Low capital costs plus abundant opportunities to bring shale gas and liquids to market: That formula continues to drive cash flows and distributions higher for Linn Energy LLC (NSDQ: LINE) and other well-managed oil and gas MLP’s.

The company recently announced a “continuous equity offering,” under which it will sell $500 million in units over a period of time. That’s the latest innovation from the fast-growing producer of oil and gas, which posted a 39.8 percent jump in overall output in the second quarter versus year-earlier levels.

That gain coupled with aggressive hedging of output lifted cash flow 50 percent, not counting one-time factors. Distribution coverage with distributable cash flow (DCF) was a very solid 1.42-to-1, a robust level that induced management to boost the quarterly distribution to 69 cents per unit, a 4.5 percent jump from the prior quarter’s 66 cents and the seventh increase for the MLP since its January 2006 initial public offering.

Keeping those distribution boosts coming depends on Linn continuing to add to its reserve base at a reasonable cost, accessing low-cost capital to make such deals, controlling operating expenses and finally locking in selling prices in advance at levels that ensure robust cash flows. Second-quarter results verify once again that management is doing all that and more.

Linn closed some $621 million in acquisitions during the period, bringing total year-to-date purchases to $850 million. That includes key additions to its properties in the Permian Basin and Williston Basin. Though it carries a credit rating below investment-grade, the company was able to offer $750 million of bonds due 2019 at an interest rate of 6.5 percent, using the proceeds to among other things buy back 11.75 percent bonds due in 2017 and 9.875 percent notes due in 2018.

As for locking in favorable pricing, the company has now hedged 100 percent of its expected natural gas output through 2015. Oil production, meanwhile, is 100 percent hedged through 2013 and 80 percent in 2014 and 2015. Drilling results appear to be exceeding expectations, despite extreme weather in several key operating areas that inhibited activity. Lease operating expenses were up 4.9 percent in the quarter over year-earlier tallies, but were offset by a 13 percent drop in transportation costs and a 5.8 percent dip in general and administrative costs per unit of production.

Including the distribution boost, DCF coverage in the second quarter came in at a very strong 1.36-to-1. That leaves the door open for more distribution increases going forward, as output continues to expand. There are no meaningful debt maturities until 2016, eliminating refinancing risk.

Furthermore, as Elliott Gue noted in his InvestingDaily.com article, MLPs: Another Opportunity to Buy This Summer, MLPs remain an outstanding way to play a number of key trends underway in energy markets, including booming demand for liquefied natural gas (LNG) in international markets, soaring petrochemical demand for natural gas liquids (NGLs) and the development of America’s massive oil and gas shale fields.

These are all good reasons why of the 14 analysts covering the Linn Energy, 13 rate it a buy.