’s bankruptcy estates. For certain statewide class action royalty payment disputes, the Company filed notices advising that it had filed for bankruptcy protection and seeking a stay, which was granted. ~~In addition,~~However, the Company is, ~~involved in various other disputes arising~~and will continue to be until the final resolution of all claims, subject to certain contested matters and adversary proceedings stemming from the Chapter 11 proceedings.

In March 2017, Wells Fargo Bank, National Association (“Wells Fargo”), the administrative agent under the Predecessor Credit Facility, filed a motion in the ~~ordinary course~~Bankruptcy Court seeking payment of ~~business.~~ post-petition default interest of approximately $31 million. The Company has vigorously disputed that Wells Fargo is entitled to any default interest based on the plain language of the Plan and Confirmation Order. A hearing was held on April 27, 2017, and the parties are awaiting a ruling from the Bankruptcy Court on this matter.

The Company is not currently a party to any litigation or pending claims that it believes would have a material adverse effect on its overall business, financial position, results of operations or liquidity; however, cash flow could be significantly impacted in the reporting periods in which such matters are resolved.

The commencement of the Chapter 11 proceedings automatically stayed certain actions against the Company, including actions to collect prepetition liabilities or to exercise control over the property of the Company’s bankruptcy estates. The Company intends to seek authority to pay all general claims in the ordinary course of business notwithstanding the commencement of the Chapter 11 proceedings in a manner consistent with the LINN RSA and Bank RSA. The Plan in the Chapter 11 proceedings, if confirmed, will provide for the treatment of claims against the Company’s bankruptcy estates, including prepetition liabilities that have not otherwise been satisfied or addressed during the Chapter 11 proceedings. See above under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Chapter 11 Proceedings” for information about the Company’s entry into the LINN RSA and Bank RSA.


Item 1A.	Risk Factors

Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our ~~units~~shares are described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2015. Except as set forth below, as~~2016. As of the date of this report, these risk factors have not changed materially. This information should be considered carefully, together with other information in this report and other reports and materials we file with the United States Securities and Exchange Commission.

Any plan of reorganization that we may implement will be based in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, our plan may be unsuccessful in its execution.

On October 21, 2016, we filed a proposed Plan with the Bankruptcy Court. Any plan of reorganization that we may implement could affect both our capital structure and the ownership, structure and operation of our business and will reflect assumptions and analyses based on our management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we consider appropriate under the circumstances. Whether actual future results and developments will be consistent with management’s expectations and assumptions depends on a number of factors, including but not limited to (i) our ability to change substantially our capital structure; (ii) our ability to obtain adequate liquidity and financing sources; (iii) our ability to maintain customers’ confidence in our viability as a continuing entity and to attract and retain sufficient business from them; (iv) our ability to retain key employees; and (v) the overall strength and stability of general economic conditions of the financial and oil and natural gas industries, both in the U.S. and in global markets. The failure of any of these factors could materially adversely affect the successful reorganization of our business.

In addition, any plan of reorganization will rely upon financial projections, including with respect to revenues, EBITDA, capital expenditures, debt service and cash flow. Financial forecasts are necessarily speculative, and it is likely that one or more of the assumptions and estimates that are the basis of these financial forecasts will not be accurate. In our case, the forecasts will be even more speculative than normal, because they may involve fundamental changes in the nature of our capital structure. Accordingly, we expect that our actual financial condition and results of operations will differ, perhaps materially, from what we have anticipated. Consequently, there can be no assurance that the results or developments contemplated by any plan of reorganization we may implement will occur or, even if they do occur, that they will have the anticipated effects on us and our subsidiaries or our business or operations. The failure of any such results or developments to materialize as anticipated could materially adversely affect the successful execution of any plan of reorganization.

~~We have substantial liquidity needs and may not be able to obtain sufficient liquidity to confirm a plan of reorganization and exit bankruptcy.~~

Although we have lowered our capital budget and reduced the scale of our operations significantly, our business remains capital intensive. In addition to the cash requirements necessary to fund ongoing operations, we have incurred significant professional fees and other costs in connection with our Chapter 11 proceedings and expect that we will continue to incur significant

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professional fees and costs throughout the Chapter 11 proceedings. There are no assurances that our current liquidity is sufficient to allow us to satisfy our obligations related to the Chapter 11 proceedings, allow us to proceed with the confirmation of a Chapter 11 plan of reorganization and allow us to emerge from bankruptcy. We can provide no assurance that we will be able to secure additional interim financing or exit financing sufficient to meet our liquidity needs.

