LINN Energy to Acquire Properties in the Granite Wash for $600 Million - Doubling the Company's Granite Wash Inventory

abarrelfullabarrelfull wrote on 04 Nov 2011 13:57
Tags: linn upstream usa

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LINN Energy, LLC (Nasdaq:LINE) announced today that it signed a definitive purchase agreement to acquire mid-continent oil and natural gas properties located primarily in the Granite Wash of Texas and Oklahoma from Plains Exploration & Production Company (PXP) for a contract price of $600 million, subject to closing conditions. The Company anticipates the acquisition will close on or before Dec. 31, 2011, and will be financed with internally generated cash flow and proceeds from borrowings under its revolving credit facility.

"This acquisition represents substantially all of Plains' assets in the Mid-Continent 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" said Mark E. Ellis, President and Chief Executive Officer. "We expect to yield significant operational efficiencies in the Granite Wash as we leverage our pad drilling techniques, simultaneous-operations processes, and recently built gas gathering and water handling infrastructure."

Benefits of this transaction to LINN:

  • Highly accretive;
  • Doubles inventory of Granite Wash locations, with significant upside potential;
  • Increases organic growth potential;
  • Increases Granite Wash current production by approximately 75%; and
  • Provides operational synergies.

Significant characteristics of the assets:

  • Net production of approximately 80 million cubic feet equivalent per day;
  • High-margin natural gas with high Btu content;
  • PXP estimated proved reserves at Dec. 31, 2010 were 263 billion cubic feet equivalent (approximately 90 percent natural gas);
  • LINN estimates proved reserves will be significantly higher at year-end 2011;
  • More than 200 low-risk infill drilling locations; and
  • Approximately 20,000 Granite Wash net acres (approximately 75,000 net acres outside of Granite Wash


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