Wildcatters Portfolio holding Linn Energy LLC (NSDQ: LINE) has stepped up its acquisition activity markedly over the past year, making more than $1.2 billion worth of transactions thus far in 2010. The partnership has focused on oil-producing properties, primarily located in the Permian Basin of Texas, a move that’s further shifted its production mix in favor of crude oil.

Linn’s access to capital has improved in recent months. Most recently, the company raised $1 billion selling 10-year bonds at a yield to maturity of around 7.5 percent. To put that into context, just six months ago, the company sold $1.3 billion in similar 10-year bonds; at the time of that issue, the bonds yielded more than 9 percent. In other words, Linn’s cost of debt capital has declined by roughly 1.5 percent just since spring.

Also note that Linn has borrowed money on 10-year terms rather than relying on short-term lines of credit with banks that must be renegotiated frequently. Many partnerships ran into trouble during the 2008-09 financial crisis, when banks cut the size of their revolving credit facilities. Other firms suffered when the London Interbank Offered Rate (LIBOR) spiked in fall 2008; credit lines often carry interest rates indexed to LIBOR. By terming out its debt structure using 10-year bonds, Linn has eliminated these issues.

And in March Linn announced a secondary offering of units to raise more than $430 million. Investor demand for the additional shares was robust, and the stock quickly recovered from the immediate post-offering dip.

Ever since Linn announced that it would pick up the pace of its acquisition program a little more than a year ago, we’ve projected that the firm would boost its distribution by the end of 2010. Last night, the company delivered, boosting its quarterly payout to $0.66 from $0.63, the first increase in distributions since the payout covering the fourth quarter of 2007. Based on the higher distribution rate, Linn’s units yield roughly 8 percent.

Linn’s policy of hedging most of its production for years into the future means that it’s less exposed to commodity prices than its peers. This was one of the major reasons the partnership was able to maintain its distributions during the financial crisis and commodity price collapse of late 2008 and early 2009.

With crude oil prices over $80 a barrel and natural gas prices depressed, we also like Linn’s decision to focus acquisitions activity on crude oil properties. The Permian Basin remains one of the most attractive regions for oil producers, as a number of fields in the region have responded well to new technologies such as horizontal drilling. In addition, there are a number of smaller producers in this region; all of the small fry are potential targets for a company like Linn.

It appears that the distribution growth engine has restarted for Linn, and we expect management to boost the payout further in coming quarters. Linn Energy LLC rates a buy under 33.