In connection with a plan of reorganization, we may, for federal and state income tax purposes, trigger an actual or deemed sale of all or a portion of our properties which may result in unfavorable tax consequences.

In connection with a plan of reorganization, we may, for federal and state income tax purposes, trigger an actual or deemed sale of all or a portion of our properties and use the proceeds to satisfy debt. Our unitholders may be allocated substantial taxable income or loss with respect to such a sale, and our unitholders’ share of our taxable income and gain (or specific items thereof) from such sale may be substantially greater than, or our tax losses and deductions (or specific items thereof) from such sale may be substantially less than, our unitholders’ interest in our economic profits because of allocations under section 704(c) of the Internal Revenue Code.

~~We are subject to the risks and uncertainties associated with Chapter 11 proceedings.~~

For the duration of our Chapter 11 proceedings, our operations and our ability to develop and execute our business plan, as well as our continuation as a going concern, are subject to the risks and uncertainties associated with bankruptcy. These risks include the following:

~~our ability to develop, confirm and consummate a Plan or alternative restructuring transaction;~~

~~our ability to obtain court approval with respect to motions filed in Chapter 11 proceedings from time to time;~~

~~our ability to maintain our relationships with our suppliers, service providers, customers, employees and other third parties;~~

~~our ability to maintain contracts that are critical to our operations;~~

~~our ability to execute our business plan;~~

~~the ability of third parties to seek and obtain court approval to terminate contracts and other agreements with us;~~

the ability of third parties to seek and obtain court approval to terminate or shorten the exclusivity period for us to propose and confirm a Plan, to appoint a Chapter 11 trustee, or to convert the Chapter 11 proceedings to a Chapter 7 proceeding; and

~~the actions and decisions of our creditors and other third parties who have interests in our Chapter 11 proceedings that may be inconsistent with our plans.~~

These risks and uncertainties could affect our business and operations in various ways. For example, negative events associated with our Chapter 11 proceedings could adversely affect our relationships with our suppliers, service providers, customers, employees, and other third parties, which in turn could adversely affect our operations and financial condition. Also, we need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with our Chapter 11 proceedings, we cannot accurately predict or quantify the ultimate impact of events that will occur during our Chapter 11 proceedings that may be inconsistent with our plans.

~~Operating under Bankruptcy Court protection for a long period of time may harm our business.~~

Our future results are dependent upon the successful confirmation and implementation of a plan of reorganization. A long period of operations under Bankruptcy Court protection could have a material adverse effect on our business, financial condition, results of operations and liquidity. So long as the Chapter 11 proceedings continue, our senior management will be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on our business operations. A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management and other key personnel necessary for the success and growth of our business. In addition, the longer the Chapter 11 proceedings continue, the more likely it is that our customers and suppliers will lose confidence in our ability to reorganize our business successfully and will seek to establish alternative commercial relationships.

Furthermore, so long as the Chapter 11 proceedings continue, we will be required to incur substantial costs for professional fees and other expenses associated with the administration of the Chapter 11 proceedings. The Chapter 11 proceedings may also

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require us to seek debtor-in-possession financing to fund operations. If we are unable to obtain such financing on favorable terms or at all, our chances of successfully reorganizing our business may be seriously jeopardized, the likelihood that we instead will be required to liquidate our assets may be enhanced, and, as a result, any securities in us could become further devalued or become worthless.

Furthermore, we cannot predict the ultimate amount of all settlement terms for the liabilities that will be subject to a plan of reorganization. Even once a plan of reorganization is approved and implemented, our operating results may be adversely affected by the possible reluctance of prospective lenders and other counterparties to do business with a company that recently emerged from Chapter 11 proceedings.

~~The LINN RSA and Bank RSA provide that our common units representing limited liability company interests (“units”) will be canceled in our Chapter 11 proceedings.~~

We have a significant amount of indebtedness that is senior to our existing units in our capital structure. The LINN RSA and Bank RSA provide that our existing equity will be canceled in our Chapter 11 proceedings and will be entitled to a limited recovery, if any. Any trading in our units during the pendency of the Chapter 11 proceedings is highly speculative and poses substantial risks to purchasers of our units.

~~We may not be able to obtain confirmation of a Chapter 11 plan of reorganization.~~

To emerge successfully from Bankruptcy Court protection as a viable entity, we must meet certain statutory requirements with respect to adequacy of disclosure with respect to the Plan, solicit and obtain the requisite acceptances of such a plan and fulfill other statutory conditions for confirmation of such a plan, which have not occurred to date. The confirmation process is subject to numerous, unanticipated potential delays, including a delay in the Bankruptcy Court’s commencement of the confirmation hearing regarding our Plan.

