Linn Energy To Double Granite Wash Holdings

Acquired approximately 100,000 acres in the Granite Wash and other formations in TX & OK, gaining 80 MMcfe/d, 263 Bcfe proved.

Linn Energy LLC, Houston, (Nasdaq: LINE) has closed its acquisition of acquire Granite Wash assets in Texas and Oklahoma from Plains Exploration & Production Co., Houston, (NYSE: PXP) for $530 million.

The Linn deal concerns approximately 20,000 Granite Wash net acres and approximately 75,000 net acres outside of Granite Wash for a total $600 million. The assets double Plains’ inventory of Granite Wash locations, with significant upside potential, increases organic growth potential and increases Granite Wash current production by approximately 75%.

Net production is approximately 80 million cubic feet equivalent per day. Proved reserves as of Dec. 31, 2010, were 263 billion cubic feet of gas equivalent (90% gas).

Linn estimates proved reserves will be significantly higher at year-end 2011 due to the more than 200 low-risk infill drilling locations.

Linn president and chief executive Mark E. Ellis says, “This acquisition represents substantially all of Plains' assets in the Midcontinent region including mature stable assets and an outstanding position in the Granite Wash. This transaction will double Linn’s current inventory of horizontal drilling locations to more than 400 in the Granite Wash.”

Linn funded the deal with internally generated cash flow and proceeds from borrowings under its revolving credit facility.

Barclays Capital Inc. is financial advisor to Plains and J.P. Morgan Securities LLC rendered a fairness opinion. Citi and RBC Richardson Barr are financial advisors to Linn.