Linn Energy Inc. said on Dec. 27 its wholly owned subsidiary, Blue Mountain Midstream LLC, reached an agreement with Gaedeke Merge LP to dedicate about 7,200 acres in the Merge to Blue Mountain’s Chisholm Trail midstream business.

The dedicated acreage is located in a 13 township area in Grady and Canadian counties, Oklahoma. The agreement dedicates all current and future natural gas production from the acreage to Chisholm Trail for a primary term of 10 years. The company anticipates that it will receive the first volumes from this third-party agreement in the first-quarter of 2018 and also expects this agreement to add 10 new wells to the Chisholm Trail system in 2018.

“The agreement with Gaedeke increases our dedicated acreage by approximately 10% and aligns with our goal of accelerating the growth of our valuable midstream business in the Merge,” Mark E. Ellis, president and CEO said

“With more than 80,000 net acres in the core of the Merge now dedicated to Chisholm Trail and our new 250 million cubic feet per day [MMcf/d] cryogenic plant being commissioned in the second-quarter of 2018, we believe Blue Mountain is well-positioned to succeed as a standalone midstream company.”

“We expect this agreement to accelerate our timeline to reach full capacity at the plant and also to accelerate the construction of the gathering system within the footprint of the core development area for Roan Resources in the Merge. We will continue to pursue additional third-party dedications to further expand our footprint as we begin 2018,” Ellis added.

The board has commenced a review of strategic alternatives for Blue Mountain which include, among other things, hiring a separate management team, establishing an independent capital structure, pursuing independent third party acreage dedication and exploring potential strategic investments and/or a separate public listing independent from Linn.

Chisholm Trail is a gas gathering, compression and processing system located in the heart of the prolific liquids-rich Merge/Scoop/Stack play in Oklahoma. It has about 30 miles of existing gas gathering pipeline, a 60 MMcf/d refrigeration facility and has access to offload an additional 20 MMcf/d. Construction is underway on a highly efficient, state-of-the-art cryogenic gas processing system with a total capacity of 250 MMcf/d which is expected to be commissioned during the second-quarter of 2018.