Prior to the Chapter 11 filing, we entered into the Bank RSA with certain of our creditors, and on October 21, 2016, we entered into the LINN RSA, which is intended to replace the Bank RSA with respect to the terms of the Restructuring of the LINN Debtors. The restructuring transactions contemplated by the LINN RSA and Bank RSA will be effectuated through a Plan. However, we may not receive the requisite acceptances of constituencies in the Chapter 11 proceedings to confirm our Plan. Even if the requisite acceptances of a Plan are received, the Bankruptcy Court may not confirm such a plan. The precise requirements and evidentiary showing for confirming a plan, notwithstanding its rejection by one or more impaired classes of claims or equity interests, depends upon a number of factors including, without limitation, the status and seniority of the claims or equity interests in the rejecting class (i.e., unsecured claims or secured claims, subordinated or senior claims).

If a Chapter 11 plan of reorganization is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if anything, holders of claims against us would ultimately receive with respect to their claims.

~~The LINN RSA and Bank RSA are subject to significant conditions and milestones that may be difficult for us to satisfy.~~

There are certain material conditions we must satisfy under the LINN RSA and Bank RSA, including the timely satisfaction of milestones in the anticipated Chapter 11 proceedings, such as confirmation of a Plan and effectiveness of a Plan. Our ability to timely complete such milestones is subject to risks and uncertainties that may be beyond our control.

~~If either the LINN RSA or Bank RSA is terminated, or if both agreements are terminated, our ability to confirm and consummate the Plan could be materially and adversely affected.~~

The LINN RSA and Bank RSA contain a number of termination events, upon the occurrence of which certain parties to the LINN RSA and Bank RSA, as applicable, may terminate the agreement. If the LINN RSA and Bank RSA are terminated, each of the parties thereto, as applicable, will be released from their obligations in accordance with the terms of the applicable agreement. Such termination may result in the loss of support for the Plan by the parties to the LINN RSA or Bank RSA, as applicable, which could adversely affect our ability to confirm and consummate the Plan. If the Plan is not consummated, there can be no assurance that any new Plan would be as favorable to holders of claims as the current Plan.

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~~Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.~~

We face uncertainty regarding the adequacy of our liquidity and capital resources and have extremely limited, if any, access to additional financing. In addition to the cash requirements necessary to fund ongoing operations, we have incurred significant professional fees and other costs in connection with our Chapter 11 proceedings and expect that we will continue to incur significant professional fees and costs throughout our Chapter 11 proceedings. We cannot assure you that cash on hand and cash flow from operations will be sufficient to continue to fund our operations and allow us to satisfy our obligations related to the Chapter 11 proceedings until we are able to emerge from our Chapter 11 proceedings.

Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things: (i) our ability to comply with the terms and conditions of any cash collateral order that may be entered by the Bankruptcy Court in connection with the Chapter 11 proceedings, (ii) our ability to maintain adequate cash on hand, (iii) our ability to generate cash flow from operations, (iv) our ability to develop, confirm and consummate a Chapter 11 plan or other alternative restructuring transaction, and (v) the cost, duration and outcome of the Chapter 11 proceedings.

~~As a result of the Chapter 11 proceedings, our financial results may be volatile and may not reflect historical trends.~~

During the Chapter 11 proceedings, we expect our financial results to continue to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact our consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the bankruptcy filing. In addition, if we emerge from Chapter 11, the amounts reported in subsequent consolidated financial statements may materially change relative to historical consolidated financial statements, including as a result of revisions to our operating plans pursuant to a plan of reorganization. We also may be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. Our financial results after the application of fresh start accounting also may be different from historical trends.

~~We may be subject to claims that will not be discharged in the Chapter 11 proceedings, which could have a material adverse effect on our financial condition and results of operations.~~

The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation. With few exceptions, all claims that arose prior to May 12, 2016, or before confirmation of the plan of reorganization (i) would be subject to compromise and/or treatment under the plan of reorganization and/or (ii) would be discharged in accordance with the terms of the Plan. Any claims not ultimately discharged through the Plan could be asserted against the reorganized entities and may have an adverse effect on our financial condition and results of operations on a post-reorganization basis.

