LINN Energy Announces $1.2 Billion Acquisition of BP's Hugoton Basin Properties

abarrelfull wrote on 14 Feb 2014 08:00
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Feb. 27, 2012

LINN Energy, LLC (Nasdaq:LINE) announced today that it signed a definitive purchase agreement to acquire Hugoton Basin properties located in Kansas from BP America Production Company for a contract price of $1.2 billion, subject to closing conditions. The company anticipates the acquisition will close on or before March 30, 2012, and will be financed with proceeds from borrowings under its revolving credit facility.

"This acquisition marks our entry into the largest conventional natural gas field in the U.S., and it is an excellent fit for our business strategy," said Mark E. Ellis, Chairman, President and Chief Executive Officer. "This impactful transaction has a low decline rate of 7 percent and is expected to provide 110 million cubic feet equivalent of liquids-rich production that is 37 percent NGLs. This acquisition should be immediately accretive to distributable cash flow per unit and is expected to provide a very steady stream of cash flow with little requirement for capital investment. We also fully hedged for five years 100 percent of natural gas production and 68 percent of NGL production, utilizing natural gas puts."

Significant characteristics expected from the acquisition:

• Immediately accretive to distributable cash flow per unit;
• Liquids-rich production of approximately 110 MMcfe/d (98 percent operated, 63 percent natural gas, 37 percent NGL) ;
• Excellent low-decline asset with a decline rate of 7 percent and a reserve life of 18 years;
• Proved reserves of approximately 730 Bcfe, highly developed with 81 percent PDP;
• Approximately 2,400 operated wells and more than 600,000 contiguous net acres;
• Estimated 2012 Adjusted EBITDA of approximately $160 million;
• Estimated 2012 maintenance capital of approximately $30 million to $40 million;
• Potential for production optimization and cost savings;
• 100 percent ownership of the Jayhawk Natural Gas Processing Plant, with significant excess capacity; and
• More than 800 future drilling locations.

• LINN Energy Announces $1.2 Billion Acquisition of BP's Hugoton Basin Properties

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