Shares of Linn Energy LLC (LINE) plummeted today by over 10% to $1.12 per share. The once-renowned company is now almost a penny stock. In fact, its demise started only a year ago, and since then the company has lost over 90% of its market value: (Source: Bloomberg) The market simply does not believe in the company. Moreover, the suspension of distributions (i.e. dividends) in October 2015 aggravated the matter even further. Nevertheless, a few analysts keep being optimistic on the stock: "Linn Energy, LLC (NASDAQ:LINE) stock has received a short term price target of $ 4.81 from 8 Analyst. The share price can be expected to fluctuate from the mean short term target, can be seen from the standard deviation reading of $3.1. The higher estimate of target price is $12 , while the lower price target estimate is $2". Motley Fool recently posted an article on Linn Energy's debt situation, so did a Seeking Alpha's analyst. There is good news and there is bad news. The good news is that none of Linn's financial debt is due until April 2019 which gives the company a lot of room to maneuver, improve its balance sheet, and better its credit rating. The bad news is that the company currently has over $10B in debt and only about $2.2B in equity, according to the latest balance sheet: (Source: 10Q Report) The book value of equity of ~$2.2B translates into a per share value of about $6.4, which is 5.7x more than the current market value. Sounds like a crazy deal to you? Well, hold on. Remember that the balance sheet carries most of the company's assets at their cost, not market value. Are oil and gas properties worth a lot when Brent is in mid-30s? I do no think so. However, for the sake of the analysis, let us recalculate the balance sheet and come up with our own estimates of the company's book value: Cash and equivalents - no change - $344.8M Accounts Receivable - 10% discount - $244M Derivative Instruments - valued at market prices / no change - $1132M Other current assets - 50% discount - $56M Total current assets = $1,777M Oil and Gas properties, net - 20% discount - $8,087M Other PP&E, net - 20% discount - $421M Derivative Instruments, non-current - valued at market prices / no change - $721.7M Restricted Cash - no change - $257M Other non-current assets - 50% discount - $52M Total Assets = $11,316M Less: Total Liabilities - $11,384 Net Assets = ($68) Essentially, the above calculation shows that Linn's shares are worth $0, which is $1.12 less than the current market price. Sad! But hold on. The company is actually generating cash flows: not only operating cash flows but also free cash flows (defined as Operating Cash Flows minus maintenance CapEx in this case): (Source: 10Q Report) Even if we assume that cash flows from operations go down by 50% over the next year - energy price slump completely - the company will still not be burning cash. Moreover, as the CEO stated, CapEx will actually be down for 2016: We haven't really done our budget for 2016. As we look out, what I would tell you this year we're spending around $470 million in oil and gas capital. As we think about it next year, my guess is it'll probably come inside of that, a little less, but at the end of the day, we'll have all of our cost savings associated with our capital program. (c) Mark Ellis So, as long as the company can fork up ~$500M in operating cash flows, its bank account will be fine. Keep in mind that the company cancelled its dividends and does not have any debt maturities for at least three years. I have a feeling that it will still be selling assets in the short-term to raise extra cash and will have the cash flows to extinguish a lot of its $10B debt down the road. In conclusion, based on the above analysis, I can say that I am bullish on Linn Energy. While it is true that its equity is pretty much worthless, as the balance sheet analysis showed, it still generates free cash flows, which are worth something. I think that Linn Energy is a speculative play right now. But it is a play with limited downside and a very attractive upside opportunity. In other words, if you have the guts, load up!