~~We may experience increased levels of employee attrition as a result of the Chapter 11 proceedings.~~

As a result of the Chapter 11 proceedings, we may experience increased levels of employee attrition, and our employees likely will face considerable distraction and uncertainty. A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations. Our ability to engage, motivate and retain key employees or take other measures intended to motivate and incent key employees to remain with us through the pendency of the Chapter 11 proceedings is limited by restrictions on implementation of incentive programs under the Bankruptcy Code. The loss of services of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would be likely to have a material adverse effect on our business, financial condition and results of operations.

~~In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.~~

There can be no assurance as to whether we will successfully reorganize and emerge from the Chapter 11 proceedings or, if we do successfully reorganize, as to when we would emerge from the Chapter 11 proceedings.

If the Bankruptcy Court finds that it would be in the best interest of creditors and/or the Debtors, the Bankruptcy Court may convert our anticipated Chapter 11 bankruptcy case to a case under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities

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established by the Bankruptcy Code. The Debtors believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to the Debtors’ creditors than those provided for in a Chapter 11 plan because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a disorderly fashion over a short period of time rather than reorganizing or selling in a controlled manner the Debtors’ businesses as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.

We may be unable to hedge anticipated production volumes on attractive terms or at all, which would subject us to further potential commodity price uncertainty and could adversely affect our net cash provided by operating activities, financial condition and results of operations.

Our anticipated production volumes remain mostly unhedged. Based on current expectations for continued low future commodity prices, reduced hedging market liquidity and potential reduced counterparty willingness to enter into new hedges with us, we may be unable to hedge anticipated production volumes on attractive terms or at all, which would subject us to further potential commodity price uncertainty and could adversely affect our net cash provided by operating activities, financial condition and results of operations.

Our units are no longer listed on a national securities exchange and are quoted only in over-the-counter markets, which carries substantial risks and could continue to negatively impact our unit price, volatility and liquidity.

As a result of our failure to comply with the NASDAQ Global Select Market (“NASDAQ”) continued listing requirements, on May 24, 2016, our units began trading over the counter on the OTC Markets Group Inc.’s Pink marketplace under the trading symbol “LINEQ.”

Our delisting from the NASDAQ and commencement of trading on the OTC Pink Sheets marketplace has resulted and may continue to result in a reduction in some or all of the following, each of which could have a material adverse effect on our unitholders:

~~the liquidity of our units;~~

~~the market price of our units;~~

~~our ability to obtain financing for the continuation of our operations;~~

~~the number of institutional and other investors that will consider investing in our units;~~

~~the number of market makers in our units;~~

~~the availability of information concerning the trading prices and volume of our units; and~~

~~the number of broker-dealers willing to execute trades in our units.~~


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

~~Issuer Purchases of Equity Securities~~

The Company’s Board of Directors had authorized the repurchase of up to $250 million of the Company’s outstanding units from time to time on the open market or in negotiated purchases. The Company did not repurchase any units during the nine months ended September 30, 2016, and as of September 30, 2016, the Company does not intend to make any purchases under the program.None


Item 3.	Defaults Upon Senior Securities

See Part I. Item 1. Note 2 to the Company’s condensed consolidated financial statements entitled “Chapter 11 Proceedings, Ability to Continue as a Going Concern and Covenant Violations” which is incorporated in this item by reference.None


Item 4.	Mine Safety Disclosures

Not applicable


Item 5.	Other Information

None


Item 6.	Exhibits



Delaware (State or other jurisdiction of incorporation or organization)	~~65-1177591~~81-5366183 (I.R.S. Employer Identification No.)
600 Travis Houston, Texas (Address of principal executive offices)	77002 (Zip Code)
(281) 840-4000 (Registrant’s telephone number, including area code)

~~600 Travis, Suite 5100~~ ~~Houston, Texas 77002~~ ~~(Former address of principal executive offices)~~



Large accelerated filerx	¨	Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)
		Smaller reporting company	x
		Emerging growth company	¨


	September 30, 2016			December 31, 2015			Successor			Predecessor
	(in thousands, except unit amounts)						March 31, 2017			December 31, 2016
(in thousands, except share and unit amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	800,507		$	2,168		$	1,072		$	694,857
Accounts receivable – trade, net	213,108			216,556			181,034			198,064
Derivative instruments	1,447			1,220,230			2,406			—
Restricted cash							81,766			1,602
Other current assets	121,092			95,593			91,005			106,011
Total current assets	1,136,154			1,534,547			357,283			1,000,534

