LINN Energy Acquires $525 Million Properties In Permian Basin

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
528MM
Description

Acquired oil and natural gas properties in the Permian Basin with estimated net production of 4,800 BOE/d for the first 12 months.

LINN Energy LLC (Nasdaq: LINE) signed a definitive purchase agreement to acquire oil and natural gas properties in the Permian Basin for $525 million, the company and LinnCo LLC (Nasdaq: LNCO) announced on Sept. 12.

The company anticipates the acquisition will close during 4Q 2013 and will be financed primarily with proceeds from a committed term loan to be entered into at closing.

"This bolt-on acquisition in the Permian Basin is an attractive addition to our assets in the area. This acquisition increases our exposure to oil and adds more than 300 proved low-risk infill drilling opportunities as well as future waterflood potential," Mark E. Ellis, chairman, president and CEO, said in the release. "We expect this transaction will be immediately accretive to cash available for distribution."

Significant characteristics expected from the acquisition:

  • Estimated first 12 months net production of 4,800 barrels of oil equivalent per day (BOE/d) primarily from the Clearfork formation with 63% oil;
  • Low operating expenses of $15.00 per BOE;
  • Operated with 98% working interest;
  • Proved reserves of 30 MMBOE with 70% oil;
  • Reserves to production ratio of 17 years;
  • Future additional waterflood reserve potential of 24 MMBOE;
  • 124 producing wells and more than 6,250 net acres; and
  • 300 identified future low—risk, infill drilling locations.

Financing

LINN intends to finance this acquisition with proceeds from a committed $500 million senior secured term loan with certain participants in its lender group and borrowings under its revolving credit facility. Subject to final documentation, the term loan is expected to have a maturity of April 2018, consistent with the maturity of the credit facility, incur interest at a rate of LIBOR plus 2.5% and be funded at closing, which is expected to occur in 4Q 2013.

Linn Energy LLC and LinnCo LLC are independent energy companies engaged in the acquisition and development of oil and natural gas properties. The companies are headquartered in Houston.