Noncurrent assets:
Oil and natural gas properties (successful efforts method)	18,193,256			18,121,155			2,203,893			13,232,959
Less accumulated depletion and amortization	(12,676,972		)	(11,097,492		)	(15,351		)	(9,999,560		)
	5,516,284			7,023,663			2,188,542			3,233,399

Other property and equipment	742,264			708,711			445,951			636,487
Less accumulated depreciation	(232,245		)	(195,661		)	(4,197		)	(224,547		)
	510,019			513,050			441,754			411,940

Derivative instruments	—			566,401			8,960			—
Restricted cash	205,204			257,363
Deferred income taxes							624,704			—
Other noncurrent assets	35,287			33,234			23,352			14,718
	240,491			856,998			657,016			14,718
Total noncurrent assets	6,266,794			8,393,711			3,287,312			3,660,057
Total assets	$	7,402,948		$	9,928,258		$	3,644,595		$	4,660,591

LIABILITIES AND UNITHOLDERS’ DEFICIT
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	363,003		$	455,374		$	334,160		$	295,077
Derivative instruments	1,776			2,241			18,701			82,508
Current portion of long-term debt, net	2,828,848			3,714,693			28,125			1,937,729
Other accrued liabilities	46,299			119,593			48,829			26,304
Total current liabilities	3,239,926			4,291,901			429,815			2,341,618

Derivative instruments	1,199			857			—			11,349
Long-term debt, net	—			5,292,676
Long-term debt							805,625			—
Other noncurrent liabilities	571,123			611,725			350,981			399,607
Liabilities subject to compromise	5,173,059			—			—			4,305,005

Commitments and contingencies (Note 10)

Unitholders’ deficit:
355,142,363 units and 355,017,428 units issued and outstanding at September 30, 2016, and December 31, 2015, respectively	5,367,277			5,343,116
Accumulated deficit	(6,949,636		)	(5,612,017		)
	(1,582,359		)	(268,901		)
Total liabilities and unitholders’ deficit	$	7,402,948		$	9,928,258



	Successor			Predecessor
	March 31, 2017			December 31, 2016
(in thousands, except share and unit amounts)
Temporary equity:
Redeemable noncontrolling interests	29,350			—
Stockholders’/unitholders’ equity (deficit):
Predecessor units issued and outstanding (no units issued or outstanding at March 31, 2017; 352,792,474 units issued and outstanding at December 31, 2016)	—			5,386,885
Predecessor accumulated deficit	—			(7,783,873		)
Successor preferred stock ($0.001 par value, 30,000,000 shares authorized and no shares issued at March 31, 2017; no shares authorized or issued at December 31, 2016)	—			—
Successor Class A common stock ($0.001 par value, 270,000,000 shares authorized and 89,233,922 shares issued at March 31, 2017; no shares authorized or issued at December 31, 2016)	89			—
Successor additional paid-in capital	2,035,991			—
Successor accumulated deficit	(7,256		)	—
Total stockholders’/unitholders’ equity (deficit)	2,028,824			(2,396,988		)
Total liabilities and equity (deficit)	$	3,644,595		$	4,660,591


	Three Months Ended September 30,						Nine Months Ended September 30,						Successor			Predecessor
	2016			2015			2016			2015			One Month Ended March 31, 2017			Two Months Ended February 28, 2017			Three Months Ended March 31, 2016
	(in thousands, except per unit amounts)
(in thousands, except per share and per unit amounts)
Revenues and other:
Oil, natural gas and natural gas liquids sales	$	360,143		$	427,245		$	959,715		$	1,374,233		$	87,445		$	203,766		$	199,849
Gains (losses) on oil and natural gas derivatives	274			549,029			(72,533		)	782,622			(11,959		)	92,691			109,453
Marketing revenues	18,352			15,723			47,177			60,200			2,914			6,636			9,061
Other revenues	6,896			6,307			21,468			19,624			2,033			9,925			28,336
	385,665			998,304			955,827			2,236,679			80,433			313,018			346,699
Expenses:
Lease operating expenses	117,470			154,086			370,658			467,759			27,166			53,224			88,387
Transportation expenses	49,630			54,915			156,590			164,250			13,723			25,972			41,994
Marketing expenses	12,191			9,359			35,784			47,359			2,539			4,820			7,833
General and administrative expenses	50,202			60,113			196,377			237,731			10,411			71,745			83,720
Exploration costs	4			3,072			2,745			4,032			55			93			2,693
Depreciation, depletion and amortization	142,448			207,218			449,677			637,964			21,362			56,484			105,215
Impairment of long-lived assets	41,728			2,255,080			1,195,632			2,787,697			—			—			123,316
Taxes, other than income taxes	15,383			46,238			80,297			158,317			7,502			15,747			19,754
(Gains) losses on sale of assets and other, net	1,940			(166,980		)	5,959			(197,263		)
Losses on sale of assets and other, net													445			672			1,269
	430,996			2,623,101			2,493,719			4,307,846			83,203			228,757			474,181
Other income and (expenses):
Interest expense, net of amounts capitalized	(40,105		)	(138,383		)	(213,758		)	(427,584		)	(4,917		)	(18,406		)	(85,267		)
Gain on extinguishment of debt	—			197,741			—			213,527
Other, net	(269		)	(1,701		)	(1,437		)	(10,060		)	(388		)	(149		)	68
	(40,374		)	57,657			(215,195		)	(224,117		)	(5,305		)	(18,555		)	(85,199		)
Reorganization items, net	(116,276		)	—			418,608			—			(2,565		)	2,331,189			—
Loss before income taxes	(201,981		)	(1,567,140		)	(1,334,479		)	(2,295,284		)
Income (loss) from continuing operations before income taxes													(10,640		)	2,396,895			(212,681		)
Income tax expense (benefit)	(3,616		)	2,177			3,140			(7,680		)	(3,384		)	(166		)	10,246
Net loss	$	(198,365	)	$	(1,569,317	)	$	(1,337,619	)	$	(2,287,604	)
Income (loss) from continuing operations													(7,256		)	2,397,061			(222,927		)
Loss from discontinued operations, net of income taxes													—			—			(1,124,819		)
Net income (loss)													$	(7,256	)	$	2,397,061		$	(1,347,746	)

Net loss per unit:
Basic	$	(0.56	)	$	(4.47	)	$	(3.79	)	$	(6.72	)
Diluted	$	(0.56	)	$	(4.47	)	$	(3.79	)	$	(6.72	)
Weighted average units outstanding:
Basic	352,792			350,695			352,606			340,831
Diluted	352,792			350,695			352,606			340,831

Distributions declared per unit	$	—		$	0.313		$	—		$	0.938
Basic and diluted income (loss) per share/unit – continuing operations													$	(0.08	)	$	6.79		$	(0.64	)
Basic and diluted loss per share/unit – discontinued operations													$	—		$	—		$	(3.19	)
Basic and diluted net income (loss) per share/unit													$	(0.08	)	$	6.79		$	(3.83	)
Basic and diluted weighted average shares/units outstanding													89,848			352,792			352,234



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



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



		Page

	Glossary of Terms	ii

	Part I – Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets ~~as of September 30, 2016, and December 31, 2015~~	1
	Condensed Consolidated Statements of Operations ~~for the three months and nine months ended September 30, 2016, and September 30, 2015~~	2
	~~Condensed Consolidated Statement of Unitholders’ Deficit for the nine months ended September 30, 2016~~	3
	Condensed Consolidated Statements of ~~Cash Flows for the nine months ended September 30, 2016, and September 30, 2015~~Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	57
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3732
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6648
Item 4.	Controls and Procedures	6749

	Part II – Other Information
Item 1.	Legal Proceedings	6850
Item 1A.	Risk Factors	6850
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7250
Item 3.	Defaults Upon Senior Securities	7250
Item 4.	Mine Safety Disclosures	7250
Item 5.	Other Information	7350
Item 6.	Exhibits	7451

	Signatures	7653



	Units	Unitholders’ Capital			Accumulated Deficit			Total Unitholders’ Deficit
	(in thousands)

December 31, 2015	355,017	$	5,343,116		$	(5,612,017	)	$	(268,901	)
Issuance of units	125	—			—			—
Unit-based compensation expenses		24,514			—			24,514
Other		(353		)	—			(353		)
Net loss		—			(1,337,619		)	(1,337,619		)
September 30, 2016	355,142	$	5,367,277		$	(6,949,636	)	$	(1,582,359	)



	Class A Common Stock			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	(in thousands)

Issuances of successor Class A common stock	89,230	$	89	$	2,021,142		$	—		$	2,021,231
Share-based compensation expenses		—		13,750			—			13,750
February 28, 2017 (Successor)	89,230	89		2,034,892			—			2,034,981
Net loss		—		—			(7,256		)	(7,256		)
Issuances of successor Class A common stock	4	—		—			—			—
Share-based compensation expenses		—		1,135			—			1,135
Other		—		(36		)	—			(36		)
March 31, 2017 (Successor)	89,234	$	89	$	2,035,991		$	(7,256	)	$	2,028,824


	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016			Successor			Predecessor
	(in thousands)						One Month Ended March 31, 2017			Two Months Ended February 28, 2017

(in thousands)
Gain on settlement of liabilities subject to compromise							$	—		$	3,724,750
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement							—			(1,000,000		)
Fresh start valuation adjustments							—			(591,525		)
Income tax benefit related to implementation of the Plan							—			264,889
Legal and other professional advisory fees	$	(25,604	)	$	(46,114	)	(2,570		)	(46,961		)
Unamortized deferred financing fees, discounts and premiums	—			(41,122		)
Gain related to interest payable on the 12.00% senior secured second lien notes due December 2020 ⁽¹⁾	—			551,000
Terminated contracts	(92,957		)	(47,848		)	—			(6,915		)
Other	2,285			2,692			5			(13,049		)
Reorganization items, net	$	(116,276	)	$	418,608		$	(2,565	)	$	2,331,189


⁽¹⁾	~~Represents a noncash gain on the write-off of postpetition contractual interest through maturity~~, ~~recorded to reflect the carrying value of the liability subject to compromise at its estimated allowed claim amount.~~



Plan confirmed enterprise value	$	2,350,000
Fair value of debt	(900,000		)
Fair value of subsequently determined tax attributes	621,486
Fair value of vested Class B units	(36,505		)
Value of Successor’s stockholders’ equity	$	2,034,981



	As of February 28, 2017
	Predecessor			Reorganization Adjustments ⁽¹⁾				Fresh Start Adjustments				Successor
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	734,166		$	(679,811	)	⁽²⁾	$	—			$	54,355
Accounts receivable – trade, net	212,099			—				(7,808		)	⁽¹⁶⁾	204,291
Derivative instruments	15,391			—				—				15,391
Restricted cash	1,602			80,164			⁽³⁾	—				81,766
Other current assets	106,426			(15,983		)	⁽⁴⁾	1,780			⁽¹⁷⁾	92,223
Total current assets	1,069,684			(615,630		)		(6,028		)		448,026

Noncurrent assets:
Oil and natural gas properties (successful efforts method)	13,269,035			—				(11,082,258		)	⁽¹⁸⁾	2,186,777
Less accumulated depletion and amortization	(10,044,240		)	—				10,044,240			⁽¹⁸⁾	—
	3,224,795			—				(1,038,018		)		2,186,777

Other property and equipment	641,586			—				(197,653		)	⁽¹⁹⁾	443,933
Less accumulated depreciation	(230,952		)	—				230,952			⁽¹⁹⁾	—
	410,634			—				33,299				443,933

Derivative instruments	4,492			—				—				4,492
Deferred income taxes	—			264,889			⁽⁵⁾	356,597			⁽⁵⁾	621,486
Other noncurrent assets	15,003			151			⁽⁶⁾	8,139			⁽²⁰⁾	23,293
	19,495			265,040				364,736				649,271
Total noncurrent assets	3,654,924			265,040				(639,983		)		3,279,981
Total assets	$	4,724,608		$	(350,590	)		$	(646,011	)		$	3,728,007

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	324,585		$	41,266		⁽⁷⁾	$	(2,351	)	⁽²¹⁾	$	363,500
Derivative instruments	7,361			—				—				7,361
Current portion of long-term debt, net	1,937,822			(1,912,822		)	⁽⁸⁾	—				25,000
Other accrued liabilities	41,251			(1,026		)	⁽⁹⁾	1,104			⁽²²⁾	41,329
Total current liabilities	2,311,019			(1,872,582		)		(1,247		)		437,190

Derivative instruments	2,116			—				—				2,116
Long-term debt	—			875,000			⁽¹⁰⁾	—				875,000
Other noncurrent liabilities	402,776			(167		)	⁽¹¹⁾	(53,239		)	⁽²³⁾	349,370
Liabilities subject to compromise	4,301,912			(4,301,912		)	⁽¹²⁾	—				—


2)	Changes in cash and cash equivalents included the following:



(in thousands)
Borrowings under the Successor’s revolving loan	$	600,000
Borrowings under the Successor’s term loan	300,000
Proceeds from rights offering	530,019
Removal of restriction on cash balance	1,602
Payment to holders of claims under the Predecessor Credit Facility	(1,947,357		)
Payment to holders of claims under the Second Lien Notes	(30,000		)
Payment of Berry’s ad valorem taxes	(23,366		)
Payment of the rights offering backstop commitment premium	(15,900		)
Payment of professional fees	(13,043		)
Funding of the professional fees escrow account	(41,766		)
Funding of the general unsecured claims cash distribution pool	(40,000		)
Changes in cash and cash equivalents	$	(679,811	)


3)	Primarily reflects the transfer to restricted cash to fund the Predecessor’s professional fees escrow account and general unsecured claims cash distribution pool.


4)	Primarily reflects the write-off of the Predecessor’s deferred financing fees.


5)	Reflects deferred tax assets recorded as of the Effective Date as determined in accordance with ASC 740. The deferred tax assets were primarily the result of the conversion from a limited liability company to a C corporation and differences in the accounting basis and tax basis of the Company’s oil and natural gas properties as of the Effective Date.


6)	Reflects the capitalization of deferred financing fees related to the Successor’s revolving loan.


7)	Net increase in accounts payable and accrued expenses reflects:



(in thousands)
Recognition of payables for the professional fees escrow account	$	41,766
Recognition of payables for the general unsecured claims cash distribution pool	40,000
Payment of professional fees	(17,130		)
Payment of Berry’s ad valorem taxes	(23,366		)
Other	(4		)
Net increase in accounts payable and accrued expenses	$	41,266


8)	Reflects the settlement of the Predecessor Credit Facility through repayment of approximately $1.9 billion, net of the write-off of deferred financing fees and an increase of $25 million for the current portion of the Successor’s term loan.


9)	Reflects a decrease of approximately $8 million for the payment of accrued interest on the Predecessor Credit Facility partially offset by an increase of approximately $7 million related to noncash share-based compensation classified as a liability related to the incentive interest awards issued by Holdco to certain members of its management (see Note 12).


10)	Reflects borrowings of $900 million under the Successor Credit Facility, which includes a $600 million revolving loan and a $300 million term loan, net of $25 million for the current portion of the Successor’s term loan.


11)	Reflects a reduction in deferred tax liabilities as determined in accordance with ASC 740.


12)	Settlement of liabilities subject to compromise and the resulting net gain were determined as follows:



(in thousands)
Accounts payable and accrued expenses	$	134,599
Accrued interest payable	144,184
Debt	4,023,129
Total liabilities subject to compromise	4,301,912
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement	1,000,000
Funding of the general unsecured claims cash distribution pool	(40,000		)
Payment to holders of claims under the Second Lien Notes	(30,000		)
Issuance of Class A common stock to creditors	(1,507,162		)
Gain on settlement of liabilities subject to compromise	$	3,724,750


13)	Reflects redeemable noncontrolling interests classified as temporary equity related to the incentive interest awards issued by Holdco to certain members of its management. See Note 12 and Note 17 for additional information.



(in thousands)
Issuance of Class A common stock to creditors	$	1,507,162
Issuance of Class A common stock pursuant to the rights offering	530,019
Payment of the rights offering backstop commitment premium	(15,900		)
Payment of issuance costs	(50		)
Share-based compensation expenses	13,750
Cancellation of the Predecessor’s units issued and outstanding	5,386,812
Par value of Class A common stock	(89		)
Change in additional paid-in capital	7,421,704
Par value of Class A common stock	89
Predecessor’s units issued and outstanding	(5,386,812		)
Net increase in capital accounts	$	2,034,981



(in thousands)
Recognition of gain on settlement of liabilities subject to compromise	$	3,724,750
Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement	(1,000,000		)
Recognition of professional fees	(37,680		)
Write-off of deferred financing fees	(16,728		)
Recognition of deferred income taxes	264,889
Total reorganization items, net	2,935,231
Share-based compensation expenses	(50,255		)
Other	(236		)
Net decrease in accumulated deficit	$	2,884,740


16)	Reflects a change in accounting policy from the entitlements method to the sales method for natural gas production imbalances.


17)	Reflects the recognition of intangible assets for the current portion of favorable leases, partially offset by decreases for well equipment inventory and the write-off of historical intangible assets.


18)	Reflects a decrease of oil and natural gas properties, based on the methodology discussed above, and the elimination of accumulated depletion and amortization. The following table summarizes the components of oil and natural gas properties as of the Effective Date:



	Successor		Predecessor
	Fair Value		Historical Book Value
(in thousands)
Proved properties	$	2,186,777	$	12,258,835
Unproved properties	—		1,010,200
	2,186,777		13,269,035
Less accumulated depletion and amortization	—		(10,044,240		)
	$	2,186,777	$	3,224,795